A bigger budget still won’t make you a better marketer, but zero-based budgeting (ZBB) just might.
Earlier this month I commented on a LinkedIn post about an article in Marketing Week titled ‘Unilever plots big cuts to marketing but says effectiveness is not at risk’. That comment has led to a lot of interest in a post I wrote a year ago about how ZBB measurably benefits marketing. And since a lot of us are currently going through our annual planning and budgeting cycle, it seemed like a good time to update that article.
What prompted the original post a year ago was that I was astonished to read an article titled ‘How to secure more budget for marketing’. It apparently came off the back of research that found almost half of marketers believed lack of marketing budget to be the single most significant barrier to their success. Yet I fundamentally disagree and consistently argue that big budgets are as much of a challenge as small ones. Because more doesn’t always equate to better; it’s not the size of our budgets that matter, it’s what we do with them.
In January 2016, Unilever announced it was implementing a zero-based budgeting (ZBB) approach across their entire organisation – including marketing – and it was followed by quite an uproar from marketers across my networks, as well as the marketing media. That furore did eventually die down, but one year on ZBB may once again be moving front of mind. According to the Marketing Week article, Unilever CFO Graeme Pitkethly said on an investor call that “ZBB has given Unilever much greater visibility on exactly where marketing and brand investment is going”.
Isn’t this a good thing? Yet many of us in B2B marketing are deeply afraid of ZBB. All we hear are the words ‘zero budget’ and we start to panic that our budgets are going to be slashed – and perhaps our jobs along with it. And the Marketing Week article headline doesn’t help with its focus on ‘big cuts to marketing’.
It’s unfortunate that ZBB has traditionally been used as a cost-cutting measure. It’s actually a powerful strategic tool that we shouldn’t fear at all. Because it can profoundly help marketers to think differently and challenge ingrained, ineffective approaches to the marketing planning and budgeting process.
I want to emphasise here that ZBB is a strategic approach towards planning and that budgeting doesn’t necessarily mean cuts to marketing budgets. Instead of making last year’s marketing plan and associated budget the starting point for this year’s process, just like its name, ZBB begins from square one – the zero – every time. What this means is we need to forget about what we did last year and focus on what we need to achieve for the business this year. It starts with the business and marketing strategy, not with the marketing plan. It starts with marketing talking to the business to get to grips with what they want and need to achieve, then develop a marketing plan that is accountable to the business. Only then do we look at what budget is necessary to support that.
ZBB forces us to plan and budget more effectively – and that’s not the same as cutting costs. By starting from a zero baseline, we’re forced to take a good hard look at what we do and why we’re doing it. This then becomes an empowering process for marketing and has so many advantages, but the real benefits for me are:
- Changing perceptions about marketing within the business: by having clear communication, collaboration and agreement upfront with all stakeholders on the marketing strategy, goals and objectives – and what measures will be used to identify success – marketing then becomes an activity that’s done in partnership with the business, not in isolation to the business.
- Accountability: by embracing ZBB we become accountable for our marketing investment choices and that accountability gives us what we need to demonstrate value within the business.
- New ways of thinking: ZBB challenges us to become better marketers, who think as well as do, pushing the boundaries of what marketing can and should be, and educating ourselves on where we need to go next. Traditional marketing planning and budgeting too often is a repetitive process that’s draining and frustrating, and allows too many of us to get away with mediocrity.
- Focus: so that we stop doing those activities that ‘we’ve always done’ and that are no longer making an impact. We have simply got to stop doing so much ‘stuff’ and start doing fewer, more meaningful, impactful activities – but do them better, deeper, wider and for far longer. ZBB pushes us to think about and act on what matters, for both our customers and for our business.
Even if our companies aren’t doing it, marketing can and should be embracing a zero-based budgeting approach. Because simply having a bigger budget won’t propel us towards the kind of strategic thinking that will make us better marketers.
