What should I measure when it comes to my Marketing spend?
Many businesses lack clarity when it comes to their marketing spend beyond campaign costs. But it is important to evaluate every dollar of your marketing investment according to rigorous frameworks in order to maximise your return.
This guide examines what should define total marketing spend, why comprehensive marketing spend assessment is vital and how applying increased analytical scrutiny will unlock efficiencies.
Marketing Spend an Obscured View
Too often, businesses define marketing spend through a limited scope. Media budgets. Production expenses. Event costs. But this restrictive viewpoint fails to build an accurate assessment – and often means skewed ROMI (Return on Marketing Investment) figures.
Without incorporating a thorough analysis of agency costs, Marketing Procurement are missing the opportunity to optimise a significant portion of marketing investment.
Isolated assessments yield limited efficiency gains, so looking at the bigger picture and evaluating every dollar of marketing budget is crucial for transformational improvement. It’s time to assess the finer details. Looking at every area of spend to see where improvements and efficiencies may lie.
Evaluating Marketing Spend Drives Better Allocation
With broader visibility into accurate total marketing spend, Procurement and Marketing can collaborate and make strategic decisions on budget reallocation between various channels, categories and agencies to improve overall impact.
Agency fees often represent a large proportion of overall marketing investment. In our experience, they can also fly under the radar of regular assessments, with some companies only reviewing their agencies every 3-5 years. In Marketing, so much can change quickly that to extract value and the best ROMI, you need to review agencies at least yearly.
Using the right data to analyse and evaluate your agencies can reveal overpayment or underperformance issues that can be solved via improved contracts and negotiations. Significant portions of marketing spend could shift into more productive channels or higher performing agencies.
At the very least, the right data can help you to understand why your agency might charge you 13% more than the industry benchmark.
Without the right data you could leave money on the table.
Ongoing agency evaluations ensure a better understanding of ROI and both Marketing and Procurement can instantly shift budgets from inefficient areas or underperforming agencies. Reallocating marketing spend to emerging opportunities, proven growth drivers, or agencies delivering excellent value for money.
The result is an optimised marketing budget.
Agency Investments Outsize the Impact on Returns
Procurement teams have an impact on vital supplier relationships that can influence marketing success. Yet, a lack of visibility into the appropriate agency fee structures based on the scope of work can complicate partnership management and affect the opportunities.
Benchmarking agency rates is vital. Evaluating proposed (or contracted) fees specifically against staffing plans, deliverables, overheads, and profit margins provides invaluable insight into assessing the overall effectiveness of marketing spend.
Marketing Procurement benchmarks can also help Marketing and Procurement teams agree on reasonable budgets and strategic planning based on ‘should cost’ analysis.
Accurate comparisons and assessments justify negotiations, performance bonuses or consolidation around top performers – without additional stakeholder spend required.
Data-Driven Marketing Spend
Typically, Marketing Procurement utilises historical performance data to inform budget recommendations, but this approach needs to be more precise. Real-time analytics platforms like RightSpend enable ROI assessment down to granular details helping to paint more exact pictures of successes and inefficiencies, inform decisions, and lead to significant returns.
With transparency and clarity into every marketing dollar spent, Procurement can implement an analytical, data-driven approach to marketing spend decisions and drive substantial ROMI.
Why not schedule time with RightSpend to increase your visibility into Marketing Procurement data that can improve your marketing spend?