Post by Michael Kahn, Worldwide CEO
As the marketing world continues its accelerated pace of change, machine-based buying/optimization becomes an increasing norm and attributed performance data is obtainable for all investments, it seems like we have reached a time when budgeting as we know it is due for an epic change.
The traditional business planning approach has been built on a linear process of setting a revenue and profit objective, determining allowable costs for revenue acquisition, determining the contribution various marketing/media investments make in driving that revenue and then setting a fixed budget for any one area of investment/the total plan to drive the targeted revenue outcome.
Candidly, this seems narrow-minded and in conflict with expectations for 24/7 marketing and media management. These expectations are increasingly being expressed by advertisers, agencies and publishers.
Based on the depths of what we should now know about driving sales day in/day out, we believe “fixed budgets” are a concept of the past. All marketers should be working from an “always on” perspective to drive maximum sales against the validated cost to acquire that sale, moving to a whatever the market will bear approach and mindset.
With all the data, tools and talent at our disposal, this should be the new way forward.
- We have access to data that can fully dimensionalize the consumer path to purchase, and all the points along the way that identify and convert intent
- We can now attribute appropriate ROI value to all media channels and their role/contribution to the sale
- We can now capture the optimum media mix to drive the sales/performance outcomes we seek
- We can apply people, platforms, programmatic capability and performance stacks to continually optimize our investments to drive sales at the right ROI every time
As we head into planning season for 2016, let’s all plan for a post-budget world where expectations to drive performance 24/7/365 actually match the way we fund it!