The evolving B2B marketing budget: what are you really paying for?

How do you allocate your marketing budget?

There are of course many different ways, but I'm willing to bet that the most significant factor is precedent. Not only are we creatures of habit by nature, but we are also emerging from a particularly nasty dip in the world economy. Now is not the time to take big risks, so it's not surprising we like to stick with what worked in the past.

But it is interesting to look at a gradual evolution of marketing budgets over the years. Starting with the very origins of budget setting and the very first advertising model, I have taken a small - and quite unscientific - look at how marketing budgets have changed.
 
It is fascinating to see how this has changed because we stand on the edge of a further stage of evolution. We have to account for a very different marketing mix these days and it all starts when we sit down and work out where the money is going to go each quarter.

Let's start by recapping the last 100 years...

A quick recap of the last 100 years

The Advertising Era: Originally, in the dim distant past, ad agencies were there just to book the media. It was only later that they realised they could make more money from supplying creative services at the same time. So the regular procedure was to give the agency a certain budget, from which the agency took a little for itself, offset by the fact that it got better rates from the publishers than the client could have done on its own. The agency produced creative work that made the media spend more effective and everyone was happy.

The Direct Era: Over the years, this model naturally became more complicated as additional marketing activity was required. Whether this consisted of producing collateral & sales tool, attending exhibitions, direct marketing or many other techniques, it all had to come out of the marketing budget. So, as a proportion, the media budget shrank to allow more funding for those activities [depending on how successful they are].

The Web Era: A similar effect occurred from the Nineties onwards, when the Internet came to the fore. A lot of the paper media spend became online media spend, but budgets now needed to accommodate ever more complex websites and online initiatives. The programmers and web designers had to be funded somehow, and this has put even more pressure on media budgets.


...and onto the present day

But now, as we enter the Social Media Era, it starts to get really interesting - because budget allocations now reflect the fact that marketers now need to work in a different way. They know that winning the trust of buyers depends on building relationships - and that can't be done with the same old outbound marketing tools. It is now about building a presence in the places where the buyers go for information. Content marketing and social media is getting bigger and bigger and I believe budget allocation will very soon reflect this. It is already moving in this direction, but I believe that, before long, we will see something like the crude but colourful diagram below.


A certain amount of funding still goes to agency to run creative and direct activities. But the need for content is so much greater, should it not have its own separate budget? It is the key tool for establishing the credibility of a brand in the complex world of B2B.

And then, what about media? This too has changed because it's not just about buying it; in social media circles you have to earn it. If you want to succeed in social media, you have to earn the respect and trust of the online communities you target and that takes time, training and technology. Companies are always saying that they need to engage in social media but don't have the time.

Surely the answer is simply to build it into the budget. If you want to reap the benefit of having a presence in the online world that is so important in shaping the buyers' perception of your brand, you should expect to pay for it. But instead of simply paying for the space into which you insert your ad, you need to invest in the time and the training required to have an active presence in social media. Pay for people to run your Facebook page, your Twitter account, your blogs, your online outreach in general. It's the same money - just a different way of allocating it.

With the wave of idealism that accompanied the arrival of social media a few years ago, many subscribed to the misguided belief that a social media presence would just happen. This simply doesn't work, because everyone else is doing it - and this includes competitors as well as the millions of citizen commentators who are getting involved. If you want that presence, you've got to pay.

In this world of social media and relationship building we like to think that we can 'friend' our way to riches. I don't think so. Sometimes, you just have to put your hand in your pocket and pay for the attention your brand needs, and if that means changing the way you think about allocating your budget, so be it.

Are you spending more on content creation? Do you have a specific budget for social media? Is your budget allocation changing? I'd be fascinated to know...