Marketing Budgets and Plans in an Economic Tornado

The 2023 planning season is in full swing. Many of our clients, as well as the AcrobatAnt leadership team, are looking at economic indicators to evaluate what’s ahead and how to adapt accordingly. Here are some of the themes regarding 2023 planning that we thought we would share:

Planning based on historic data only.
• Historical data hasn’t stopped CFOs and CEOs from challenging CMOs to cut, adjust, or defend budgets that are already under pressure over the last few pandemic and inflationary years.
• If you build your plan based on 2008, it may be easily challenged. Next year, we are expected to deliver more revenue on less budget. Marketing overhead, creative, and working media investments are all being scrutinized.
• Recast the plan based on what you will accomplish, and the resources to get there. If you had significant change in a marketing strategy that had huge returns, develop a budget from there instead of an approach to “hold dollars flat” or expecting an increase based on an inflation rate.

Planning based on past or anticipated ROI.
• Although CFOs and other executives may appreciate a plan based on ROI, it puts at risk innovation and actions that weren’t measured that way, as well as some legacy projects.
• ROI for everything may set a trap unintentionally, as future marketing investments will need to demonstrate returns quickly or become unapproved.
• This may unintentionally tempt strategies and investments toward the bottom of the funnel.

Introduce new, more appropriate metrics.
• If you have insights or tested something that led or will lead to higher margin results or market share increases in 2022, articulate the story based on those metrics, and not the same metric for everything for the sake of simplicity or the approach that worked for last year’s plan.
• If you have made progress in digital transformation, for instance, express ROG, or “return on goals.” Otherwise, state ROS, or “return on sustainability.”

Data-based plan recommendations.
• Another pivot from ROI can be presenting data that provides a combination of short- and long-term metrics.
• Examples are goals based on revenue growth, profitability improvement, brand health scores or even the company’s mission.
• A mix of all these metrics will more likely give marketers a chance to have marketing plans approved and keep budgets intact.

Gain preapproval for continency plans.
This may also be the time to proactively lay in preapproved budget at preapproved decision points.
• On the offensive side, seek preapproval for additional resources when the plan reaches a forecasted metric.
• On the defensive side, a contingency plan is deployed with the budget to support a market share loss.
• This will also indirectly demonstrate planning due diligence and agility in the unpredictable year ahead.

Planning for rollover.
• Another approach is managing to rollover, which especially holds true when there was an event that created a big spike in growth this year and provides plan risk in the upcoming year.
• This one is tricky, as over time it can create a dependency for resource commitments year over year and risk to the entire plan if the recommended actions fall short.

Planning for competitive actions.
• Expect and don’t be surprised by a competitor who increased marketing investments at a time when most budgets are cut because of economic headwinds.
• It’s better to anticipate that the competitive set will not experience budget cuts by a similar amount and therefore performance will remain equal.

Consider this: if the C-suite, board of directors, or franchise committees were marketing targets, and previous strategies needed to be revised, then how would the approach change to yield a better outcome? Having the internal audience in mind in addition to the best approach to planning and budgeting strategies to achieve the firm’s goals for the upcoming recession.

Of course, if we can help partner with you for growth, with or without these anticipated headwinds, let us know.