3 Budgeting Pitfalls to AvoidOctober 23, 2017
This month, we’ve spent time discussing budget planning, successful budget management, and how to find more money within your budget. Now, let’s take a moment to review some key tips to help you avoid common budgeting pitfalls.
Common Pitfall: Instead of starting with project or campaign level budgeting, pull out and think big picture. Are there certain ground rules or strategies to align all the teams on before jumping in to the detail build?
Helpful Tip: When reviewing the annual budget, do a detail review for any spending not tied to a specific plan or campaign, often this can identify spend that can be trimmed without impacting brand objectives and KPI’s.
Common Pitfall: Instead of asking your agency what the production budget should be, consider using models to build your own budgets and set guidelines. The budgets and models can be further refined as the detail planning and creative idea is finalized.
Helpful Tip: When building out models for production budgets, it may be helpful to have a ranges of standard costs for components. For example, animation costs will vary widely depending on the complexity of what is required. A :30 spot with heavy CGI will have a very different budget than one with very little. Music costs will vary depending on whether you’re using stock, original, or licensed music. No two :30 spots are exactly the same, and buying production is not like buying widgets. Setting an appropriate budget is a critical first step to managing costs.
Need a production budgeting tool for your organization or benchmarks for different components of production? Contact us — we’ve had the pleasure of helping hundreds of brands with budgeting, and we’d be glad to help you, too.
Common Pitfall: Failure to obtain written approval for scope changes, overages, or changes in direction during the project can lead to agency disputes and financial management issues down the road. Standardizing and formalizing this process relieve this pressure on projects, teams and relationships.
Helpful Tip: Use a standard form for routing and documenting change requests and approvals. Also consider using a management report to show project budget, revisions, and final spend. Having a dedicated resource (internal or external) who actively manages the budget during all stages may seem like an additional step, resource or cost, but this pays for itself quickly (usually multiple times over).
Need a fresh perspective on a budget issue/opportunity? Click here to submit questions to our team, and one of our experts will get back to you right away.
Written in collaboration with Angela Saferite.