Get it right!
“Montgomery’s cautious gathering of resources, his set-piece battles and small advances were …”
Budgeting is the art of allocating resources, which are always limited, to implement a business plan. Compromises will be omnipresent. Make sure to secure a budget that can deliver on the objectives set, or otherwise, revisit your objectives!
Top to bottom budgeting:
Estimate what the average player is spending, as a percentage of sales. For example, DETERGENTS were spending for a very long period, 2% on sales. Have in mind that functional products (ex. Cereals) grow slower and ambitious targets, usually are not achievable in short timelines.
• MEDIA MIX: Ask your media agency to come-up with the optimum meaningful annual plan for your main medium. Usually TV for FMCGs.
• If this is adequate and leaves room for the rest media too, then you are ok
• If not, check the factors that are under your own control: Can your video be shorter? Can you move towards cheaper seasons? Etc.
• Same way, plan your second and third medium.
• Remember that in war you need all your resources to act in concert. Only then the impact is higher from the sum of the elements. The same is true in advertising.
• All above will bring you close to the optimum budget to support an initial media plan.
Budgeting from bottom to top:
• Focus on the main medium of the category.
• What’s your mandate? To retain, to increase your market share, or to make a new entry?
• The “Wheel of Marketing” by Nielsen- early sixties, was suggesting a 2.5 times Share of Voice vs. the targeted Share of Market. Thus you have first to calculate an estimate on where these two variants will go next year.
• Plan the first medium to support product seasonality and to secure max continuity
• Then follow the 60-20-10 rule: Allow 60% for the main medium, 20% for the second and 10% to experiment (by geography, or in new media etc.)
• If you have secured the media objectives for the first medium, go for “activations” of niche audiences through radio, digital, social media, influencers, programmatic
• Plan the rest media as if “top to bottom”, on the given budget
And don’t forget: Gather all synergies you can secure to complement your effort, as budgets will always be lesser than ideal. In recent years, Growth Hacking became quite inspirational in search of synergies.