Mighty marketers like Coca-Cola may use disciplined budgeting to fund marketing innovation, but most companies don’t. A new analysis from Forrester reveals that only 11% of marketers have an established budget for experimentation. And when it comes to figuring out return on investment for new programs, most rely on guesswork: While 95% say they believe their innovations pay off, only 27% actively review those programs.
While specific budget guidelines, such as Coca-Cola’s model, with 70% of its marketing and advertising budget earmarked for the “now,” 20% for “new,” and 10% for “next-generation” marketing programs, are rare, writes analyst Bert DuMars in his report, companies like Chick-Fil-A, Nestlé, 7-Eleven, and Mondelez are also cooking up budgetary blueprints that reflect their commitment to discovering marketing’s next new big thing.
The report is based on in-depth interviews with 45 marketing executives, with nearly half of them working at companies with more than $1 billion in revenue.
And while most believe they have systems in place to fund innovation, key ingredients are missing. First, there’s little financial commitment. “Only 15% of marketers agreed or mostly agreed that budget for innovation was available, even on an ad hoc basis when end-of-quarter or end-of-year budgets were released,” he writes. “Only 11% said there was a centralized budget, and only 9% said marketing innovation was part of their ongoing budget.”
There’s even less dedication to cultivating talent. Although 61% invite team members to go out and find innovation, only 12% have a committed program to develop innovation leaders. Just 22% say they actively monitor or promote innovation leaders.
The conclusion? Those in the relative infant stages of innovation are likely to get left in the digital dust. “Strategy without the ability to execute will doom many of these organizations’ efforts,” he says.
The challenge is to step on it, yet most marketers are still somewhat ill-equipped to move at the speed of rapidly changing changing technology and consumer behavior.
One solution is to widen the net, looking for new ideas both in and outside the company. While 38% say they do, “that should be much closer to 100%,” he adds. “Customer-obsessed marketers know innovation can come from anywhere.”
And once a dedicated marketing innovation budget has been determined, it’s critical to hold people accountable. “This is the only way the organization will learn what works,” he adds, “and synthesize the insights, and effectively scale the successes.”