PROS AND CONS OF LETTING YOUR AGENCY ALLOCATE YOUR BUDGET
Expertise in marketing budgeting
A marketing agency that offers to manage your marketing budget often have experience and industry knowledge on how to effectively utilise a marketing budget. Their expertise in marketing budgeting means you will have optimised campaigns that are giving you the best value for money in terms of achieving the marketing goals set out by you and your agency.
Maximise return on investment
Marketing agencies that are given a marketing budget are judged on the return on investment they bring to your company. As a result all marketing activity is tracked and reported to you to demonstrate the effect their marketing efforts are having on your bottom line. As a result, your marketing agency will be doing everything in their power, informed by data and their marketing experience, to deliver maximum return on investment on the budget you have given them.
Budgeting based on customer research
A good marketing agency will make all their budgeting decisions based on research. They will identify who your target customer are, what marketing channels engage with them, and build a customer profile informed by the research. These customer profiles will be used to allocate the marketing budget to maximise the impact and effectiveness of your investment.
By giving your marketing agency permission to allocate your budget where they feel will work for you, all you have to do is approve how they plan to spend your budget and review their regular reports that highlight how their marketing is having a positive effect on your business. This saves you the time and resources that would apply to managing the budget and marketing activities yourself.
Costs are fixed
Your spending is predictable as you have set your budget and your agency will propose how best to spend it. There will be no additional financial requests for software, advertising budgets or extra projects as they will all be costed in to the budget allocation proposal. You will also avoid the need to have fees approved by senior management for every project, as the agency will just get on with the work and report back the results.
Trusting your marketing agency
You may be nervous about telling your marketing agency how much you are willing to spend and be concerned that they will spend your budget in a way that maximises their profits.
How to avoid this?
Pick an agency that talk about building relationships with clients. Any good marketing agency knows that if they provide a service that is effective and this is demonstrated to you, then the recurring work is worth more to them than a one off project. By letting your marketing agency use your budget you are effectively offering them a retainer contract as they will cost their time into the budget allocation. This means your marketing agency will do everything they can to utilise your budget efficiently.
You may have had experience where an agency has charged you more than the proposed fee as a project has taken longer or has been more complicated than expected and you may be worried this will happen if you let your marketing agency allocate your budget.
How to avoid this?
Ensure your marketing agency provides a detailed breakdown of where they will spend your money. They should provide monthly reports that show the forecasted spend and actual spend and adapt their marketing plan if they are over budget. The advantage of telling your marketing agency the budget before they start working with you is that all eventualities should be considered and they should not be going over budget.
You do not know what the agency are doing with your budget
By giving your agency a budget to spend you may think that you do not know where your money is being spent.
How to avoid this?
Your agency will draft a proposal for your budget allocation that should be approved by you before they spend any money. They should also provide a breakdown of your budget spend each month, alongside the marketing report, as well as a timeline that shows the hours and tasks they are completing with the hours they have allocated to themselves.