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Why Share Your Marketing Budget?
When you engage an agency, there’s a good bet they will ask what your marketing budget is.
I encourage agencies to ask this question early in talking with a client or prospective client.
Because they want to get as much money out of you as possible.
There, I said it. Of course they do. Agencies are commercial enterprises with revenue and profit targets to hit. They need to be profitable to survive.
Keep that in mind. But it’s not the only reason an agency asks how much marketing budget you have.
It’s helpful in many ways; here are the top three reasons why it’s good for both client-side marketers and agencies to be transparent with budgets:
1. Do you have a viable project?
If you only have £10,000 to spend on a website, you don’t have enough money to build an all-singing, all-dancing, custom website.
Same principle for event marketing; £50k will not buy you a good launch event in London for 300 people.
If you can establish this at the outset, you will save an awful lot of time.
Your agency will tell you they can’t help immediately or that you need to rethink your strategy. Knowing you need more budget is helpful when planning a campaign.
2. What can you afford to do?
If your agency knows how much you want to spend, it can define the most appropriate strategy or set of tactics.
This point builds on number 1. If you reveal your marketing budget, it’s much easier for an agency to provide consultancy.
If you have a £20k budget and your objective is to grow a skincare brand through digital advertising, it will be tough. You will need to sweat every penny and probably can’t afford an agency to support your campaign.
An agency will probably advise you to spend your marketing budget in another direction that is more in line with your resources.
3. Are you the right client-agency fit?
When you approach an agency for help, the early discussions are as much about finding out if you are the right fit for each other as it is the agency selling to you.
Agencies aren’t geared up to work with every client or on every project or opportunity that comes our way. Or if they are, they are probably desperate for the work, which tells another story.
If you have a lean budget, find an agency with low overheads that is used to working on tight budgets. If you have ample resources, find an agency that knows how to work on big projects and where you won’t be the gorilla client on their roster; this isn’t healthy for either party.
If you don’t know your marketing budget, it likely means you haven’t sufficiently planned out your campaign or you don’t have the authority to appoint an agency. Both are significant issues for an agency.
Also, if you don’t trust your agency to know your marketing budget, how will this relationship play out when you work together?
The success of any client-agency relationship relies on exactly that, a relationship. Treat this with appropriate care.
I could go on, but these are three top reasons to be open with your marketing budget.
I understand why marketers want to keep their budget hidden, but if you know it, share it with your agency. There’s so much more value to gain in this approach.
Equally, if you don’t know your budget, say as much. You could then pay an agency/consultancy to help you determine a reasonable budget for achieving your objectives or work it out yourself without expecting an agency to do all the thinking for free.