You may have caught a glimpse of the term “agile budgeting” during the pivotal discussions at Google Marketing Live this year. But is it just another trendy phrase, or does it carry substantial value? Let’s explore.
If you’re well-versed in the concept of Agile within project management, aiming to prioritize project speed and fostering adaptability in the face of change, then you’re on the right track.
Likewise, agile budgeting aims to empower you to promptly adapt to changes in demand, focusing your spending on the most promising areas. Consider being proactive rather than reactive… Operating in real-time rather than looking back retrospectively… Fostering unity rather than working in isolation…
We get it – hasn’t one of the longstanding advantages of digital marketing been its agility, enabling swift budget adjustments, testing, and iteration? Certainly, but the reality has often involved managing channels in isolated silos, with budgets traditionally planned over fixed time periods.
Certainly, with AI advancements facilitating quicker responses to market shifts, many marketers are reconsidering the essence of agility. When practicing budget agility, your ability to adapt to market and business dynamics accelerates, unshackled from the limitations of fixed budgets tethered to strict timelines, channel silos, and other constraints. This marks a significant paradigm shift for numerous businesses and agencies, especially for teams and individuals accustomed to channel-centric work and budgeting.
As with any innovative approach, embracing agile budgeting demands a reassessment, restructuring, and reprioritization. It mandates seamless coordination across marketing, sales, and operations, with a particularly close collaboration between marketing and finance.
Sure, but is the Investment Justified?
Revamping the way your business strategizes, allocates, and fine-tunes digital budgets might seem overwhelming (smaller organizations often have a leg up in this area!). However, research indicates that companies don’t necessarily need to undergo drastic transformations to adopt a more budget-agile approach.
Chances are, you can identify a few straightforward adjustments to enhance specific behaviours in how you, your teams, and your agency operate. In reality, you might already be incorporating elements of agile budgeting, even if you haven’t formalized the process yet.
Rather than assigning a fixed amount to each individual channel, your budget is dynamically allocated wherever there is evident customer demand. The objective is to uncover additional conversions or conversion value within your target, irrespective of the channel.
To assess the prevalence of budget agility among marketers and gain deeper insights into the key factors contributing to successful agile budgeting, Google collaborated with Kantar last year to survey over 2,400 marketers globally.
According to the study, marketers who adapt budgets across digital channels weekly or more frequently are classified as behaviourally budget agile.
(You can understand why tight cross-functional coordination is crucial!)
Crucial Insights for Embracing Budget Agility
The progress of AI is unlocking a myriad of fresh opportunities in digital marketing, spanning multichannel campaigns. Consequently, numerous organizations and agencies are reassessing their strategies to optimize ROI.
Let’s highlight specific focus areas that can propel marketers toward enhanced agility:
• Adaptable and Regular Planning
Agile budgeting doesn’t entail discarding your planning process. Instead, it involves planning with the expectation of change, allowing room for adaptation and adjustment as conditions evolve. This probably entails increasing the frequency with which you revisit and modify your plans.
• Shared Objectives and Metrics
Harmonize around business-relevant marketing objectives, such as sales revenue, profit margins, lifetime value, and more. Subsequently, introduce uniform measurement standards and metrics spanning marketing and cross-functional teams, enabling collaborative assessment and adjustments.
• Enhanced Collaboration Among Teams
Embracing budget agility doesn’t imply a shift away from having in-house or agency teams and individuals dedicated to specific channels. However, it does necessitate breaking down organizational barriers to ensure that these teams and individuals collaborate, meet, and share insights more frequently. While this requires dedication and effort, the dividends can become apparent swiftly.
• Durable Investment Partnership
Building trust, fostering understanding, and forging a strong partnership with your CFO and finance teams are essential steps toward embracing budget agility.
• Alignment in Operations
One significant challenge in achieving budget agility lies in securing timely approvals for budget allocation or reallocation. Close to 60% of marketers practicing budget agility reported that obtaining approval for digital budget changes exceeding 20% takes a week or more. While obtaining substantial budget approval within a week may seem like a daunting task, it’s worth considering the competitive edge if your rivals are part of the 40% able to do so. This allows you to capitalize on new opportunities, drive incremental value, or experiment more rapidly.
• Incorporated Experimentation
As digital marketers, conducting tests and experiments is part of our routine. Yet, frustration arises when the desire to launch a new test or scale a promising one is hindered by rigid budget limitations. Approximately one-third of marketers embracing budget agility expressed that obtaining an incremental budget for initiating new tests is “very easy,” a notable contrast to the less than 10% reported by non-agile marketers.
Once more, this underscores the importance of organizational alignment on goals, measurement, and an operational framework, facilitating quicker movement.
Integrating adaptable planning and budgeting processes into your digital advertising endeavours enables a concentrated effort on propelling growth. It empowers you to swiftly readjust forecasts and invest in emerging opportunities with heightened speed and coordination.
The dividends from reaching this point can undoubtedly make the effort worthwhile.
