Recap: It’s budgeting time at Zoom Running, and Marketing VP Chris Brown wants to recalibrate where he’s spending his designated marketing dollars. His challenge is attribution. He’s considering reassigning how much he allots to catalogs, email, and search—all of which drive online sales—but the purchase drivers aren’t clear enough to properly allocate the new budget based on past customer behaviors. Additionally, the overlapping way Brown and his team coordinate multichannel campaigns makes it difficult to know with certainty which touch or combination of touches actually prompts purchases.
Another positive making his task more difficult is the effectiveness of Zoom’s social sharing strategy. Brown wonders if he should simply allot more to social, even though, in some cases, email and mobile are the channels actually spurring activity there. More testing would help him decide, but his budget for the next fiscal year is due in a week.
Jim Pisula, Principal, Jim Pisula and Associates
Brown is a little late to this decision with only a week left before the budget is due, but the deadline is on him and he has to choose.
Presumably, he has received input from his team as to how the funds ought to be allocated and he hasn’t heard any new information to guide any reallocation.
He does have one piece of new information, that to some extent email and mobile are spurring activity in his social media sphere—yet, he’s thinking of allocating more funds to social without considering an increase in channels that partially drive social’s activity.
Besides polishing his résumé, Brown ought to consider the following:
- Allocate 90% of the budget in the same fashion as the previous year; after all, some results have been positive or he would have questioned them in the past.
- Take the other 10% so he and his team can devise some tests to be completed in 45 to 60 days.
- Use the test results to reallocate the remaining budget for the rest of the fiscal year.
- Resist the temptation to allocate more resource to social media until the tests are completed and analyzed.
In the future Brown will likely not wait until the end of the budgeting period to do any fundamental reassessments. If results pan out, Zoom Running continues to prosper. If they don’t due to misallocated funds, Brown is smarter in his next position.
Peter Mendelson, CMO, Raiseworks
Zoom Running is operating under the last-touch attribution model. With last touch, all credit is given to the last touch from the prospect that ultimately made the conversion, sale, etc. Although not ideal, many companies still do attribution this way since other models are much more complex. Last touch will artificially make some channels look more efficient than others, as they are reaping the benefit of all previous “touches” by the prospect. For example, DRTV is a key driver for Internet sales, yet with last touch it would not get credit for viewers who saw the URL in the commercial and went to a landing page to complete the order.
Still, it’s wise for Marketing VP Chris Brown to budget based on the most efficient channels first (based on last touch) and then work backwards knowing full well that other channels in fact aided in this process. Therefore, social media, although important, should not arbitrarily get an increase in budget versus a year ago unless Brown can demonstrate its contribution in the numbers.
Kevin McPherson, Industry Sector General Manager, Xerox
Budgets are not rigid; they need to have some flexibility. Markets are constantly changing and evolving, marketing spend needs to have some flexibility to be able to adjust to the market. Therefore, Brown should set up his marketing budget with the best information he has now and build in the flexibility to reallocate funds between channels, campaigns, and social. He should also build in some funds to do some pilots to test new concepts. Marketing is a continuous process and he needs to build this learning process into his budgeting so that it’s not a one-time activity.
Lawrence A. Tillinger, Proprietor, SFLI
Brown should segment his budget request for the next fiscal year as it was for this fiscal year—among all drivers of online sales—and then submit it to the budget approval process.
Afterward, Brown should begin using the free version of Google Analytics, or a similar program, to get multichannel attribution data, institute A/B testing, followed up by multivariate testing.
Brown’s budget request for the next fiscal year, with the same divisions as the current year’s budget, should explain that the amount to be allocated to each segment is multichannel attribution analytics data-dependent, may change with approval by those responsible for the budget approval process, with the total budget amount remaining the same.