Finding the Silver Lining in 'Zero-Based Budgeting'

For Smart Marketers, Zero-Based Budgeting Can Jumpstart Growth

By Published on .

So your company has decided to go the way of Unilever and "zero-base" its marketing budgets. You Google the term, and what you see gives you chills. For example, The Wall Street Journal calls zero-based budgeting "an arcane-sounding financial tool that slashes costs by focusing on details as minute as how to make photocopies."

Limiting photocopies? Seriously? Even the thought of such micromanagement is enough to send a marketing professional searching for new job postings on LinkedIn. And that's before you find out that this "cost-slashing" tactic has led to mass layoffs at companies like Kraft Heinz.

But there's more to the story than that. It's time to stop, take a deep breath, and close out that Word doc where you're editing your resume. Zero-based budgeting is time-consuming, true, and in the wrong hands can lead to unproductive penny-pinching. But for a smart marketing team with proper support from upper management, it can also be an opportunity to jumpstart enormous growth.

Zero-based budgeting forces you to approach marketing as if you were a tiny, bootstrapped startup. You have to build your entire budget from scratch, with a bottom-up approach, justifying every single dollar spent. That doesn't necessarily mean you get less money -- but it does mean that the money you get is allocated more efficiently. It also means that, instead of a finance executive with no marketing training setting your budget for the next year, you get to set your own priorities. Translation: Zero-based budgeting, done right, equals sweet freedom.

Especially at large, established companies, zero-based budgeting might be your best -- or even only -- chance to reexamine legacy agency relationships and ask if they're still working for you. Are they getting you what you want, at the price you want? Or have your agency partners gotten complacent after years of expensing steak-and-lobster client dinners?

Zero-based budgeting gives you an excuse to shop around without burning bridges -- and potentially get a better deal. The very idea has a lot of agency execs shaking in their boots about the rise of short-term relationships and the end of customer loyalty. But the truth is, if they can justify their expenses to you, you can keep them on the payroll. Simple as that.

It could be that you've been delegating work to agencies or other vendors that could easily be taken care of in-house. The past five years have brought a boom in user-friendly analytics, publishing and adtech software, as well as increased automation in areas like ad sales. If you haven't recently re-evaluated your spending, it could be that there are tools out there you don't even know about. Zero-based budgeting gives you a reason to up your game.

I'd argue that, when used properly, zero-based budgeting isn't a cost-cutting stratagem at all. It's a way to identify inefficiencies and redundancies, freeing up more money to reinvest in programs that actually work -- or experimental initiatives you've always wanted to try. Efficiency improvements can also free up your employees for more high-level creative or analytic work -- an opportunity they'll likely appreciate, especially if it comes attached to a pay raise made possible by reducing inefficiency.

Of course, there are a lot of ways to do zero-based budgeting wrong, and success is far from assured. To gain the real, deep benefits from the exercise, managers and employees alike need to commit to the process -- not just pay it lip service. But with enough buy-in from your department, zero-based budgeting can breed a culture of efficiency and accountability that will last for years to come.

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