As a myriad of items swirl around the economy these days and idea is beginning to surface in many company boardrooms. Zero Based Budgeting is essentially the review of budgeting line items to ensure viability and efficiency. There’s obviously more to it than that and you can read a great article from McKinsey about the 5th myths of zero-based budgeting to learn more. However, for our intent and purpose we want to leverage this methodology to ensure you’re thinking through your digital marketing expenditures. We’ve written a lot of about budgeting recently and the reasoning is that as we approach the end of the year it is imperative that the budgets you create for 2019 are accurate and viable.
How to Apply Zero-Based Budgeting to Digital Marketing
What is your goal? We ask that a lot, I know. But it is a fundamental question that often is never fully fleshed out. Zero-Based Budgeting forces organizations to think through their goals and revenue targets so that each dollar that goes out is accounted for. It all starts with the organization understanding and agreeing on specific targets, then each department is forced to be accountable to those targets. So to begin, ensure that you understand the revenue goals set by the executive leadership. Secondly, work backwards from your revenue goals (ensuring margin is calculated) by estimating conversion rates and click through rates to determine your overall cost threshold. Lastly, track to these goals by evaluating your return on ad spend on a week-to-week basis. If you’re not on target then evaluate which tactics are throwing things off course. Is it Pay Per Click Advertising? Perhaps it’s particular keywords driving up your cost? Knowing your revenue targets and budgeting to them is job number one as marketers and can ensure that you become a leading voice in the zero-based budgeting game!
Digital Strategists & Zero-Based Budgeting
As any digital strategist worth their salt will tell you, we’ve been doing this for years. The ability to track costs and follow that through to conversion is the cornerstone to any digital marketing plan. More importantly, digital marketers have always had a clear understanding of the full conversion funnel and ensuring that each step along the way is tracked. This gives us a unique opportunity to become leaders within a zero-based budgeting organization and ensure the entire organization accounts for each and every dollar that goes out the door!