Let’s Talk About That BIG 6-Letter Word
You know the word. It comes up as part of most sales processes. I know we encounter it often. Ready, here it is…B-U-D-G-E-T.
You also know how it goes when that word comes up. The conversation goes something like this, right:
- Sales Rep asks, “So, what is your budget?”
- Prospect replies, “You tell me what our budget should be.”
Ah, the ol’ song and dance over budgets in the agency-client dating game. Unfortunately, it’s not a productive exchange and doesn’t establish an open, transparent conversation that’s in the best interest of both parties. So, in this post, I offer the elements an agency needs to understand to answer a prospect’s question.
To do that, I must first–like any good lawyer (and no, I’m not a lawyer)–answer this question with the answer we all know that follows…
What does it depend on? That’s a great question. Here is the “it.”
“It” #1: Volume vs. Efficiency
I cover the tension between volume and efficiency in this post, but here is a quick summary:
Volume means you need a large number of conversions. Efficiency means you’re getting the best ROI or, our preferred measure, ROAS. Both of these aim at the same goal – profit.
The second part of this asks, do you have volume targets? Descriptions like “big” and “more” may be accurate, but they are vague. We need real numbers to understand the real target. When we have a real target, we can estimate a real budget. In some cases, it’s just a matter of math–looking at your average CPC, Conversion Rate and AOV to determine how much budget is needed to hit a ballpark target. (Of course, it’s our job as the agency to outperform those estimates.)
Now, we understand some clients may not have set numbers. In that case, perhaps we should take a step back and look at how we can help with an audit to identify those numbers. In fact, sometimes when we do this, we uncover hard numbers that completely change the conversation and strategy.
“It” #2: Budget Ballpark
For the love of business, let’s recognize business is not a game. You want to meet the needs of your clients and we want to meet your need. Let’s have an honest conversation about the budget. After all, if we’re going to be on the same team, we need to understand your situation and (budget) needs. That’s the only way we can possibly give the best advice.
It doesn’t matter what your budget is. Even if it’s limited, that’s OK. Let’s put all our cards on the table so we can work together and create a realistic recommendation. If that means we support you, but you do more in-house to save on agency costs, that’s cool. If it means we have to come up with a new organic strategy because you can’t spend a large media budget, that’s OK too.
“It” #3: Historical Data
Feed us! Your data is 100% more relevant to our recommendations than our brains, experience, history, other clients, hundreds of success stories, industry averages, or “what Google tells us.” For example, if your brand has lower conversion rates, maybe we need to spend more to get enough conversion data to understand. We’ll tell you what we see, but we need to see something to tell you!
“It” #4: Facebook & Social Estimates
Let’s begin this statement with the understatement to end all understatements: Facebook is pretty big. Actually, Facebook is a huge platform with the immense potential to reach any potential customer, and yes, that includes B2B clients, too! That, however, is not the good news…
Why is it not good news? Simple – budget. Unless you’re Coca-Cola or FedEx, most brands don’t have the budget to target a general audience like “millennials.” To meet budget needs, we need to get specific, like targeting “millennial women with college degrees who live within 5 miles of our retail store in zip code 12345 who also like…”
Facebook is so huge that we honestly need to see the data before we can even start thinking about a budget estimate. Once we define a target audience, we can then work backward to estimate what kind of budget would be needed to reach them with enough frequency to move the needle.
“It” #5: YouTube
Much like #4, it all comes down to finding the right audience and building a media plan to address this audience. Brands can find ways to spend $5K, $50K or $5MM a month on these platforms. The inventory is there. The key is to identify the right audience, align with your goals and choose a budget that will yield the right frequency to your audience and a positive ROI.
“It” #6: What is The Risk Tolerance?
I didn’t put these “its” in order of importance, otherwise, this would be really close to the top. Risk is important. Some clients, especially start-ups and non-public companies, want to test tactics quickly, early and fast to find the best ones for them. Some other clients have fixed budgets and aggressive targets. This leaves little room for testing new tactics.
An important note on new tactics: they can – and often do – fail. A failed test with 5% of your budget that delivers valuable information and some winners can develop into a big long-term win. A failed test with 25% of a fixed budget often finds the agency (and in some cases the CMO!) on the street looking for a new gig.
We understand the risks. We’ll share them with you. All we ask is that you be upfront on your budgetary needs and your tolerance for risk. If it doesn’t make sense, we won’t recommend it. But it’s often the brands that are most open to testing (and breaking) new things that find the biggest long-term wins.
“It” #7: How Long is Your Sales Cycle?
This factor plays a key role in determining tactics used and the expectations we need to agree on. For example, if you have a long sales cycle, we’ll want to work with your team to set up attribution across the sales cycle. This will allow us to optimize campaigns based on leading data such as MQL to SQL Conversion Rate, Lead Scoring or Booked Demos. This prevents waiting half a year to find out what worked.
Depending on the length of the sales cycle, we might also recommend a different approach to tactics, like remarketing or writing more sales enablement content, to help nurture your prospects down the funnel.
The length of the sales cycle will also help us recommend how to best structure budgets and flighting. With a long sales cycle, we have to think about “tests” differently since we won’t have immediate results or feedback to determine the efficacy of any given channel.
“It” #8: Attribution Model
We need to understand how you attribute conversion to recommend the best mix of platforms. If you heavily weight last-click attribution, we might more aggressively recommend one over another. If you’re looking for new customers, we may have an entirely different set of platform recommendations and budget allocations.
Is There a Perfect Budget for Digital Marketing?
No, there isn’t. Every client has different goals, different situations and different needs. We recognize this and want to be your partner to help you achieve both your immediate and long-term goals. As such, our objective isn’t to get you to spend the most budget.
All the above items lay out what we need to know to give you an accurate and reasonable estimate. We’ve laid our cards on the table.
Frankly, for us at BFO, the perfect budget is the one you have. Let’s save each other time and effort. Share your budget – or your idea of a budget — with us. Then let’s have an open and transparent conversation about what will get you where you want to go!