Working Vs. Non-Working Budgets: An Outdated Metric
A long time ago, in a galaxy far, far away, there was a simple marketing world. Creative agencies created advertising, the media department and the media agency devised a media plan (read: TV plan with some ornamental other media), consumers saw said TV campaign and flocked to brick-and-mortar stores and bought the brand or service. If they weren’t buying, then at the very least the consumers’ perception of the brand or service was improving, as driven by those witty TV ads. This was the general belief system marketing was built on.
The creative department led the media department (Briefing: “Buy as much TV in prime time as the budget allows after creative development and production”), clients flocked to exotic locales like New York or L.A. (if you were a European-based advertiser), the Caribbean or Hawaii (if you were a U.S.-based advertiser) to shoot THE commercial. Once a year all senior agency leadership (minus the media director) would descend onto Cannes to bask in each other’s glory at the Cannes Ad Festival, where TV ads were celebrated.
Fast-forward to today: -- Most ads (or should we say “content”?) are not developed for TV. -- Media leads creative in terms of where the ads are going to appear. -- Consumer insights and data determine the touch points based on (alleged) effectiveness. -- Clients are no longer allowed to travel to exotic locales.
Cannes is desperately trying to hold on to the creative celebration it once was, but is steadily evolving into a marketing-tech show, mostly taking place on a boat.
When we talk to clients today, they are tasked with developing vast amounts of content to feed the beast that is their social media presence, as well as all other touch points (ranging from traditional media to CRM, email, store, shelf or Web site). The nature of these touch points is that many need a refresh frequently, some almost every day — certainly not every three to six months, like TV in the olden days.
This means marketers need a very different creative development and delivery machine — especially since much content will be created in a large number of variations, to be tested for effectiveness in real time, in a continual race to create brand and/or sales impact.
In this world, we are having conversations with marketing and marketing procurement departments about the kind of ecosystem(s) that are capable of delivering all of that at a cost that is manageable, measured in a way that is meaningful, and compensated on the basis of effectiveness and ROI.
In our discussions, we never really talk about working vs. non-working budgets anymore, and we are telling our clients they should forget about this equation as well. We are not saying that it isn’t important to see how much you are spending on creating, managing and delivering your message content respectively. But using working vs. non-working budget is an outdated metric. You would not look at just TV spend only to determine the effectiveness of your total marketing campaign either, now, would you? That is so last century!