A budget proposal is the first thing a client will see and the last thing they will like to read. So, how do you make sure you prepare it well?
Every new year, two things are spoken about a lot:
- Taking up a new gym membership
- Getting approvals for your marketing budgets
Well, we ain’t the people to talk more about the first one. But, we can surely help you succeed in the second one.
As an agency, you are primarily responsible for a set of goals that the client decides on. This makes asking for more budgets a little complicated as you become more of an executioner than a strategist.
Agencies often find themselves in a tight spot, balancing client expectations with the hard reality of limited funds. The challenge isn’t just about getting more money; it’s about proving that every dollar spent is a wise investment. It’s a world where “spend less, gain more” is the new mantra, and justifying every penny is crucial.
But fear not!
In this guide, we will dive into everything that will help you win more budgets – from the right tools and strategies to the approaches you can take to conquer them.
Building the Foundation: Get the Data-In
Before you jump into preparing a pitch, build nuance in your understanding.
As an agency, you have the means to understand what is shaping a particular industry. Utilize this to the fullest by documenting everything you can to build depth in your pitch. To help you understand the needs of your clients better, we advise you to understand three things in depth:
What does your client help solve?
We are not talking about your client’s product here, instead focus more on the problem the business solves. Get to the core of the problem and then branch out the solutions your client offers.
And don’t stop at that, always keep updating it by constantly asking your clients about the improvements in their products/services.
Who are your clients helping?
We can’t stress this enough. Getting to know your clients’ customers is extremely effective in charting out the right strategy for you. This is an exercise that needs to be performed in conjunction with your client. Complement that with your research by talking to your client’s customers frequently.
A well-defined customer profiling document will help you identify what problems customers have, where they are, what they like, and more insights. This is crucial for crafting the right campaigns that get in those dollars.
How is the industry shaping up?
As an agency, you will have access to a group of clients in the same industry. Utilize this data to identify trends and patterns. Be aware of how the industry is growing, what is the average spend in this industry, what are other players doing in marketing, what channels are they using, and how is the ROI on those channels.
Getting such a sense of direction will help you understand what you need to do and what you don’t.
Collating the Data: Studying the Past
The foundation will give you a nuanced understanding of all the fronts of your client’s business. However, this only gives you the power to “tell”. To get buy-in from your clients you also need to bring the data on what has worked in the past. This data helps in two ways:
- Help you identify the gaps in your strategy
- Invoke confidence among your clients
This begs the question: How can you consolidate all this data into a single place?
There are two answers to this.
One is by setting up a manual process of tracking metrics like budgets every month, spends across channels, and ROI on these channels. This system fails to help you derive ROI out of awareness campaigns or offline spends that you know helped. Merely going by the gut or saying, “We found most brands doing this and seeing success”, will make you less likely to get those budgets.
This is where the second method comes in.
Using a tool like Lifesight can help you consolidate all the data in a single place and help you identify the right metrics across ROAS, conversions, CAC, total revenue, and more.
The Marketing Mix Modeling feature also helps you understand how your campaigns influence the bottom line and thereby helps you back your demand for budgets with data.
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Initiate Planning: Identifying the Channels
Once you have access to all the data, you need to start figuring out what channels you are going to invest in and how much would each channel need to get a good ROI.
Now here is where things get interesting.
Most agencies look at the data and take a calculated guess based on that. The chances of success then get lopsided. If competitor A is investing $10,000 in Facebook, does that mean you will have to invest too?
Though Facebook might be the channel where your intended audience is active, what are the other channels that are driving revenue for your clients?
These questions become pertinent to creating a solid data-backed strategy for asking for more budgets.
So how do you answer these questions?
If you thought about attribution then you are right my friend! But mere last-touch attribution is not going to do the trick here. As we said before, marketing is a nuanced game.
If your customers are coming across you on different channels, you cannot put all your money on the channel where the conversion happens. At the same time, you need to question the impact of every touchpoint of the customer.
This is where universal attribution will help.
Using Universal Attribution, you can understand what channels your customers are engaging with you. This will help you develop a customer journey and showcase how interactions are happening across channels.
