Plenty of us have thought over the first month of the New Year that we should probably cut back a little and start saving some more money.
Perhaps you stop eating out so much, or decide not to renew that gym membership you signed up to last January (but have found that you spent more time in the sauna than the gym). Whatever it is, people are looking to get more for their money in these times. And to make these decisions, having the right information, especially about what you’re actually spending and where, is paramount.
Bank statements now give breakdowns that help us with this, giving a good overview of spend areas as well as individual transactions. In our personal lives, this is generally sufficient, as not many want to know how much exactly they spend on bread, milk & cheese. A simple ‘groceries’ summary is good enough. In a business context however, this summary isn’t sufficient and yet that is frequently all the detail that is available, especially on marketing spend.
With budgets already tight and under scrutiny, marketers are being asked to make some tough decisions to make savings and improve the efficiency of their marketing communications. And just like all of us going through our personal spending, these decisions are best made based on the right information. However in our experience marketing spend data can often be misleading and/or inaccurate, making the decisions of marketers harder than they perhaps should be.
The issues arise for marketers as invoices often tend to have spend aggregated in such a way that the details are hidden rather than providing a line item breakdown. Whilst this data is usually available somewhere, be it through quotes or knowledge held by the project manager, it is not readily available through client accounting systems. In our experience, this lack of granularity can skew financial data, sometimes by over 30%, and prevent companies from identifying economies of scale, duplication of effort and opportunities to improve efficiency. With some relatively simple changes though, marketers can rectify this and start to make more insightful decisions. In doing so, they can look to reduce non-working spend, improve visibility and ensure brand consistency across their global campaigns.
In the majority of cases, simple amendments to supplier SLA’s can be made to oblige them to provide detailed invoice breakdowns that can be pulled into financial systems. Of course the level of detail to be captured needs to be considered, taking into account the media category, the desired reporting and the system capabilities, however if set correctly these changes can provide transparency throughout the financial process.
In other scenarios a more detailed phase of work may be necessary to move suppliers towards an output based commercial model. This approach requires a greater time investment up front to plan & negotiate the commercial model, and indeed is not suited to all suppliers, yet if implemented correctly the benefits of increased transparency & consistency in financial tracking can be considerable.
Embedding these protocols won’t of course magically cut costs in itself, but they provide a platform from which marketers can identify those areas of inefficiency and have the backing data to “deep-dive” into these areas of spend. In so doing, they too can look to streamline their marketing body and start to lose those costly extras.
For individuals as well as businesses, it can sometimes be obvious where to make savings, but only if you know what you’re spending on in the first place.
For now though, I’m off to cancel that gym membership.