How to figure out the size of your brand’s media budget

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media budgetsBalance your media choices by looking at media efficiency, quality, impact, and fit with the brand. The efficiency of the media math starts with reach and frequency. Reach is the number or percentage of different households or people exposed to the ad at least once, over a specific period. Frequency is the number of times that household or person will be exposed to the ad within a particular period. Be careful to avoid relying on efficiency alone.  You need to balance efficiency with the quality of the media choices. I always set aside about 10 percent of my media budget to create a high impact to generate early attention to a new campaign or product innovation.

Use your strategic thinking to understand how much you can invest. You need to focus your limited resources on a distinct opportunity point you have identified based on a potential change in the market.

The reasons you would strategically invest in media include:

  • Discovery of a new brand message you know will motivate consumers to buy your brand.
  • Identified change in consumer needs, motivations, or behaviors, which will benefit your brand.
  • Shift the competitive dynamic, with an opportunity to make gains or a necessity to defend.
  • Continue to fuel brand growth with a window to drive brand profits.
  • New distribution channel you can use to move consumers through before competitors do.
  • The launch of a breakthrough product innovation offering a competitive advantage to your brand.

To make the media investment pay off, you need to be able to drive a performance result that pays back with an increase in brand power you can use in the future or an immediate increase in brand profit.

Here are six factors to help guide you on the size of your media investment:

  1. Brand profit situation, looking at margin rates and the size of the business.
  2. Past media ROI projected forward as a forecast of the potential.
  3. Impact of your current creative advertising tracking results
  4. Future investment opportunities or future threats to battle.
  5. The degree of competitive pressures in the marketplace and their levels of media spend.
  6. The comparative opportunity cost for investing elsewhere.

Control the marketing and selling costs

Marketers are protective of marketing budgets. They usually want as much money as possible to carry out the activities on their priority list. The strategic brand leader should act like the owner/CEO by using budgets to manage the profit rather than act like a subject-matter expert trying to protect their turf.   

  • Marketing cost decrease: Many times companies look at cost-cutting to counter short-term changes happening within other parts the P&L (price, volume or COGs). However, many of the best-run brands keep the investment strong, aligning with the longer-term strategy instead of a short-term situational need.
  • Marketing cost increase: Used when there is an opportunity to gain share against a competitor or as a defensive position trying to hold share. The brand should see an opportunity where significant revenue gains can cover off the lower profit ratios.

media budgets

Always bring an ROI mindset to your brand’s marketing budget. In the example, the investment of $1.5 million generates an incremental sales of $5 million. After subtracting the cost of goods and the marketing investment, your brand generates $500,000 in incremental profit. To calculate the ROI, take the profit and divide it by the investment. In this example, the ROI is 33%; if it holds, the investment will take three years to pay back.

Media budget levels

media budgetsThere is a term called zero-based marketing budgeting, which starts off each new year assuming all brand budgets are zero and the brand must prove their case to earn its budget level. While it makes perfect sense in theory, with 20 years of experience with marketing budgets, this is not an easy concept to implement. One risk I see is that a zero-based budget could lead to short-term and highly transactional advertising. 

A brand needs to balance brand-building activities, which add to the long-term connection with consumers with transactional call-to-action messaging intended to trigger purchases. For instance, if you tell me “Buy two, get one free” for five straight years, your consumers will eventually forget why they should buy your product at all, let alone two. There is a degree of uncertainty in making investment decisions. Get comfortable with your instincts to balance the degree of ambiguity to make the smart decision.

Blowfish media plan

When you feel the risk/reward of the media investment is unknown, it might be wise to start with a smaller investment level. Use what I call a “blowfish” media plan. Among those consumers you target, you appear to be a large brand. Pick a tight target market with a limited media choice or geographic focus to replicate how a more substantial media investment would appear. When the unknown is very high, get smarter by using test markets with various media spend levels to gain the necessary consumer response data before you make a full investment.

Medium level media plan

You should use a medium investment level when your brand faces only a couple of the media investment factors listed above, yet your brand has the size and margin to invest. With this level of spend, you should use a selective media plan by making smart choices of the target market who you know will respond to those media choices proven to pay back.

High level media plan

You should use a high investment level when your brand faces many of the investment factors, including profitable brand, reliable messaging, product innovation, and an intensely competitive situation. You can afford to take a mass approach. However, just because you have a lot of money does not mean you should waste it. I still recommend using one lead media choice and then use support media to supplement. Figure out your lead paid media and your lead earned media to provide focus and alignment with your strategy.