If you are using Lifesight’s Universal Attribution model, you can also look at how every channel is bringing in revenue and the weightage of each channel. This will help you prove specific ROI coming from each campaign and channel thereby making your pitch more trustworthy.
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For instance, if customers are majorly learning about the brand on Facebook, checking the website, seeing a TikTok ad, and then making a purchase, Lifesight can map out this entire journey on an order level, with the weighted distribution of revenue from each touchpoint.
Such data-backed analysis will help you provide clear insights into how your marketing is functioning and driving revenue. This will build trust among your clients to understand the whole picture better.
Putting the Money: How to Allocate the Right Budgets?
Identifying the channels and the revenue attribution is a major step in winning over your clients. But then the next question they would ask is “How much money do we need to invest in these channels to get the best returns?”
Usually, most agencies fix the budgets in proportion to the revenues brought by every channel. But attribution is like giving a direction, it won’t help you answer any questions on numbers. Moreover, budget allocation is a whole different ball game.
With the world moving to a more dynamic, omnichannel way of buying, pinpointing what works is difficult for an agency. And making decisions based on the gut is not wise enough when you are dealing with thousands or millions of dollars.
The last year for instance saw spending patterns change during BFCM as compared to 2022. It’s very hard to predict such trends. You can only do that if you have been studying all the data that influences a purchase and making decisions based on that.
Agencies cannot do it, but a machine learning model trained on shopping data having myriad internal and external factors can.
With brands sitting on huge data and AI being more accessible a former tool called Marketing Mix Modeling (MMM) has come to the forefront to help you achieve just that.
While attribution gives you direction as to what channels and campaigns people are engaging with, MMM gives you depth as to how much money you can invest in those channels to get the best returns possible.
The output generated from an MMM model is developed based on the internal data you feed it – spends on channels, and revenue on a day-to-day basis. A good MMM model also factors in external dependencies like seasonal trends, market fluctuations, etc.
Furthermore, MMM is best suited for omnichannel as it can help you pinpoint the exact budgets required for online channels – Facebook, Google, Twitter, and offline – events, print, OOH, and radio.
For instance, Lifesight’s MMM model helps agencies direct the right budgets to every channel based on the marketing and sales information fed to it. With an accuracy of up to 98%, agencies can get the desired return for their investment on these channels.
You can also track non-revenue metrics like conversions, awareness, reach, installs, store visits, registrations, admissions, and subscriptions to gauge the effectiveness of your awareness campaigns.
The best part?
The budget optimizer tool helps you understand how much of the budget needs to be spent on what channels to attain the ROAS set by you. Such a tool will help you showcase the effectiveness of the strategies and campaigns you plan using the data owned by the brands, instead of following trends.
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This adds more weight to your pitch and puts more conviction in your campaigns and channel strategy.
Additionally, Lifesight allows you to test different scenarios to understand how they impact the goal you plan to achieve. All you have to do is add your goals and target KPIs, and you can chart out scenarios for different outcomes. This will help you plan better and showcase how tweaks in the strategy can impact the bottom line.
Talking Strategies: Balancing Short-Term Goals with Long-Term Goals
Marketing as a function is always asked for results. In most scenarios, your clients expect you to get them quick wins and they are not wrong in their expectations.
Let me explain.
When a brand hires an agency for their marketing, they usually make this decision by having multiple conversations with you and other people who have worked with you. They expect to take a chance and look to prove themselves right.
This is usually done when agencies deliver some quick wins to the brands.
To deliver such quick wins, you as an agency have to map out what are the short-term goals in the first three months with the action plan to achieve them – what campaigns you are going to run on what channels, what is the expected ROI and how will that be proven.
Does that mean you have to be short-sighted? No.
While you set up trust in the first few months, you also need to get a deep understanding of the brand’s long-term goals. And by the long term, you need not have a 5-year strategy, a one to two-year strategy works best.
Map out the long-term strategy with milestones set for every month – have them clearly defined and seek out what resources you may need to achieve them. These could be time from internal subject matter experts, investment in other tools, or the like.
