Planning and allocating your marketing budget used to be a relatively straightforward process.
At the start of each annual or quarterly cycle, spending decisions were made based on the company’s most important business goals, whether that was to drive more revenue or increase customer acquisition.
And once the budget was signed off by the powers that be, marketing teams would have the green light to invest in the best techniques, tools or partners to help them achieve these goals.
But 2020 has been anything but a straightforward year. Just as the Covid-19 pandemic has changed the way consumers behave, it has also reshaped the way in which marketing budgets are being allocated and spent.
In the first blog of our series ‘The State of Marketing UK Budgets’, we delve into the budgeting highs and lows that our 200 B2C marketers from big and small businesses have experienced during a year of thrifty marketing, and the early steps they are taking to mitigate unexpected challenges in 2021.
Early 2020: Maintaining the marketing budget status quo
According to our marketers, their early 2020 budget allocations were mainly on par with previous years.
Smaller businesses with fewer than 100 employees were allocated an average annual budget of £45,984 – £603,996 whilst their counterparts in larger businesses (500+ employees) received between £603,996 – £2,865,605.
Although over half of the businesses (56%) we surveyed set their budgets annually, 29% of this group feel that is too long.
On the flip side the 9% whose budgets are decided on a monthly cycle are the happiest with their budgeting timescale with 79% of those stating they are happy with the monthly agility.
No doubt that this monthly, agile set up enabled them to be amongst the first to quickly change their marketing tactics as soon as the pandemic started disrupting activities in March.
Secondary to Advertising, Events enjoyed the largest slice of marketing spend, harking back to the early days of 2020, when conferences, trade shows etc were still highly sought after opportunities to create and build brand awareness.
Interestingly, it appears that companies placed the same value on PR as they did Marketing Tech, with both activities receiving 14% of this year’s budget allocation.
The investment in tech is an encouraging stat because it shows that some marketers had the foresight to invest in more digitally focused marketing before they were forced to by the pandemic.
The COVID effect on marketing budgets
Our research reflects what industry bodies such as the IPA uncovered earlier this year – that marketing budget cuts came swiftly after COVID-19 hit. In fact, only 26% of our marketers managed to avoid some kind of budget cut as a result of the pandemic.
Events are the biggest casualties with a 16% cut, meaning that they have fallen out of the top three most invested-in marketing activities for 2020.
There are many reasons for this, but the most obvious is that despite some notable exceptions, remote events are yet to recreate the same atmosphere or bring in the same volume of prospective customers that real life events used to – therefore not worth the investment.
But Marketing Tech, after matching the 14%, PR investment at the start of the year, seems to be proving its value to our marketers, receiving the lowest budget cut of 9%.
Again, an encouraging nod to respondents’ awareness of a need to ring fence digital tech spend to make data, and the smart use of it, the basis of future digital marketing activities.
2021: The Age of The Thrifty Digital Marketer?
In spite of the pandemic cuts, our marketers don’t seem to have a burning desire to reinvent the marketing wheel. Advertising still leads the pack, with a conservative 1%, increase to 36% allocation.
However, events marketing’s loss will be Marketing Tech’s gain as marketers plan to allocate an average 15% of their budget to it. This means it has also overtaken traditional PR as our marketers’ most favoured strategy for next year.
So what has made marketing tech so appealing post pandemic? In simple terms, advertising costs money. A TV, radio or online creative campaign may bring in new customers, but this has to be activated at scale to truly make an impact or reach these new prospects.
It’s a costly approach that may not pay dividends at a time when most businesses are battling simply to keep their current customers.
This is why a new breed of thrifty digital marketers appears to be enamoured with the data-led marketing that’s enabled by marketing technology – it is one of the most cost effective ways to both retain and acquire customers.
From customer behaviour insight gathering, profitable customer profile creation to lookalike targeting, marketing tech enables you to implement the most effective, data-informed customer retention strategies, often at a fraction of the cost of a full scale advertising campaign.
Thrifty marketers also know that in times of uncertainty, current customers are your most prized asset.
This is why you need to invest in the right technology to understand them in the first place, and then use your insights to create effective strategies that will help you to retain their custom and loyalty.
As UK marketers race to complete their 2021 planning, many may have similar goals to last year, but with significantly less budget available to achieve them.
There will also be more scrutiny of marketing spend as different departments compete to demonstrate their value within the business.
The key will be to include digital elements in your 2021 marketing budget plan that will enable you to adapt to the still changing environment – where vaccines give us hope for business recovery.
To find out how our 200 marketers are planning to do this, follow our exclusive The State of Marketing UK Budgets infographic series, to receive deeper insights from our research.
Download your copy here