How to set a marketing budget for an uncertain 2021
When marketers were setting 2020 budgets, they had to account for a possible recession, the Summer Olympics and the presidential election. Even the most meticulous planners couldn’t anticipate a global pandemic or the rising racial justice movement.
Now, in the midst of this unprecedented year and with even more uncertainty lying head, preparations must be made for the next. And many marketers, now living quarter by quarter, will likely have smaller budgets to pull from and fewer places where they want to spend those dollars.
Here are some things chief marketing officers should keep in mind while facing the hair-pulling exercise of setting budgets for 2021.
“I’d say ‘flexibility’ is a candidate for any marketer’s word-of-the-year in 2020, and that will very likely continue into 2021,” says Denny’s Chief Marketing Officer John Dillon.
Recent comments from food and drink maker PepsiCo Inc. highlight the pressure on marketing departments. To mitigate COVID-19 costs of $500 million and counting, PepsiCo is “tightly managing our discretionary expenses, reducing nonessential advertising and marketing spend to reflect the realities of the current environment,” Chief Financial Officer Hugh Johnston said on a July 13 earnings call.
Marketers must be in close contact with leaders across their organizations to track current events and to keep others informed. “It’s important that marketing leaders build trust within all levels, maintain a high level of transparency and are able to articulate how and why marketing spend is good for the brand as a whole,” Dillon says.
Be more selective
This year has proven the need to maintain the expenses that matter.
Andrea Brimmer, chief marketing and public relations officer at Ally, expects the financial services company’s 2021 marketing spending will be slightly lower or flat with 2020. “I don’t see a scenario where we’ll necessarily go north,” she says.
PepsiCo Chairman and CEO Ramon Laguarta said advertising will continue to be “a key component” of the company’s strategy, though it’s focusing on initiatives with more return on investment and cutting those that don’t deliver. “Sometimes, a crisis helps to be more selective and to be more impactful and to kind of generate internal momentum against simplification and against focus, against fewer and bigger,” Laguarta said on the earnings call. “And that’s what we’re trying to do.”
Make the most of media moments
“We had a lot of big-dollar inventory that has evaporated,” says Brimmer, including the Olympic Games. Ally reinvested what the company felt was needed in different media and swept the rest to the bottom line, says Brimmer. It headed to Twitch for the first time as it knew there was a rush of people spending time on such platforms. “What we’ve been looking for is culturally relevant moments,” says Brimmer.
And after production ground to a halt, TV shows are scrambling to find ways to hit the air in the fall with fresh content that feels right for the moment.
“We’re trying to figure out how much original production is going to happen,” says Brimmer. “We’re not going to throw away good money after bad programming.”
Marketers wonder what inventory will be available next year. Chipotle Mexican Grill will invest in digital and streaming as it did in 2020, says Chief Marketing Officer Chris Brandt.
Sports remain a big bet. Brimmer says Ally will advertise during the Olympics if they go forward in 2021. Chipotle is also eager to tap into the appetite for sporting events.
“We’re hoping live sports will be back in a more normal fashion and we will certainly pursue that, but otherwise our plans for 2021 will look more like our plans coming into 2020, although we’re looking for increased flexibility wherever we can get it,” says Brandt.