Filling the Last Gap: Going Beyond Data
Tools like Universal Attribution and MMM are based on the data you provide them. The decisions made by these tools help you optimize your current marketing spend to get the best results. However, the output of these tools is built from historical data generated.
Though these tools are robust, they won’t point you to new channels, campaigns, or strategies. This is where your human analysis comes into the picture.
As you seek for more budgets, do not directly invest the whole of it into existing channels. Split the budget to serve existing goals. The 70/20/10 rule is one of the best ways to do that.
According to this rule, you split the entire budget into three buckets – 70%, 20%, and 10%. Here’s how you can use them in your marketing:
70% budget on what’s working
This budget is allocated to the channels and campaigns that are already working and generating positive results for the brand. The output delivered by tools like MTA and MMM is the best use case here.
20% budget on innovation
While you continue optimizing your successful campaigns, it is also equally important to understand how you can notch it up. Setting some budget aside for trying some innovative campaigns can help you break the boundaries and expand your horizons.
10% budget on experiments
With marketing continuously evolving, it is pertinent for you to test different channels or different campaigns that have not been used before. For instance, Meta’s Threads can be a good channel for you to experiment and see how can it perform for your clients. You can also test how you can expand your client’s geographical reach by using Geo experiments.
But the thing with experiments is that the results are not certain. You cannot really make out whether the experiment is going to prove your hypothesis right or not. Secondly, measuring these experiments is hard.
Suppose you run a geo experiment to test a new region and see positive results in your paid campaign, can you really conclude that the cause was the new audience targeting?
What if there are other factors?
As it’s said, correlation is not always causation. However, you can measure causation.
With an experimentation platform like Lifesight, you can run multiple experiments like Geo experiments and split testing. The platform helps you design and run experiments by letting you choose your control variables and test variables. Furthermore, if you are testing the impact on a metric, the platform will also validate what should be your control and test variants so that you get the best results.
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However, the best part about such tests is that you can study both the correlation and causation factors of your experiments. Lifesight lets you ask questions about your experiments and data so that you can clearly understand what were the driving factors of the results and finally accurately answer the question – “Did this experiment actually drive impact?”
If you are using MMM, the platform also goes ahead and augments the experiment data to the MMM model, so that your model is enhanced with newer findings around your marketing data. This continuous enhancement keeps your MMM model accuracy soaring so that your budgeting decisions are always backed with the most recent data.
As the last piece of advice, we suggest you ensure these experiments are properly documented and reported to your clients at a fixed cadence. Clearly mention what you are trying to achieve through these experiments and upon completion share your learnings with your clients.
The Best Tip: Over-Communicate
If you think about it, budgets are always diverted towards strategies that seem to be the most reliable. In that sense, your primary job as an agency would depend more on how reliable you as a partner can be.
Building reliability can act like an unending leverage that will always put the right budgets in your sack. But building this reliability takes constant communication with your clients. An agency that constantly documents its work, builds reports, and shares it with its clients regularly, always seems to have the best share of the budget pie.
I get it, this might come across as time-consuming. But with a unified marketing measurement tool like Lifesight, you can showcase the whole of your marketing regularly so that your agency is seen as a trusted partner in the success of your clients.
Quick Recap: How to win more budgets?
- Build a solid foundation of your client’s services, customers, and their industry.
- Get all the historical data you can get your hands on.
- Identify what channels have been working using MTA.
- Use MMM to get clarity on how much money you need to invest in each channel.
- Balance your strategy by including a good mix of short-term and long-term goals.
- Always split the budget to have some room for innovation and experimentation.
- Have a system in place to measure the effectiveness of your experiments and understand the causality.
- Use feedback loops from the experiments you run to feed your marketing decision engine like Lifesight.
- Build reliability among stakeholders by periodically communicating the performance of your marketing.
Summing it up
In conclusion, winning more budgets as an agency hinges on a smart, data-informed approach. With technology helping more marketers give a true sense of their strategies, tools like Lifesight are becoming the go-to for building trust among clients and showcasing expertise. With the boundaries blurring between technology and other fields, it is about time for agencies to get into the data game and help their clients achieve certainty even during uncertain times.
You can see Lifesight in action and understand how it can help you win more budgets by setting up a demo.
