Why is marketing budgeting the most important exercise of the year?

Many people who have managed or owned growth companies can remind you of the importance of investing in marketing. When you're looking for strong growth, you talk about the ratio of marketing investment to turnover or the importance of marketing ROI, among other things. But less is said about what marketing investment can or should be.

Marketing is nowadays divided into so many different sub-sectors that investments can be very diverse. If we limit the discussion on budgeting to marketing communications alone, my own thinking has been strongly influenced by the rule of thumb used by global FMCG companies, where 80% of the marketing budget should be spent on the customer-facing side and 20% on marketing planning or production (the so-called working/non-working split). This is an old rule of thumb that applies particularly to products aimed at large target groups. 

Over the past few years, and especially with the rise of digital marketing, this metric has been challenged on several occasions - and rightly so. In particular, it has been influenced by the rise of content marketing over the last decade, which has exploded the cost of content production for businesses.

Another reason has been that many companies have long since moved from a campaign-based approach to an "always on" world, which requires new content on an ongoing basis.

Thirdly, I see a growing mindset where advertising is yesterday's marketing and where marketing communications must be something other than advertising - for example, influencer collaboration.

All of the above is natural, but it does not remove the problem that the budget should always have a guaranteed impact on the growth of the company.

So can it ever make sense for a company's marketing communications budget to spend the majority of its budget on content production and design, and only a fraction of the money on distribution?

This idea is probably particularly familiar in the B2B world, where the underlying idea may be that it is difficult to find relevant channels for paid advertising. I can understand this idea if, for example, the aim is to sell nuclear power plants where the one-off purchase is large and the target audience is small.

What I don't understand is that a large part of the budget is spent on content and then the content is stashed away on your own website or in your own social media libraries, in other words, content graveyards. Many sites are now so full of content that they have become labyrinths.

When creating content, a careful distribution strategy should always be in place to ensure that the content is distributed as widely as possible to the target audience. Sufficient effort should also be invested to ensure that the content gets sufficient visibility and thus a return on investment. 

With the budgeting season currently in full swing, I recommend doing a simple exercise at the same time: go through your 2022 marketing budget and identify the portion spent on content production and planning and compare it to the money budgeted for distribution. Then consider whether the budget will ensure that the diamond content will be given sufficient visibility, or whether it would help to focus more on a few key pieces of content and ensure their delivery with sufficient investment in visibility. 

I can't resist using an old saying as an analogy: if a tree falls in the forest and no one is there to hear it, can you hear the sound? Applied to the world of modern marketing: if a company produces content and no one is there to see it, is there an impact?

It's easy to see that the impact will be felt at most in the wallets of content providers.

This article was published in Markkinointiuutinen 6.10.2021