Diy marketing budget Part 1: D? Mystify budgets m Media
As vice president/director of planning of full-service marketing agency NYCA, I¡¯ve been talking to a lot of different companies lately. And maybe it¡¯s just random luck, but the same question keeps popping up over and over:
How much will it cost to execute a marketing campaign?
These are smart and innovative people running smart and innovative companies. They understand the concept of variable costs of goods and services because in many cases, their businesses sell products where range pricing models are applied, at the very least. And they have come to us having been inspired by our previous work, which so obviously is custom-tailored to specific marketing problems. And yet, they are vexed by the only accurate answer we can give at that moment:
It depends.
If you¡¯re one of those executives out there who know you must undertake a marketing campaign in the near future but have never built one directly before, it¡¯s important to understand up front how agencies cost out projects and retainers, and to be prepared to estimate how much you might reasonably expect to spend for your own company.
Marketing campaign costs are made up of three distinct cost areas: media, production, and agency time. Each have different rules governing how much you might expect to spend, how that money will be used, and how to spend most economically.
Media costs typically make up the largest percentage of the spending pie. Of course, this varies by medium, with television time being the most expensive in absolute terms, and online campaigns being the least expensive. It¡¯s typically not reasonable to evaluate media in the absolute, however, because a more expensive medium may be capable of reaching more of your target audience more effectively. It all depends on whom you are trying to reach and what your goals for affecting them might be.
So the first question we at NYCA typically ask clients who want to know ¡°how much it costs,¡± is ¡°what are your goals?¡± Knowing those goals up front will help you plan a realistic budget to meet your needs, and be able to defend that budget to senior management or a board.
In terms of gathering general information about how much media spend might be enough, you may need to go through some homework or exercises on your own prior to contacting an agency, so that you are armed with adequate information to facilitate a productive first conversation. For example, do you know how much money others in your industry have spent trying to accomplish something similar? Call up some of those media reps who are cold-calling you and ask them to do some of the back work for you. Is there a cost-per-lead metric that one of your competitors has spoken about at a conference, or a number that your industry analysts believe is a reasonable line item for a company like yours? A little sleuthing and networking can go a long way toward determining what a solid media budget may look like.
Be sure to stay tuned for Parts II and III of this article series, designed to help you understand production costs and agency fees.
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