16th April 2017
But zero-based budgeting (ZBB) just might.
Earlier this month I commented on a LinkedIn post about an article in Marketing Week titled ‘Unilever plots big cuts to marketing but says effectiveness is not at risk’. That comment has led to a lot of interest in a post I wrote a year ago about how ZBB measurably benefits marketing. And since a lot of us are currently going through our annual planning and budgeting cycle, it seemed like a good time to update that article.
What prompted the original post a year ago was that I was astonished to read an article titled ‘How to secure more budget for marketing’. It apparently came off the back of research that found almost half of marketers believed lack of marketing budget to be the single most significant barrier to their success. Yet I fundamentally disagree and consistently argue that big budgets are as much of a challenge as small ones. Because more doesn’t always equate to better; it’s not the size of our budgets that matter, it’s what we do with them.
In January 2016 Unilever announced that it was implementing a zero-based budgeting (ZBB) approach across their entire organisation – including marketing – and it was followed by quite a bit of uproar from marketers across my networks as well as the marketing media. That furore did eventually die down, but one year on ZBB may once again be moving front of mind. According to the Marketing Week article, Unilever CFO Graeme Pitkethly said on an investor call that ‘ZBB has given Unilever much greater visibility on exactly where marketing and brand investment is going’.
Isn’t this a good thing? Yet many of us in B2B marketing are deeply afraid of ZBB. All we hear are ‘zero budget’ and we start to panic that our budgets are going to be slashed – and perhaps our jobs along with it. And the Marketing Week article headline doesn’t help with its focus on ‘big cuts to marketing’.
It’s unfortunate that ZBB has traditionally been used as a cost-cutting measure. It’s actually a powerful strategic tool that we shouldn’t fear at all. Because it can profoundly help marketers to think differently and challenge ingrained, ineffective approaches to the marketing planning and budgeting process.
I want to emphasise here that ZBB is a strategic approach towards planning and budgeting that doesn’t necessarily mean cuts to marketing budgets. Instead of making last year’s marketing plan and associated budget the starting point for this year’s process, just like its name, ZBB begins from square one – the zero – every time. What this means is that we need to forget about what we did last year and focus on what we need to achieve for the business this year. It starts with the business and marketing strategy, not with the marketing plan. It starts with marketing talking to the business to get to grips with what they want and need to achieve, then develop a marketing plan that is accountable to the business. Only then do we look at what budget is necessary to support that.
ZBB forces us to plan and budget more effectively – and that’s not the same as cutting costs. By starting from a zero baseline we’re forced to take a good hard look at what we do and why we’re doing it. This then becomes an empowering process for marketing and has so many advantages, but the real benefits for me are:
Even if our companies aren’t doing it, marketing can and should be embracing a zero-based budgeting approach. Because simply having a bigger budget won’t propel us towards the kind of strategic thinking that will make us better marketers.
Heidi Taylor is an award-winning senior marketing strategist with 25 years' experience of helping organisations engage with their customers, creating impact and differentiation. She is a sought-after speaker at marketing conferences in the UK and internationally, and regularly contributes articles to marketing journals in print and online. You can follow her on Twitter @TaylorMadeInKew.