Creating a Media Mix
This is the fifth and final article in the series. If you haven’t read the rest of the articles, start here. This week we are going to determine how much of the marketing budget should be allocated to upper and lower funnel activities as well as derive a rough media mix across these channels. As a reminder, this is the full process.
5 Step Marketing Budget
- Business Goal Setting
- Finance Constraints
- Total Marketing Budget
- Non-Working Budget
- Brand, Activation, and Channel Mix
Let’s dive in. Last week we covered the non-working budget. This week we are focusing on the media budget. Notice that this is the last step in the process instead of the first. Let’s quickly define some terms. By brand marketing, I mean marketing that is meant to raise awareness or consideration of your brand and its products. It is often directed to mass media and is more difficult to directly measure. Activation marketing refers to the performance-oriented marketing efforts whose primary purpose is to drive purchases. Now surely there is an intent for all marketing to drive revenue in one form or another, but it is a question of balance and primary intent. This article is a great read on the mutual benefits of brand and performance marketing.
Brand Media
What percentage of a media budget should be spent on upper funnel brand marketing activities? That’s the million-dollar (more likely multi-million dollar) question isn’t it? According to IPA, a brand:activation split of 60:40 is most likely to yield large brand effects. It is worth bearing in mind those brand effects compound after several years of spend. If your objectives are more focused on single year marketing profitability than multi-year growth, a balance skewed more towards activation is likely to yield better short term results. Even in this scenario, brand media may represent 20-30% of spend.
Another consideration is the need for evergreen brand spend. That is ongoing brand spend not associated with a specific campaign. This usually includes things like podcasts, ongoing influencer campaigns and other organic social content. Here is a sample split between brand campaigns, evergreen brand, and activation media. In this example you can see 3 major brand campaigns planned for the year that start off heavy and then taper
Activation / Performance Media
Activation media, will comprise the rest of the budget. Provided there is enough demand for the product, this tends to perform more efficiently than brand spend. However, it scales less efficiently than brand spend, eventually leading to less efficient acquisition performance overall as seen in the example below.
Channel Mix
The goal of running a channel mix analysis in the budget process is to estimate channel spend only to the extent required to support the strategy, negotiate contracts with vendors, and get a general sense of impression weight in-market. It is also helpful to understand if your appetite for channels is right-sized for your budget. Many digital channels need a minimum amount of weekly conversions for the platform algorithms to operate efficiently. On the other end of the spectrum, if you allocate too much spend to a channel, ad frequency will soar, annoying prospects and driving down efficiency.
In reality, the mix, especially the mix within digital activation channels will change frequently based on performance. Don’t spend too much time on this activity during the budgeting process, and don’t feel constrained to stick to those allocation if better performance can be obtained by re-allocating spend.
Putting It All Together
Congrats! You’ve made it to the end of the series. We started off by setting annual business goals and discussing financial guardrails such as available cash and LTV:CAC ratios. Then we determined our total marketing budget and set aside money to create assets, pay agencies, and conduct research. Finally, we split the budget between upper-funnel and lower-funnel activities and created a starting channel mix.
One Hour Marketing Budget Template
Wouldn’t it be great if there were a tool for this? We developed the One Hour Marketing Budget template based on the process outlined in this series to help Knoetry’s clients build an enterprise-class marketing budget tied to revenue goals in as little as one hour. Now the tool is available to the public as a Google Sheets and Excel template. Give it a try!
Thanks for sticking through the series. I wish your business great luck and great growth!
