Table of Contents
- The Long and the Short of It: Two Priority Pots
- Adjusting the Budget Split Based on Business Age
- The Evolution of Marketing Budgets
- Key Takeaways
As a small business owner or marketer, you may face challenges in setting quant objectives and creating a well-balanced marketing budget. According to Mark Ritson, a professor at the Mini MBA, the key to overcoming these challenges lies in embracing the “long and the short of it” concept by Les Binet and Peter Field. In this blog post, we’ll explore this idea and how you can apply it to your marketing budget for maximum effectiveness.
The Long and the Short of It: Two Priority Pots
To strike the right balance between short-term and long-term marketing efforts, Ritson suggests dividing your marketing budget into two priority pots:
- Long Pot: This budget is allocated for top-of-the-funnel activities focused on building brand awareness, consideration, and salience. These long-term investments don’t require a specific response or objective.
- Short Pot: This portion of the budget is dedicated to bottom-of-the-funnel activities aimed at specific segments, driving sales or actions that are directly linked to ROI.
Adjusting the Budget Split Based on Business Age
The 60/40 rule, which recommends allocating 60% of your budget to long-term brand building and 40% to short-term sales activation, is a general guideline that can change depending on various factors, including the age of your business.
For relatively young businesses (launched within the last two years), the general budget split should be 65% for activation and 35% for long-term brand building (depending on other factors including your industry). As your business matures, the budget allocation gradually shifts towards brand-building efforts.
The Evolution of Marketing Budgets
As your small business grows, it’s crucial to adjust your marketing budget accordingly. In the initial years, focusing on activation helps establish a foothold in the market. However, as your business matures, it’s essential to invest more in long-term brand building to reap the same benefits that big brands enjoy.
- Divide your marketing budget into two priority pots for long-term brand building and short-term sales activation.
- Adjust the budget split based on your business’s age and market share, with a higher focus on activation in the early years.
- Evolve your marketing budget allocation as your business matures to capitalize on the benefits of brand building.
By embracing the “long and the short of it” concept and balancing your marketing budget, you can ensure that your small business thrives in both the short-term and the long-term, maximizing the impact of your marketing efforts.