budget best practices
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.
Budgeting can be like going to the dentist — not high on your list of favorite activities. However, if you go often and do the recommended preventative maintenance, you are much less likely to end up in a painful and costly situation!
The key to successful budget management is “early and often.” Below, we’ve identified three steps to take in building the annual budget, setting project budgets, and managing budgets on an ongoing basis:
- Select methods that fit your company culture such as zero based budgeting, standard costing models, top-down target driven, inflation factors, prior year base, stop/start/continue, etc.
- Lay the groundwork up front so everyone in marketing consistently applies the budget methodology. Set the standards for level of detail required, standard costing and modeling, and ratios requirements (working versus non-working, media versus production, fee versus creative, etc.)
- Train the team and review the budgets during the process versus after the budget is submitted. Giving a list of review tips, frequent errors, and issues to avoid can be very helpful for your marketing team.
- Consider a model approach with standard cost ranges for various components of production.
- Define the components and potential costs up front with agreement from all stakeholders.
- Explain variations to the standard costs and obtain senior management approval to operate outside the standard, as needed.
Ongoing Budget Management
- Recruit a champion to manage project budgets and implement process enhancements.
- Analyze, understand, and agree upon detailed budgets prior to the start of any project.
- Wrap-up and reconciliation are just as important as the planning phase and can help your team learn from issues and collect remaining funds for re-investment.
In summary, here are 5 additional things to keep in mind:
- Clarify expectations with the team up front before budgets are prepared and submitted.
- Have a formal review process for variances to standard costing models used in budgeting.
- Have a formal approval process for changes to project scope.
- Assign responsibility for ongoing budget management.
- Be the team that gets more money due to your track record for effectively and efficiently managing your budget!
Being involved early and often are the keys to success in budget management. Check out our upcoming post for tips and key watch-outs for implementing improved budget processes in your company.
Written in collaboration with Angela Saferite.
With today’s consumers digesting content at a rate like never before, organizations are struggling to keep up. Marketers are challenged to create more content, more often — yet have stagnant (or decreasing) budgets. So, how do you overcome the challenge of doing more with less? During this “budgeting season” we wanted to share a few ways you can approach “finding” more money in your budget. Check out three real-life examples:
Refine Your Content Production Strategy
This can help drive creative synergies, increase speed to market, and lead to significant cost efficiencies — especially for advertisers looking to globalize advertising development and production. So, where do you begin?
- Tap an internal or external production expert to analyze current processes, creative outputs, staffing, technology tools, content needs, and spending across brands and geographies to identify opportunities, barriers, and challenges.
- Develop an annual planning protocol — and stick to it
- Determine the optimal production approach(es) based on your content needs for the next year
- Analyze historical benchmarks and develop a methodology for tracking success
MRA was tapped to lead this process for a global advertiser. The results? 44% savings in production costs versus historical benchmarks for comparable scopes. Click here to request the full case study.
Establish Targeted Production Investment Levels
Whether you’re investing broadcast and digital video, creating target investment levels based on deliverable type and complexity can have a significant and positive impact for your organization.
Start by building standard cost ranges (based on historical benchmarks) for the various components of production. A few examples of these “components” include:
- Video style (presenter, single storyline, testimonial, vignette, etc.)
- Testing (boardomatic, 2D animatic, 3D cinematic, etc.)
- Number of locations
- Number of shoot days
- Music (licensed, stock, custom, etc.)
Once all components have been considered, develop categorizations based complexity and deliverable type to be used as “building blocks” for budgeting.
Next, create a budgeting tool which factors in additional elements which may increase/decrease the investment level. A few examples of these additional elements include:
- Heavy CGI or special effects
- Multiple casts
- Shooting in a low-cost location
- Repurposing existing assets
By right-sizing your budgets based on historical benchmarks, deliverable type, and complexity you have the opportunity to drive efficiencies all year long. In fact, one of our clients tapped us for help and captured $1.5M in efficiencies within the first year alone!
Create a Strategy for Scaling Social Media
These days, marketers are struggling with the need to produce more and more content for social channels — with flat budgets. Many organizations are finding themselves with unsustainable year-over-year expenditures in social media and are looking for new approaches to be able to scale their program. If you find yourself in this situation, here’s something to consider:
- Leverage an internal or external expert to evaluate optimal content for driving the best interaction across channels
- Look at social media posts over the last 12 months and analyze interaction rates
- Identify trends in interaction rates by content types and posting cadence
MRA was recently tapped by a global advertiser who needed help in scaling their social media program. By partnering with our client’s marketing team and agency, MRA was able to analyze engagement trends and identify multiple opportunities to stretch budgets and drive efficiency. The results? Our client stretched their social content production budget by more than 35%. Click here to request the full case study.
As you can see, falling into more money comes in all shapes and sizes. Understand the strategies currently accepted by your company and what strategies might improve your approach based on the culture and tolerance for change.
Check out our upcoming article as we’ll provide steps on enhancing your 2018 budgeting processes.
Written in collaboration with Angela Saferite.