A marketing budget of zero… who will buy?

The marketing budget is often the first budget cut and there may be sound business and strategic reasons to do so (Wittlake 2013). This reality makes the business of marketing a tenuous one. Whether as a CMO within a company or an agency managing clients, selling the ‘product’ of marketing needs to be relentless. But what does a marketing manager have to sell? What good or service can they provide that the CEO or CFO will buy? The CEO of Unilever, Paul Polman, for one, says he is not buying (Neff 2016).

cannes2011-unilever-paul-polman-062411

For many the marketing ‘product’ is simple, Return On Investment (ROI). The marketing effort expressed in dollar terms must be offset and surpassed by increased sales less the variable costs of the product or service that is marketed. Critics of this simplistic view are right to point out that there are more marketing metrics that should be considered such as brand awareness, preference, loyalty, satisfaction, market share and customer acquisition, all of which are captured in the nebulous term ‘brand equity’ (Ambler 2008, 735). Apart from being difficult to measure, brand equity simply describes ROI in the longer term (Ambler). Some marketing campaigns, such as my previous post ‘Let’s Fully Welcome Refugees’, are not about financial return at all and thus cannot be measured this way (Koefoed 2016). In 2016 the ability for CMO’s to measure their marketing effectiveness will be critical, especially at Unilever.

unilever

Polman’s global Zero-Base Marketing Budget for Uniliver in 2016 is a relatively low risk cost cutting measure in the short term. Brand equity will not disappear overnight, existing marketing infrastructure can be kept ticking along on a shoestring and if, because of global economic conditions, Procter & Gamble and Nestlé are also cutting marketing budgets, overall market share will be unaffected (Wittlake). This strategy will save the company a billion dollars this year (Neff).

Polman will not ask CMO’s and agencies to justify incremental increases to their budgets, or to defend incremental decreases. Rather they will need to justify why they should have a marketing budget at all (Katz 2015, 35). Marketing effectiveness must be measured, but how?

An attempt can be made to measure marketing effectiveness through analysis in review. Sales figures can be obtained and analyzed alongside marketing budgets and campaigns. This can be especially effective where controlled testing can be done and accurate real-time data collected. For example, where two supermarkets with similar surrounding demographics, in different parts of the country work together, one undertaking the marketing investment and the other acting as a control and both collecting data through their loyalty cards and sales data. But even in this situation there are many local factors that might effect sales and blur the baseline. For a multinational consumer goods company like Unilever, finding a credible baseline with which to make a comparative analysis in a global marketing campaign is almost impossible. We simply cannot know what the companies cash flow would have been if the marketing budget had not been spent.

unilever2

Multiple metrics will be needed over the full span of products offered in multiple contexts for any effective measure to be made (Ambler, 745). Jones argues not to think about measurement after or during a campaign but to plan measurement from the very beginning. Make measurement part of the structure and framework from the start (Jones 2014, 98).

Ambler, T. Roberts, J H. ‘Assessing marketing performance: don’t settle for a silver metric’, Journal Of Marketing Management, 2008, Vol. 24, No. 7-8, pp.733-750.

Jones, M. ‘The Definitive Guide to Engaging Content Marketing’, Marketo 2014. online. https://www.marketo.com. [Accessed 2015

Koefoed, S. ‘Let’s Fully Welcome Refugees’ 11/4/2016. Online: https://mpk732t12016clusterb.wordpress.com/2016/04/11/lets-fully-welcome-refugees/ [Accessed on 23/5/2016]

Neff, J. ‘Unilever Will ‘Zero Base’ Marketing Budgets in Belt Tightening Move’ Advertising Age, 19/1/2016. Online: http://adage.com/article/cmo-strategy/unilever/302196/ [Accessed on 23/5/2016]

Wittlake, E ‘Three Reasons Marketing Is the First Budget Cut’. B2B Digital Marketing. 29/1/2013. Online: http://b2bdigital.net/2013/01/29/b2b-marketing-budget/ [Accessed on 23/5/2016]

Submitted By: Simon Koefoed
E-mail: skoefoed@deakin.edu.au
Student id: 214486705
Wordpress Username: @skoefoed

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s