Here’s a quick one for you…
One of the fastest ways for marketers to improve marketing performance isn’t to improve marketing at all, but rather to increase their working dollars.
What are working dollars?
“Working dollars” is the percentage of your total marketing budget allocated to in-market activities actively promoting your organization and brand.
For example, Google ads, Facebook ads, and list purchases would all be considered “working dollars” while payroll, benefits, agency fees, and hardware would not.
So how do you increase your working dollars?
#1 Understand Your Current State
First, you need to understand what percentage of your current total marketing budget is being allocated to in-market activities. With that information in hand, you now know what your “work dollars” percentage is.
#2 Secure Permission
Next, you want to meet with your CFO or budget owner and confirm that they’re comfortable with you shifting line-specific budget allocation within the marketing budget itself.
The question to ask is…
“As long as I stay within my overall marketing budget, am I free to modestly shift allocation between budget line items?”
While I can’t speak for your specific institution, I can say over the course of my career the answer to this question has always been “Yes.”
#3 Start to Shift
Now, with your rate and permission in hand, get to work shifting money away from indirect marketing line items into in-market marketing activities.
Here’s a few “quick win” ways to do that:
Review your current marketing budget for indirect marketing activities (e.g., payroll, travel, equipment, vendors, etc.) and identify where you are already trending below total budget for the year. Reallocating your projected underspend is the first and easiest place to start.
Next, review your vendor and partnerships line (as it’s often one of the higher allocations) and determine if you can delay or pause non-critical projects, as well as renegotiate agency fees. In the case of agencies, most will be receptive to a rate reduction conversation, so long as you package it with a contract addendum that extends the duration of your current agreement.
You can also ask to apply your unused churn (% of total payroll cost associated with open/unfilled positions) to provide a one time increase in marketing spend.
Now, comb line by line and find anything else non-critical that you think can wait (e.g., delaying scheduled hardware upgrades).
#4 Invest In What’s Already Working
As you build up your pool of available funds, be sure to apply your increased working dollar allocation to your current top performing marketing activities, rather than funding new or unproven initiatives.
This will ensure you’ll see a measurable return from your increased working dollars.
Putting it into perspective
Just to paint a quick picture of the kind of impact this work can have…
For an institution with a $1.2 million marketing budget, that is experiencing a $500 cost per application, a 10 percentage point increase in working dollars (from 65% to 75%) would generate an incremental 15% more applications (assuming no degradation in yield).
That’s over 200 incremental applications delivered not by increasing marketing spend, but rather by increasing your working dollars.
Now the math is never this clean, and marketing yield will almost always degrade as spend increases, but when you can increase your investment in your top performing activities without increasing your overall budget you will always increase your ROI.
Conclusion
One of the first things marketers do when asked to increase marketing performance is to ask for increased marketing spend.
And while that’s often a reasonable request, it also isn’t always a feasible one.
The truth is, in a complex and crowded market we’re all being asked to do more with less.
So if you’re a marketer who is mid-stream on developing next fiscal year’s budget, I’d encourage you to not just ask your CFO for more money, but also ask yourself…
How can I increase our working dollars?
About the Author
Seth is the founder and CEO of Kanahoma, a San Diego-based education marketing agency. We offer full-service marketing support for higher education, K-12, education technology, and more.
You can learn more about who we are and what we do at www.Kanahoma.com.
100% aligned on the approach, but I think the post overlooks the complex set of considerations when looking at swapping FTEs and media budget. Applying unused churn is relatively easy, but making full swaps between FTEs and media budget needs a longer view as new, high quality FTEs aren't easy to find, and more importantly, laying people off to expand working dollars - while it may be financially efficient - isn't something to do on the regular. And if one finds themselves doing it, it's probably time to revisit the annual planning process.