Watch out for escalating production costs

One important consideration with any investment plan is to balance media spending and the creative production costs. Your brand’s working dollars are those investments that directly reach and influence the consumer. You can directly see the impact and measure the payback. Media is considered working dollars. This costing method is one of the reasons you do not want to spread your brand across too many media choices. If most of your brand’s advertising budget is spent making TV ads, billboards, and radio ads or paying for talent in the ads, then you will not have enough spending left to reach the consumer.

To learn more about this type of thinking, you should explore my new book, Beloved Brands.

With Beloved Brands, you will learn everything you need to know so you can build a brand that your consumers will love.

You will learn how to think strategically, define your brand with a positioning statement and a brand idea, write a brand plan everyone can follow, inspire smart and creative marketing execution and analyze the performance of your brand through a deep-dive business review.

Beloved Brands book

To order the e-book version or the paperback version from Amazon, click on this link: https://lnkd.in/eF-mYPe

If you use Kobo, you can find Beloved Brands in over 30 markets using this link: https://lnkd.in/g7SzEh4

And if you are in India, you can use this link to order: https://lnkd.in/gDA5Aiw

Beloved Brands: Who are we?

At Beloved Brands, our purpose is to help brands find a new pathway to growth. We believe that the more love your brand can generate with your most cherished consumers, the more power, growth, and profitability you will realize in the future.

We think the best solutions are likely inside you already, but struggle to come out. Our unique playbook tools are the backbone of our workshops. We bring our challenging voice to help you make decisions and refine every potential idea.

We start by defining a brand positioning statement, outlining the desired target, consumer benefits, and support points the brand will stand behind. And then, we build a brand idea that is simple and unique enough to stand out in the clutter of the market, motivating enough to get consumers to engage, buy and build a loyal following with your brand.

We will help you write a strategic brand plan for the future, to get everyone in your organization to follow. It starts with an inspiring vision that pushes your team to imagine a brighter future. We use our strategic thinking tools to help you make strategic choices on where to allocate your brand’s limited resources.

Our brand playbook methodology will challenge you to unlock future growth for your brand

  1. Our deep-dive assessment process will give you the knowledge of the issues facing your brand, so you can build a smart plan to unleash future growth.
  2. Find a winning brand positioning statement that motivates consumers to buy, and gives you a competitive advantage to drive future growth.
  3. Create a brand idea to capture the minds and hearts of consumers, while inspiring and focusing your team to deliver greatness on the brand’s behalf.
  4. Build a brand plan to help you make smart focused decisions, so you can organize, steer, and inspire your team towards higher growth.
  5. Advise on advertising, to find creative that drives branded breakthrough and use a motivating messaging to set up long-term brand growth.
  6. Our brand training program will make your brand leaders smarter, so you have added confidence in their performance to drive brand growth.

To learn more about our coaching, click on this link: Beloved Brands Strategic Coaching

To learn more about our training programs, click on this link: Beloved Brands Training

If you need our help, email me at graham@beloved-brands.com or call me at 416 885 3911

You have my personal promise to help you solve your brand building challenges. I will give you new thinking, so you can unlock future growth for your brand.

Signature

Graham Robertson

Founder and CMO, Beloved Brands Inc.

 

 

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Graham Robertson

Graham Robertson is one of the voices of today's brand leaders. As the founder of Beloved Brands, he has been a brand advisor to the NFL Players Association, Shell, Reebok, Acura, Jack Links and Pfizer. He's helped train some of the best marketing teams on strategy, brand positioning, brand plans and advertising. Graham's purpose is to use is marketing experience and provocative style to get marketers to think differently about their brands, and to explore new ways to grow. Graham spent 20 years leading some of the world's most beloved brands at Johnson and Johnson, Coke, General Mills and Pfizer, rising up to VP Marketing. Graham played a significant role in helping win Marketing Magazine's "Marketer of the Year" award. He has won numerous advertising and innovation awards including Businessweek’s best new product award. As a keynote speaker, Graham shares his passion for brands to challenge and inspire marketing minds around the world, whether speaking at Advertising Week, or at the NBA Summer League, or to a room full of marketers in Bangkok Thailand or an agency in New York. He's been a guest writer for Ad Age, and his weekly blog stories have reached millions of marketers, who are trying to improve their skills. His new book, Beloved Brands, has launched with rave reviews. Many brand leaders are using this book as a playbook to help build the brand they work on. And, it serves as a brand management textbook for business schools in the US, Canada and the UK. Graham’s personal promise is to help you solve your brand building challenges, to give you new thinking, so you can unlock future growth for your brand.

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