Turning the Fixed Marketing Budget on its Head

Written By Ted Grigg

in an article published by iMedia Connection on March 23, 2007 and entitled “The 2007 Direct Marketing Forecast,” Denise Zimmerman wrote the following.

“Many marketers -- but particularly direct marketers -- are working with a fixed budget that was developed in the C-level suite rather than in response to testing and opportunity, which demands a more rolling type of budgeting and forecasting. The fixed budget approach is being challenged as marketers deliver proven tests, but it challenges many organizations at the highest level, creating necessary dialogue and intersections between operations, finance and marketing. The approach to metrics, budget setting and management -- and even how to measure the success of a business -- are being re-evaluated.”


If direct marketers contribute nothing else to marketing as a whole other than budgeting savvy, then they have accomplished much.

As Denise states, the direct marketing philosophy of testing and reliable sales projections turns the fixed marketing budget approach on it’s head.

As long as marketing maintains the allowable cost per sale, then companies should plan for budget expansion to achieve full potential. In other words, marketing budgets shrink or expand on the fly based on the overall allowable cost per sale.

The investment and CPA world need to reconsider how they view marketing. It is an investment and not an expense.

How does your firm view the advertising budget? On what basis do you develop your company’s marketing budget? What challenges have you encountered when your marketing budget is treated as an expense rather than an investment? Why do companies resist the idea that marketing is an investment?

Ted Grigg

Ted Grigg is a direct response strategist who helps growth-focused companies reduce risk by identifying weak assumptions before they become costly mistakes.

Over the course of his career, Ted has evaluated several hundred million dollars in direct response testing across direct mail, digital, print, television, telephone, and other channels. His work combines direct response strategy, acquisition economics, customer analysis, creative evaluation, offer development, and disciplined testing.

Ted has worked on both the client and agency sides of the business. That experience gives him a practical understanding of the pressures facing executives, marketing teams, agencies, and service providers—and of the problems that arise when activity, media volume, or creative preference replaces a clear economic objective.

His consulting work helps organizations examine such questions as:

  • Are acquisition goals economically realistic?

  • Is the allowable Cost Per Sale supported by customer value?

  • Are targeting, offers, creative, media, and response paths working together?

  • Are tests structured to produce reliable business decisions?

  • Are unproven assumptions being treated as facts?

  • Is the organization measuring sales outcomes rather than convenient proxies?

Ted’s experience includes the development of direct mail and multichannel acquisition programs for insurance, healthcare, financial services, technology, nonprofit, manufacturing, retail, transportation, communications, government, and business-to-business organizations.

For a national direct-to-consumer insurance company, he developed a direct mail format that defeated established controls and helped expand the productive use of compiled prospect lists from less than 10 percent to more than 30 percent of total direct mail circulation within one year. He also planned Medicare lead-generation programs for more than 60 regional and national HMO and PPO organizations, with some programs exceeding sales projections by as much as 60 percent.

Ted founded Wyse Direct, a direct marketing division of Wyse Advertising in Cleveland, where he developed acquisition programs and helped launch a new technology product for Seiko Instruments by generating a predictable flow of qualified sales leads for its national sales organization. As vice president of new business development for the Grizzard Agency, he helped broaden the agency’s strategic capabilities and pursue new commercial and fundraising opportunities.

He is the author of The HMO/PPO Marketing Plan—A Step-by-Step Guide, published by Executive Enterprises, and has written numerous articles and conducted webinars on direct response strategy, testing, creative development, and marketing economics.

Ted earned a Bachelor of Arts degree from Abilene Christian University and completed two years of graduate study at Texas Tech University. He is the founder of DMCG, LLC.

http://www.dmcgresults.com
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