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MAKING MARKETING BUDGETS SWEAT IN A RECESSION & STILL MEET THE OBJECTIVES
By Jos Scharrer, MD Scharrer Advertising

I have always remembered what a wise ad man once said. A Marketing plan is like a rocket. If you do not give it enough fuel, it won’t reach its destination.

I find I am constantly reminded of this these days with the financial crisis. A big problem facing advertising and marketing in the current situation, is that the first cut to budgets made by the financial guys is the marketing budget, and precisely because they see it as an expense and not as an investment. Yet on these lower budgets, marketing is still expected to meet the sales objectives, in an environment that is a great deal more challenging. Then when the sales results do not meet these objectives, it is the marketing and advertising that gets the blame and not the financial guys.

What we do as an advertising agency is to take what is a reasonable budget under the circumstances, and then add a great deal more value to the budget. It would be possible to certainly double of the value of a client budget and make it work a great deal harder. To make it sweat, in fact.

But the budget has to be reasonable in the first place, especially when you are given stiff objectives to meet.

Here is the typical scenario:
A potential client calls you in and gives you a brief on a project that has already cost them over R100m in product investment over a number of years. The brief is professional and covers the information, the problem, weaknesses and strengths, and most importantly the sales objectives. You are asked to submit a proposal on what the message should be, who the target market should be, how the message should be communicated creatively, and then they want to know what budget we would need to make the campaign successful and meet the objectives.
At this point, you discover that this project has been launched before, and failed. OK. So clearly the marketing plan in the past was wrong, and the biggest thing of all that was wrong, we suspected, was the budget. It had to have been seriously inadequate for the task in hand, because after speaking to a couple dozen serious players in the target market, we learnt that the brand had almost zero awareness. This rocket didn’t even get off the ground, let alone reach its destination!

Getting the right budget right for the right objective, is not rocket science. Media planners and strategists can tell you fairly accurately what percentage of the market you will reach and at what frequency levels.

It is our skill and craft to add a great deal more value, with careful planning and targeting the best prospects, negotiating the discounts, researching and double checking the marketplace, and developing cut-through creative ideas that talk to the clients on emotive and psychological levels. A smart plan with great, relevant creative can often double the value of the budget. That’s what we do best.
So you go back to the potential client and put all the facts and research results on the table. You show the great creative, and they say it is fantastic. You tell them the minimum budget you estimate they would need to get the project off the ground and reach 50% of their target market. Then guess what? The potential client tells you that it is considerably more than they are prepared to spend. So sorry!

In that situation it is a waste of time to argue. One could say that an inadequate budget is a wasted budget – money down the drain. One could remind them, that there are hundreds of case histories of brands that were well supported in recession, even war times that held firm and strong and did even better, when the good times came back. But you know from past experience, that the financial guys will win yet again.
Some two years ago, Steve Jobs of Apple was asked by Fortune magazine what he was going to do in the financial crisis that had just started to play havoc with the banks and stock markets. He said that his plans were to invest more in his customers, research, marketing and advertising.

So I was not very surprised, to read in the financial pages that the value of Apple had now overtaken Microsoft for the first time since 1989. Apple is now the world’s biggest technology company. On Wednesday 26th May 2010 Apple shares were valued at $222bn against Microsoft value of $219bn. But then Steve Jobs has always been a great marketing man.