Working Vs. Non-Working Budgets: Outdated Metric

The following commentary by Maarten was previously published in another MediaPost column.

A long time ago, in a galaxy far, far away, there was a simple marketing world. Creative agencies created advertising, the media department and the media agency devised a media plan (read: TV plan with some ornamental other media), consumers saw said TV campaign and flocked to brick-and-mortar stores and bought the brand or service. If they weren’t buying, then at the very least the consumers’ perception of the brand or service was improving, as driven by those witty TV ads. This was the general belief system marketing was built on.

The creative department led the media department (Briefing: “Buy as much TV in prime time as the budget allows after creative development and production”), clients flocked to exotic locales like New York or L.A. (if you were a European-based advertiser), the Caribbean or Hawaii (if you were a U.S.-based advertiser) to shoot THE commercial. Once a year all senior agency leadership (minus the media director) would descend onto Cannes to bask in each other’s glory at the Cannes Ad Festival, where TV ads were celebrated.



Fast-forward to today:
-- Most ads (or should we say “content”?) are not developed for TV.
-- Media leads creative in terms of where the ads are going to appear.
-- Consumer insights and data determine the touch points based on (alleged) effectiveness.
-- Clients are no longer allowed to travel to exotic locales.

Cannes is desperately trying to hold on to the creative celebration it once was, but is steadily evolving into a marketing-tech show, mostly taking place on a boat.
When we talk to clients today, they are tasked with developing vast amounts of content to feed the beast that is their social media presence, as well as all other touch points (ranging from traditional media to CRM, email, store, shelf or Web site). The nature of these touch points is that many need a refresh frequently, some almost every day — certainly not every three to six months, like TV in the olden days.

This means marketers need a very different creative development and delivery machine — especially since much content will be created in a large number of variations, to be tested for effectiveness in real time, in a continual race to create brand and/or sales impact.

In this world, we are having conversations with marketing and marketing procurement departments about the kind of ecosystem(s) that are capable of delivering all of that at a cost that is manageable, measured in a way that is meaningful, and compensated on the basis of effectiveness and ROI.

In our discussions, we never really talk about working vs. non-working budgets anymore, and we are telling our clients they should forget about this equation as well. We are not saying that it isn’t important to see how much you are spending on creating, managing and delivering your message content respectively. But using working vs. non-working budget is an outdated metric. You would not look at just TV spend only to determine the effectiveness of your total marketing campaign either, now, would you? That is so last century!

1 comment about "Working Vs. Non-Working Budgets: Outdated Metric".
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  1. Ed Papazian from Media Dynamics Inc, November 27, 2020 at 9:44 a.m.

    Maarten, I agree with your description of the way it was in olden times---with the media department basically working out the numbers for a TV buy--plus some other media used as dictated by the client's past preferences---but having little to say about not only the media mix but also what kind of TV was to be used. Now, you say things are different. But I'm not so sure. At least if we are focused on major national branding ad campaigns as opposed to the often equally large sales promotional efforts by those same advertisers. The latter include direct response/search as well as many other types of promotional activities which, as a rule,  are not handled by the agency people that work on the branding part of the equation. In fact, specialist shops often get these assignments ---or they are in-house operations.

    What you are describing is really a combination of all types of advertising and reflects the fact that when you look at it in this way, it does seem as if TV commercials are not the major focus of advertisers---as, you say,they once were. But what if we went back in time and combined sales promotion with branding. Then too, we would see that TV was far from dominant, with large amounts of money being spent on direct mail solicitations, coupon drops, all sorts of promotional ploys, etc. As a rule, these non-TV budgets were under the contyrol of the client's sales people working---we, were told, in coordination with the brand managers.  However, as one who was there and functioned  exclusively on the branding side it was clear that the ball game was being played almost entirely in TV and the primary thrust at the agency and client marketing levels was  on brand positioning and creative execution.

    Which brings me to the current situation. Bearing in mind that there are always exceptions, it seems to me that very few media people at the agencies work on both the branding and sales promotional aspects. Indeed, even within these two types,  many specialists handle specific duties. Somehow, all of these disparate activities are supposed to be coordinated by someone---but who is that---the CMOs and brand managers? The agency account execs? The media department?

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