Invest in Research and Development for Marketing to Prevent Poor Performance Campaigns
Reworked Article:
Marketing strategies can often get stale, with companies repetitively trying the same methods and seeing subpar results. Here's a fresh perspective on shaking things up.
Most businesses stick to an annualized marketing budget, breaking it down by quarter and month, assigning dollar amounts to specific channels. While this approach works for the majority of funds, I believe it's essential to allocate a portion as a dispensable 'Marketing R&D' fund.
Being a seasoned product manager and marketer, I've witnessed how external factors could cap a marketing initiative's success—sometimes without the marketing team even realizing it. A campaign may hit a 'ceiling of success' and keep spending, unaware of the issue.
In B2B marketing, prospect audiences can be so limited that excessive spending backfires, driving up costs and reducing returns. A classic example is paid social media ads, where exhausting a targeted audience can lead to oversaturation and minimal returns. Another instance is events and trade shows, where attending the same industry events repeatedly means exposing the same people to your brand—a questionable investment for mature companies seeking new prospects.
So, what's a marketer to do?
Simple: set aside 'Marketing R&D' funds. Just like other departments in the company, R&D budgets foster innovation. Consider:
- Entering a new market necessitates market research.
- Addressing unforeseen product issues requires resources.
- Material research for manufactured products requires investigation.
- Adopting new techniques or technologies demands investigation.
- Software development requires allocating funds for security testing, meeting new regulations, and accommodating potential big clients' specific needs.
Why Not Marketing R&D?
When change occurs in the company or the market, marketing teams may be asked to support these changes without additional budget. For instance, mergers and acquisitions require resources for re-branding and communications. These costs are not insignificant and should have allocated resources.
However, the real value of a Marketing R&D budget lies in its ability to empower marketing to explore novel avenues. It enables the marketing team to discover unknowns and devise creative ways to reach new audiences and build a fresh lead pipeline. This process can also reduce sales cycle times.
Rather than relying on trial-and-error, a more sophisticated approach involves informed experimentation. Think of it as a fisherman trying new bait or lures, observing reaction, and modifying techniques accordingly. Each marketing team should integrate agile strategies without draining resources from established revenue-producing tactics.
Convincing Finance to Support Marketing R&D
Most company leaders, particularly those in Finance, may be unfamiliar with the concept of Marketing R&D.
Bring up your concerns about the limits of established marketing strategies, providing examples from your organization. Explain that exploring new avenues necessitates budgeting for those ventures.
Then, request 15-20% of the next year's marketing budget to be earmarked as R&D. Emphasize that there should be no guaranteed return on investment—these funds are allocated for experimentation and adapting to unexpected situations.
In my experience, R&D investments may not generate a 100% return, but they produce intangible learnings and insights that can be used as data points to develop future strategies. Some tactics may take time to bear fruit, like Account-Based Marketing (ABM). However, you can't achieve success without trying something new initially.
Final Thoughts
Static marketing programs will inevitably experience a decline, with inconsistent results. A growth-oriented company must always look to the future, and being agile in your marketing, along with setting aside some R&D budget for agile tactics, boosts your chances of being prepared for the future and securing more business.
- To ensure marketing strategies remain innovative and effective, it's crucial to allocate a portion of the marketing budget as a 'Marketing R&D' fund, similar to how other departments have research and development budgets for fostering innovation.
- To maintain competitive edge in the ever-changing business landscape, it's essential to allocate 15-20% of the next year's marketing budget to 'Marketing R&D', explaining to finance leaders that this funding is not for guaranteed returns, but for experimentation and preparedness for upcoming trends and opportunities in the market.
