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How to make the business case for investment in digital marketing

Author's avatar By Mike Berry 01 Feb, 2016
Essential Essential topic

Convincing "the boss" of the need for bigger digital marketing budgets

Those of us who would describe ourselves as ‘digital specialists’ have a vested interest in evangelizing digital; we love it, we believe in it and we want to do more. However, working in real-world organisations, we need to make the business case to convince those who control the budgets that we require to implement our digital plans.

In this post I'll give some ideas on making the business case to the company owner, finance or marketing managers. Of course, every boss has a different personality. What works for you?

Otherwise change won’t be fast enough and the effectiveness of our marketing activity is likely to decline as consumers or business customers switch to new platforms; we risk “missing the boat”.

The reality is that “The Digital Revolution” has not resulted in whole new marketing budgets being created. No-one is saying: “Offline is working fine. But now we have social media and mobile too so we’ll just double the marketing budget.” Far from it!  So we are, in reality, talking about substitution or reallocation of budget for digital. Often, what we are proposing is to shift money out of press advertising and direct mail (say) into PPC and Social Media (say). We need to propose and then someone needs to say ‘Yes OK’ to this shift. But why should they?

From a commercial viewpoint, there are really only 2 reasons for organisations to spend money on digital marketing:

1. It delivers immediate ROI (or at least within a measurable time frame)

or

2. It’s becoming increasingly important, so it will, in time, deliver that ROI, which means that brand owners need to get involved now and ‘learn how to do it’ or they’ll be left behind when it really takes off.

So we need to speak the language of ROI, of investment linked to return, in order to sell our digital plans in. Perhaps the best analogy is that of ‘paid advocates’ i.e. we must adopt the role of a lawyer ‘making the case’ for digital. And of course, if the balance of evidence is not in digital’s favour, the case will be lost and the budget will be locked away i.e. not released.

Convincing finance managers of the value of investment in digital marketing

Senior Finance people are, in the main, only interested in ROI; they play no favourites, and neither should we in making recommendations to them. As Commercial Accountants, they have the avoidance of waste “hard-coded into their DNA”. They won’t want to do something just because it’s the latest craze or looks ‘really cool’. Quite the opposite in fact: the newest, most fashionable platforms will need to work extra hard and make an even BETTER case to convince them!

So, where to start? You’re the Marketing Director/ CMO/ Head Of Marketing and you want to convince the ‘Bean-Counters’ to invest in Digital Marketing. The challenge here is as much a matter of understanding their mind-set as much as knowing Digital and the role it can play.

If you are in a not-for-profit or governmental organisation, the terminology will be different but the underlying principle still applies: The (senior) finance guys are responsible for increasing the net income (= sales less costs). Thus they need to focus the attention of everyone in the organisation on 2 things: maximizing revenue and minimizing costs. The CEO looks to the CFO to help and support him/ her in this vital activity. And it’s no coincidence that many CFOs get promoted to MD/ CEO and even Chairman.

Marketing, as a ‘spending’ department, will always be under scrutiny. Finance Directors have never been entirely comfortable with ‘expensive’ ad campaigns, on TV, Press, Outdoor, Direct Mail Etc. Part of the reason for this is the fact that they hate the rather mysteriously loose correlation between ad spend and resultant sales. As people with tidy, mathematical brains, they find it troubling that the CMO cannot promise, hand on heart, that “if we spend this, we will make that”.

Finance Directors in companies who spend on marketing will in general, be familiar with advertising in offline media and will, in most cases, have arrived at a kind of ‘grudging acceptance’ that it is a necessary evil (i.e. if you stop it your sales will go down), whilst still suspecting external agencies and other partners of secret mark-ups and rip-offs and often introducing procurement experts (internal or external) to audit these ‘suppliers’ and look for ‘value’ (aka cost savings).

Explaining the principles of media attribution models and the move away from last click wins models can really help we find – finance guys like this analytical approach. It can also help you explain the value of media which are traditionally more effective in brand building and demand generation rather than direct response.

For investments in systems such as CRM or email marketing systems that are aimed at increasing existing customer loyalty, then customer lifetime value models are the best approach.

So, if you’re using Google Analytics, use the Multichannel funnels to show how social media marketing or display advertising contributes “assists” sale earlier in the path to purchase.

The challenge is to convince the powers-that-be that this new activity will be well managed, tightly controlled (especially budget-wise) and ultimately that it will deliver BETTER ROI than other platforms/media. So no pressure then…

Convincing marketing managers of the value of investment in digital marketing

Here your approach will partly depend on the attitude of the main marketing person to Digital. Are they an experienced marketer with little or no exposure to Digital? Or someone who is, on the whole, a believer in digital with reasonable exposure to it (e.g. in their previous career) but who needs ammunition to sell digital internally? The former group is more of a challenge, but you can work with either.

Even today, there is still a group of senior marketers (often the MOST senior) who have largely managed to avoid digital for their entire long, successful careers. Their comfort zone is entirely offline: TV, Press, Outdoor, Collateral, Direct Mail, Exhibitions, PR, Design, you name it. Think back to 1990 (if you’re old enough!). These people were comfortable (and on top of their game) in those days; maybe they’re in denial about the changes since.

It’s not that they’re hostile to Digital, more likely they’re a little scared of it. Sure, their kids are on Facebook and they have a smartphone (in common with their senior colleagues) but they’re suspicious of those “Apps” they read about in the Marketing Press and which the Agency’s spiky-haired Head Of Digital (who looks about 16) keeps banging on about.

Moreover they’re likely to be sensitive about revealing the depth of their ignorance about digital, especially in front of their junior (web-savvy) colleagues.

They are, however, probably not stupid. They can be taught; and this is the key. With this group you need to reassure and (ever-so-subtly) educate them as to the benefits of digital as part of their marketing mix. Maybe organizing a program of in-company training for the non-digital specialists in the organisation might help? And ‘you-know-who’ could be invited to sit in? This is Stage 1; demystification and reassurance using plain-talking explanation.

However, if your marketing manager is already fairly digitally savvy and indeed digital-friendly, but just needs some hard-hitting ammo for the Board, business owner or the Chief Financial Officer, then your task is easier. You don’t need to preach “The Internet Revolution” playing dramatic videos about ‘The Connected Planet’ and proclaiming apocalyptically that ‘The World Is Changing’; rather you must simply supply some ROI projections that convince all parties. At this point, we can move seamlessly to the strategy outlined in a) above (convincing the Finance Guys). Just give this case to the CMO and wish him/ her every success in his/her meeting with the CFO!

Lastly you may need some external help. So you should either pay a consultant (who are often surprisingly persuasive in front of the Board even when merely delivering a script written by you) or tap into a reliable source of free assistance: in my experience, Digital agencies are always very keen to help clients free up budgets to spend on digital activity (Funny that!). If they have Account Planners with a business brain, as an increasing number do, they may be your best allies in putting a robust case together. Digital Media planners can also be very helpful in helping you build your case for similar reasons.

Which techniques have you found successful in making the business case?

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By Mike Berry

Mike Berry is a UK-based Digital Marketing Blogger, Trainer and Consultant. You can follow Mike on Twitter or connect via LinkedIn. Mike is Course Tutor on the IDM (Institute of Direct and Digital Marketing) Diploma in Digital Marketing and the IDM's Complete Digital Marketing 3-day professional course; author of ‘The New Integrated Direct Marketing’, (Gower) and a Partner at Aprais, a global agency/client relationship management consultancy. View Mike's company blog at http://mikeberryassociates.com.

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