Advertising and Marketing Budgets
I need advice on how to deal with the following:
First, what if the given budget is not accurate, meaning that even though the money is sectioned per media source per school per month on paper, the actual AP is so far behind that most of the sources we have are prepay only and the available funds do not match what's been written on paper?
Second, our budgets are supposedly available monthly on a use-it-or-lose-it basis; there is no monthly or quartly rolling balance, meaning if I didn't use the money in April I can't add it in for June. How effective and realistic is this approach?
Third, do you think it's better to estimate yearly starts and grads and adjust quarterly or hold schools to that annual number no matter what happens in reality?
Thanks for the questions.
Regarding the first question, if possible the budgets need to be reviewed at least quarterly because you cannot continue to plan off of numbers that are not real. I would recommend
setting aside a chunk of the monthly budget to get caught back up and then using what you have left in the best CPS media. A small hit in spending may pay off over the longterm if it gets the payables caught up.
Being stuck in a use-it-or-lose-it budget system is really not ideal. Yes, keeping with the monthly budget is important for planning and budgetting. At the same time, there needs to be some flexibility to move money and take advantage of opportunities or spend money in November if you have ads not run at the end of October. Any flexibiltiy you can get would be beneficial. Is there anyway to get some wiggle room?
With that in mind this type of system make planning ahead and setting up a yearly budget even more important. If you are not going to have flexibility in spending at the end of a month it is critical to have the planning at the start so that there don't have to be as many adjustments.
For the third question, a plan based on reality for your bottom line is really the best one. You
need to have the annual goal to build for and it is a good idea to adjust accordingly. There are just things that come up that you can not plan for--hurricanes, record political spending, employee issues. This way you have the annual goal that you are shooting for and making your company more profitable by making the adjustments. Your goals need to be realistic and it is no fun to be in a no win situation. It is a huge demotivator.
Do you have the ability to adjust start goals if special situations arise?
Hope this helps to clarify.
With reguard to linda's second issue, I beleive that it's effective to be able to move advertising allocations from one month to another depending actual results and projected leads. The goal should be results, not the adherience to previouslt established expendatures.
Similarly I would favor quartly adjustments depending on experience rather than holding to goals that have already proved to be inaccurate. Rigidity rarely leads to success.
It seems to me that the budgeting process should also include a provision for opertunistic media exposures that can be generated on a non cost basis. A little imagination can reduce advertising costs significantly.
Definitely agree on your assessment of keeping the budgets flexible. Quarterly adjustments do make sense to keep the goals achievable.
Regarding the last point do you mean PR activities and local events as opportunistic media exposures?
If so, those are certainly good items to include in your plans. Typically what schools will do is establish an "Other" catagory with an allocation that can be used for opportunities as they arise. Due the unpredictable nature of these opportunities you should budget a higher CPL so that they do not cause you to miss lead goals.
1. That show that the person how prepare the budget is far distant from the persons who execute the plan. Some time we have to deale with that and make our best.Try to meet with someone in your organization and ask how it's works(The process to make the budget) and let them know your concern.
The disconnect you mention Eldin is all too common. Either it is that the budgets are prepared by one group and executed by another or in the middle of the year there are people with their own portions of the budget that don't look at what each other is doing. Looking at advertising and marketing and keeping TV seperate from newspaper or Internet without looking for opportunities to move money from one place to the other is destined to lead to a less than efficient plan. Likewise if the people executing the plan are not given a voice in budgetting the odds of setting up the budget correctly goes way down.
Is this a problem you face regularly? How does budgetting work for other people?
Mike
