At companies around the country, the critical – but sometimes painful – process of annual budgeting is well underway. For executives in a fast-moving, ever-evolving space like digital analytics, budgeting may be especially difficult. Thanks to constant technological advances, shifting priorities and the fast-moving nature of digital marketing, many analytics leaders and teams struggle to generate estimates and figures that will reflect their needs over the course of the next fiscal year. Even quarterly needs can be hard to predict.
In our experience (including our years of developing budgets on the corporate side), there are a few common surprises that can frequently trip up analytics budgets and serve as unpleasant surprises to be managed. Paradoxically, they also offer good opportunities for getting the budget process right.
Focus on capabilities & performance improvement: This may sound obvious, but a great way to build a “business case” for your budgets is to ensure that you include funds for new capabilities that will lead to tangible results – like efficiency gains or higher productivity. Many budget requests focus on new software or tools, without explicitly defining how those assets will help the business move forward. For example, let’s say you want to invest in a new tool or resources to enable or improve tag management capabilities. The returns you generate will likely be measured in terms of reduced manual and duplicative work and faster reporting. In other words, the budget should highlight the capabilities and value to the business, along with the price of a new tool or package and implementation and training estimates. Plus, by planning for (and funding) improvements in one area, you can focus longer-term investments in even higher-value areas.
Be ready for unplanned migrations & upgrades: Thanks to the many mergers and acquisitions in the analytics space, companies often find themselves facing forced migrations when another company acquires the producer of an incumbent analytics platform. Similarly, some technology providers will occasionally require upgrades to new versions – like Google is doing with DoubleClick for Publishers (DFP) Premium.
These can be disruptive undertakings, but especially if sufficient resources are not ready to plan, support and execute them. Depending on the state of current systems and processes, there may even be opportunities for strategic transformation – but that requires advance planning and the involvement of strategists, business stakeholders, data specialists, integrators and project managers. Again, such forced migrations are pretty common occurrences in the digital world, and the pace of M&A may even increase as more powerful technology continues to emerge and digital analytics becomes more essential to bottom-line success.
Don’t overlook resource changes: We’ve often said that people are the key to digital analytics success – see our full take here and here. After all, it’s people who use the tools, digest the data and make decisions and recommendations. One common threat to budgets is when companies are caught unprepared to replace resources – technical specialist, business analyst or leader – who leave the organization. Whatever the reason (promotion, termination or parental leave) for the sudden resource gap, analytics teams need proactive back-up plans to fill it. More broadly, many analytics groups overlook new positions, specific training or conferences (in our industry, there are many worthwhile ones) where their people can learn new skills. In our experience, underinvesting in people and teams is the most common budgeting-related threat to analytics success.
The bottom line is that digital marketing leaders must plan to be flexible when it comes to budgeting. Budgets must reflect the reality of change in the competitive landscape as well as emerging opportunities and process and technology innovations. Continuous forecasting, clearly defined assumptions and “what if” scenario modeling can help ensure budgets are somewhat accurate in the first place and can be adjusted as business needs and opportunities dictate.