Marketers Should Reassess Process Before Making Those Budget Cuts

In the course of my nearly decade-long experience of building a company, I’ve had hundreds of investor meetings. Fundraising has never really been my strong suit. In fact, I had over a hundred meetings to raise our Series seed, and it took me a record 14 months to close our Series A, which is a slightly discomforting fact to admit in writing, given that I’m often told that fundraising is a core part of the CEO’s job. When it came time to raise our Series B in January of this year, I braced myself for the onslaught of rejection, yet within five days of kicking off our raise, we received our first term sheet. Curiously, within two to three weeks, half a dozen more followed. I was self-aware enough to know that my abilities here hadn’t really changed, so the reversal of fortune was due to something else. When companies reach the Series B stage, the rules of the game change. Instead of being swayed by the big vision and shiny PowerPoint slides, investors are significantly more influenced by the numbers and its spreadsheets that command higher currency. The silver lining of being bad at fundraising meant we had to get pretty good at running a business on a dime and, at the stage we were at, investors valued and praised our efficiency. As the capital from our fundraising began to percolate through the business and we began to scale up our operations, that efficiency muscle that we’d repeatedly flexed throughout the last decade started to show signs of atrophy. Efficiency is paradoxically easier when scarcity is real; it’s an ongoing decision when choice is an option. As we were growing quickly, we weren’t spending enough time thinking about how to adapt the ways we work to the new larger, more distributed company we were becoming. As Consumers Enter a ‘Scarcity Mindset,’ Address Negativity Head-On As our team size approached triple digits, we needed to change how we work. Everything from how information is shared and communicated to how certain tasks are completed (manual versus automated) to how managers run their teams has to evolve. While I cannot yet say we’ve successfully completed all of our necessary transformations, our awareness of this and our decade-long heritage put us in a good place to successfully make these transitions. Marketers at companies small and large are facing the same challenge, albeit for different reasons. Macroeconomic factors outside of our control mean that the spending power of our budget has decreased. Our budget might have been $1 million when it was allocated earlier this year, but in today’s terms, it’s worth 10-15% less than that. The knee-jerk reaction is to eliminate: Remove vendors, decrease scope, strike out entire line items on your budget. But that instinct should be challenged. Measure twice before you cut. Before marketers take the knife to their budget, which will have a more drastic impact on what they can deliver this year, there is an opportunity to improve efficiencies within existing media investment through improving existing processes, many of which probably haven’t been put under a microscope for quite some time. Take an average b-to-c company. That company probably produced anywhere from 1,000 to 5,000 pieces of image and video content five years ago. Today, thanks to the rise of visually led platforms like TikTok and YouTube, not to mention the onslaught of programmatic video, it’s probably closer to 100,000, if not half a million. Most brands have scaled content production five to 10 times in the last few years yet likely haven’t sufficiently adapted their processes to revamp how they create, adapt, review, measure and learn from all their visual marketing. To exacerbate the problem, five years ago, a dozen campaigns carried a load of our media budget while the rest barely made a dent. Today, thanks to the decreasing shelf-life of a piece of content, it’s more evenly distributed, which means the relative average weight of each ad is arguably greater. Furthermore, five years ago, we probably had a few creative production partners and agencies. But today that picture is different: We have agencies that specialize in creating content for specific platforms and audiences, not to mention influencers and in-house teams. More content, more partners, same processes. As a result of this speedy content proliferation, over 70% of Fortune 500 images and videos produced are not in line with basic creative “first principles,” whether that’s consistent logo usage, product framing, usage of supers and subtitles and more. Together, these principles make up something called the Creative Quality Score (CQS), a KPI that has been statistically linked to improved media efficiency, like cheaper CPMs and cost-per-completed view. Build a Sustainable 2023 Marketing Plan and Stick to It In fact, while the average CQS for a Fortune 500 campaign is around 20-30%, every 10% increase in CQS is statistically correlated (at the 99% confidence level) to a 2% decrease in CPM and a 5% decrease in cost per completed view. From a starting point of 20-30%, those efficiency improvements quickly add up and might just help you recoup some of that spending power loss while helping you stay on track to hit your goals. Instead of thinking about what to cut, what if we thought about which of our existing systems didn’t scale in parallel with the rapid growth of digital media? Change is uncomfortable and often painful, and revamping age-old ways of doing something rarely feels like a priority. But it is actually when change gets forced upon us that incumbents get dislodged and new winners are born. We can cut our budgets and accept that we will just do less, or we can take this opportunity to explore whether now is the time to try doing things differently.