Marketing Intelligence by Iain Johnston

So if you are running a creative business, or indeed any professional services firm, how should you spend your scarce marketing budget?

I suppose this begs the question: “what budget?”

We’ll have to suspend the normal subject matter of this column at this point. Here, we’re not talking about the £1-30m our clients spend every year. We’re discussing the normally hard-won and constantly under threat marketing budget for our own agency.

I have worked in a range of such businesses, but many of them have evolved a level of marketing budget at between 2% and 5% of revenues, typically towards the bottom end of that scale. So an established £10m revenue direct marketing business might have its own budget of about £200-500,000, whereas a small fast growth design business of £1.5m fees might still feel able to commit £100,000 to 3^rd party promotional activity and cost.

These numbers probably include the cost of 0-3 dedicated marketing staff, but exclude new business people.

The absolute level of budget should of course be a function of what the objectives are in marketing terms, in most cases driven by short term new business goals and longer term profile and reputational plans. Stable businesses without ambitious growth plans can probably achieve all they need with relatively limited funding and resource. More aggressive plans will inevitably necessitate deeper pockets.

So back to the “how to spend the budget” question. Conceptually, I view marketing activity as a 3-D sphere, with the essential non-negotiable activities right at the core, and the nice-to-have not so critical stuff around the outside. The marketing activities are a bit like the layers of an onion from core priorities at the centre, to more peripheral things further out.

Let’s assume I’m running a £5-8m creative business and I have managed to hire a good B2B marketing manager. I might now have £80-150,000 to spend as an annual investment.

In allocating priorities, I’d start at the core, and ask myself, “if I only had £10k, what would it go on?” I might decide a credible holding page on the internet was the minimum first step, plus some business cards.

Then I’d work on through each additional £10-15k, adding layers to my marketing budget onion, each time asking “what is the next priority”. Sometimes as you work your way outwards, you top up the budget on some earlier priorities. For example, you might decide after you have a credible presence on the web and some business cards, you next invest in a decent creds deck (£5k), a basic PR retainer (£20k), a contact database (5k plus subscription to marketing intelligence tools) and some outbound direct marketing (£10k). You might be up to £50k+ by now, and the next £25k you allocate to take the web site from digital brochure to interactive portal. Then you carry on adding more new activities (event attendance £10k, sponsorship £10k, some client dinners and hospitality £15k), and then top up PR £20k).

Easy to spend £150k, isn’t it?

I guess every business is different, but however you end up prioritising your budget in your business, I’d still urge you to test the budget in two more ways:

1. slice your onion straight through across all the layers of activity so you get in any one month a small slice of each activity: does each activity that month support the others, are they consistent, and do they build together?

2. ask yourself for each £10-15k, is there a better use of that money? What specifically do we hope to achieve from that activity and is there a more cost effective way of doing it?

By far the most effective business to business marketing events I have been involved with have been some which don’t actually cost very much money. Gaining a speaker slot at the right conference can be priceless in terms of exposure, reputation and even new business leads. Such things often cost just the time and expenses of getting the right person there to speak. Similarly many networking events can be superb for business development activity, and cost very little to do.

In most cases it is our time that is actually the biggest driver of success. The more we invest, the further the budget goes, and the more the activity is likely to deliver useful results.