Zero-based budgeting. More into the future of marketing
While it may look as a new growing trend among FMCG global giants, the zero-based budgeting (ZBB) was firstly implemented by the US President Jimmy Carter back in the 70s. It is one of the few cases when the public system is an inspiration for the private one and not viceversa. Forty years later, several companies like Diageo, Unilever, Coca Cola and Kellogg anounced or talked about adopting the zero-based budgeting for their marketing investments.
What does this effectively mean? Does it mean that finance will jump with joy that finally marketing has to prove cent by cent how their fancy stunts, buzzez, wows and interactions are turning into money? Does it mean that marketing will cry with fear that their budgets will be cut?
Do not jump, finance.Do not cry, marketing.
It only means that you marketing have to work harder to justify investments, put your mind, heart and why not your ass to create, not just copy with pride or cover the base. This is already part of the old marketing school, as projections point to a ZBB in almost every major marketing department in the next three years. It only means that you finance have to work harder to help marketing assess, quantify and project completely new ideas. Same story about mind, heart and ass. ZBB is already a common practice among venture capital funds because it encourages management to come up with new and better ideas on how to invest their shareholder funds.
What are the key benefits of the ZBB?
- helps the marketing team look into the future, not into the past compared to the last year base budgeting model.
- delivers across the market changes and the marketing objectives, not on the company’s marketing budget affordability as it does in the percent of turnover budgeting model
- forces the marketing teams for true innovation and creativity, up-to-date activation and promotion, fighting corporate inertia and building trust and credibility among the entire organization
- rewards the marketers based on proven results year after year, acting as a true incentive, comparable to the sales incentives
While the marketing discipline has hugely evolved in past years, why would its financing be based on same old methods? While we are talking about IBM Watson used by banks to offer customers their entire banking life (account information, credit-card debt, mortgages) in single mobile apps, how come that finance can not be more innovative with their most innovative organization department?
Marketers who know what they are doing and are doing new things year after year will be just fine. Those who feel safe with the routine of good old things and percentage of sales should better look around. More into the future of marketing.