Every marketer is talking about agility right now–but only in regards to planning. This is a huge mistake.
Agile marketing plans are half of the equation. To execute on new plans you need full visibility into your marketing budget and the flexibility to move funds around as scenarios shift.
To create an agile budget, you need to focus on three interdependent elements:
In an unpredictable economy, the smartest way to plan your budget is to build in multiple options. Loading your budget with an arsenal of what-if plans empowers your marketing organization to act quickly and decisively as budget shifts–even at a high level. Need to pivot all the way to plan G? You’re ready to go!
Start by categorizing all of your investments as high, medium, and low risk. In the case of COVID-19:
High Risk – travel, events, and anything that involves in-person interaction
Medium Risk – anything involving partners
Low Risk – anything digital
Think of back-up plans for each, establishing extra replacement scenarios for high and medium risk situations.
Back-up planning can take a few different forms. The first option is moving funds into alternative programs that can drive impact. If you don’t have the necessary ROI insights, focus on quick-test projects that will improve overall insights into performance.
Another way to look at back-up plans is imagining that your budget gets slashed by 10%–what would you do differently? How about 15%? Look carefully at all your programs and decide which can still run on a smaller scale or with different resources and which would need to be axed.
Reallocations and transfers pop up frequently when managing a marketing budget, especially when you need to pivot between scenarios. Your marketing organization needs to have clearly defined processes around reallocations and transfers so that moving funds is as swift and decisive as shifting between plans.
These terms sound like synonyms, but they refer to very different procedures.
As long as the quarterly and annual totals stay the same, you can simply modify the line items within your budget. Depending on how deep budget cuts are, you may need to reallocate funds to another program if the smaller investment won’t drive impact.
These can be messy and time-consuming, and usually require a strict procedure. Transfers will be prevalent over the coming months. In March, entire in-person event budgets were transferred. But as we begin to plan for re-opening, funds will need to be transferred to support new initiatives.
Whether you’re reallocating or transferring your budget, it’s important to capture the original planned investments. Too many organizations overwrite the original entries as they make changes and lose important metrics such as:
Errors during budget transfers can lead to double-counting and other financial management headaches. Some organizations allow discretionary transfers between marketing budgets, provided the amount is under a certain threshold and a record of the transaction is captured. In order to work, your marketing organization must have strong tools and processes that can handle budget transfers without triggering manual work. If your company allows budget transfers, but not discretionary trading, we recommend advocating for it.
The third piece of an agile budget is frequent forecasting. Marketing budgets usually undergo many modifications, but it’s even more frequent when dealing with an economic crisis. By regularly tracking spend status, your team will know exactly how much budget they have leftover to invest at all times. Frequent forecasting helps avoid overspending and, arguably even worse, underspending.
Three quarters of companies using Uptempo have their marketers update their forecasts every day. And this was before the current economic crisis! With limited resources, all of the conversations around budget and spend receive more scrutiny. It’s critical that your marketers work with the most up-to-date budget information. Our recommendation is to update forecasts at least once a week.
Every marketer is concerned with agile marketing plans, but you’ll never be able to implement a truly agile marketing organization unless you make your budget agile. Marketing budgets are the true expression of marketing strategy because they enable us to execute all of our incredible marketing plans.
Learn more about creating an agile budget in our new eBook, Budgeting in a Crisis: How to Steer Your Ship Through the Storm
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