In today’s business environment, planning ahead simply isn’t enough. Marketers need to balance early planning with an ability to pivot. Especially in times of macroeconomic uncertainty when budgets are under pressure, marketing and finance teams must work together even more closely to effectively deploy resources and maximize ROI.
An ingrained benefit of digital marketing has always been the ability to quickly change media plans and constantly optimize. More than ever, marketers have to lean into an agile mindset to shift budgets to the biggest opportunities. It hasn’t always been an easy task.
In my past CMO roles at Calvin Klein Inc. and L’Oréal USA, I remember how often industry media buying platforms were distinctly siloed by channel: search, online video, display, social, and more. These silos carried over to our budget and organizational structures, creating friction and inefficiency whenever we tried to optimize performance across many marketing channels.
But as technology and solutions like AI and machine learning have rapidly improved, so have opportunities to show up for customers in more connected and consistent ways. Automation is now a multiplying force for businesses. You can more precisely scale your marketing presence across channels, stay on top of consumer needs and trends, and achieve new levels of agility within your marketing.
These opportunities are empowering marketers to rethink their old approaches to multichannel digital campaigns to improve ROI. To better understand this shift, Google partnered with Kantar to survey over 2,400 global marketers and explore the importance of agility in planning, allocating, and optimizing digital budgets across channels. From this study, we’ve identified three core areas that require a careful balancing act to unlock greater agility and developed guiding principles for success.
1. Create strong plans, but hold them loosely
While initial budget planning is considered fundamental, marketers should also leave room for flexibility. In our study, marketers are considered behaviorally budget agile if they adjust budgets across digital channels on a weekly or more frequent basis. Based on this metric, nearly a quarter of the marketers surveyed are considered budget agile.1
Budget agile does not, however, mean unprepared. Thirty-one percent of budget-agile marketers engage in formal marketing planning to align on strategy and digital-media budget allocations every month versus 18% of non-agile marketers.2
Budget-agile marketers are 25% more likely than non-agile marketers to report their performance as stronger than industry competitors.
Being budget agile can also lead to better business outcomes. Budget-agile marketers are 25% more likely than non-agile marketers to report their performance as stronger than industry competitors.3 And 48% of budget-agile marketers state that their marketing performance exceeded internal expectations and marketing KPIs, compared to 33% of marketers who are not budget agile.4
This finding did surprise us: Many of the marketers surveyed considered themselves more budget agile than they actually are based on their budgeting behaviors. On average, 60% of marketers who say they are “extremely agile” only make budget adjustments across digital channels monthly or less frequently.5
While this gap between perception and actual behavior happens at all levels of an organization, C-level executives are 2X more likely than individual contributors to perceive their business as extremely budget agile.6
58% of marketers have created more cross-channel touchpoints to improve collaboration.
The disconnect between perceived and actual budget agility reveals that there’s room for improvement across organizations. For me personally, empowering my teams to work with greater agility means I need to step back and allow them to make faster decisions. But this isn’t the case for many businesses. Indeed, the budget approval process is quite lengthy for 54% of non-agile marketers, where changes to digital budgets of 20% or more take a month or longer for approval.7 And even agile marketers must deal with time-consuming approvals. For 59% of budget-agile marketers, changes to digital budget of 20% or more take a week or longer for approval.8
Marketers also face heavy oversight and scrutiny over budget changes and reallocations. Fifty-two percent of marketers say that executive or C-level individuals have a heavy influence on budget adjustments after the initial planning period.9
2. Invest in specialization without losing collaboration
Fortunately, our research shows that companies don’t have to make dramatic changes to become more budget agile. Even brands and agencies that invest in dedicated channel expertise and specialist teams can still achieve quick wins to drive better collaboration and results.
First, it’s important to break down organizational silos. Fifty-eight percent of marketers have created more cross-channel team touchpoints, such as meetings, training, and information sharing to improve collaboration.10 And, compared to their non-agile peers, budget-agile marketers are twice as likely to call their marketing across channels “very tightly integrated.”11
They’re also leaning into their agency partnerships to stay on the cutting edge. Agencies can help encourage an agile mindset when it comes to budgeting and breaking down organizational silos.
Forty-two percent of budget-agile marketers say their agency partners greatly influence adjustments they make after initial budget planning, compared to only 31% of non-agile marketers.12
Next, more teams are setting shared goals that allow them to take a results-first rather than a channel-first approach. This starts with implementing consistent measurement and success metrics that help marketers align on a common language, even when they work on different channels. In fact, 41% of marketers surveyed have instituted shared metrics and KPIs across channels to improve collaboration.13
Marketers are also relying on automation to maximize budget agility across channels in real time. Budget-agile marketers are 29% more likely than non-agile marketers to use cross-channel automation.14
One example of this is demonstrated by the global streaming service Discovery+, which adopted Performance Max to improve how the brand optimizes performance across all of Google’s advertising channels and inventory. Regina Sommese, group vice president of paid media and global subscriber acquisitions at Discovery+, says, “Being budget fluid has always been critical for us, but the process has historically been manual. Performance Max allowed us to move away from managing siloed campaigns to one holistic optimization approach.”
3. Build experimentation into business as usual
As global brands like Discovery+ have found, driving reliable results and creating a culture of experimentation don’t have to be at odds. In fast-changing environments, marketers who can strike the right balance between investing in proven strategies and funding experiments that unlock new opportunities will deliver long-term growth. In fact, 31% of budget-agile marketers say it’s “very easy” to get additional budget to start new tests that weren’t included in the initial media budget, compared to just 9% of non-agile marketers.15
In times of uncertainty, it can also be a natural instinct to become more conservative and pull back on marketing budgets. Only 17% of budget-agile marketers and 6% of non-agile marketers have channels with uncapped or unlimited budgets that make it easy to increase budgets for new opportunities.16
Inside Google’s own marketing team, we’re taking the exact opposite approach. We’ve partnered with our finance teams to prove the incremental value of marketing by aligning marketing goals with real business outcomes, like profitability and customer lifetime value. We also reforecast our global budgets regularly to ensure that we can request more funds if we have room to scale successful tests against finance-approved ROI thresholds. This gives us greater freedom to avoid artificial “caps” on digital media budgets that can limit our ability to improve results.
Agile marketers help their teams move faster, pivot to take advantage of new performance opportunities, and ultimately drive more business growth. By finding the right balance across budget agility, cross-channel team collaboration, and experimentation, marketers can invest their resources more effectively to maximize ROI.
Taken from: https://www.thinkwithgoogle.com/future-of-marketing/management-and-culture/budget-agile/