From BMA Knowledge Base
Perhaps it's because we marketing communications people don't present our budget requests as responsibly as, say, manufacturing people do. A manufacturing person will say something like "We need $470,000 to add a hyper post-finisher to the production line. This will increase throughput by 17 percent, which means that on a DCF basis, the new machine will pay for itself in X years. After that, it will increase profitability by Y percent per year through the useful life of the equipment, for a total ROI of Z percent."
Marketing communications people are more likely to say, "Here's the new creative. Don't you love it?" Then they ask for a sum that may be right out of the air. Senior management all too often either goes along with that (in good years) or cuts it by some arbitrary percentage, or denies it (in bad years) --without ever asking the tough questions they ask of every other supplicant for company funds.
Know why? Because senior management consider advertising and other marketing communication a cost--at worst a luxury, at best a necessary evil--instead of an investment. We don't have budget problems. We have perception problems. And it's usually our own fault.
The only appropriate method of budgeting is the task method. Exactly what will it cost to achieve the specific, measurable objectives this work is accountable to achieve? Exactly how much money will the company earn as a result of this investment beyond what it would have earned if the investment wasn't made? When we're prepared to answer those questions as rigorously as other departments vying for available funds, the whole issue of too-small budgets will disappear.
Meanwhile, if you have a problem right now with what you perceive to be too small a budget, for goodness sake don't accept what one wry guru used to call a "guaranteed opportunity to fail." When you don't achieve your objectives, no one will remember that the budget was cut. It's up to you to adjust expectations immediately.
Scale back what you intend to achieve and get management's participation. Say something like: "With this amount of money, we can reach this segment of the target audience or that one, but not both. Which would you like to defer until next year?"
It also helps if you've gotten 10 percent smarter. Most of us can rework a budget to get a 10 percent stretch out of it by reallocating, doubling up, being a little more selective, combining, adding a little PR.
And don't be afraid to ask for "a little help from your friends" in the media toward achieving your objectives with the same amount of money. And I'm not talking about cutting rates. I'm talking about mailings, promotion help, maybe positioning favors.
In the end, the only real solution to "too small a budget" is to make sure it doesn't happen to you. Do that by:
Tying budgets firmly to specific, measurable results.
Making sure that management perceives marketing communications as an investment with a predictable ROI, not a discretionary expense