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Episode 127

The Science of Budget Setting

Marketing budgets are a mess right now, says Mark Ritson. His solution? A simple, three-step system inspired by triple-cooked chips: spend 5–10% of revenue, balance long and short-term investment, and measure each piece properly.

This week, Elena, Angela, and Rob tackle one of the trickiest questions in marketing: how do you set a budget that actually drives growth? They explore Ritson's budgeting system, why marketers struggle to secure investment, and the frameworks needed to justify balanced spending.

Topics Covered

• [01:00] Mark Ritson's three-step budgeting system

• [04:00] High-growth companies spend far more than 5–10%

• [11:00] The 60/40 rule and why most brands fall short

• [15:00] Setting measurement expectations for brand vs performance spend

• [20:00] How performance backgrounds shape budgeting approaches

• [26:00] Keeping unallocated budget for real-time opportunities

Resources:

2022 MarketingWeek Article

Today's Hosts

Elena Jasper

Chief Marketing Officer

Rob DeMars

Chief Product Architect

Angela Voss

Chief Executive Officer

Transcript

Angela: The improvement I think that marketers could make to their budgeting process would be in the process of trying to get to that why, just trying to gain a clear understanding of your in-market versus your out-of-market audience split. What is your share of voice currently? What is your share of market, educating the folks within the business that matter around something like excess share of voice, and really thinking about our marketing investment as the fuel that's needed to drive business growth.

Elena: Hello and welcome to the Marketing Architects, a research-first podcast dedicated to answering your toughest marketing questions.

I'm Elena Jasper. I run the marketing team here at Marketing Architects, and I'm joined by my co-hosts Angela Voss, the CEO of Marketing Architects, and Rob DeMars, the Chief Product Architect of Misfits and Machines.

Angela: Hello everybody.

Rob: Hello.

Elena: We're back with our thoughts on some recent marketing news, always trying to root our opinions in data research and what drives business results. Today we're talking about budget setting. Believe it or not, we're rapidly approaching fall and planning season when marketers everywhere are staring down spreadsheets, trying to figure out how do we make the most out of our 2026 budgets. So in today's episode, we're gonna tackle one of the trickiest questions in marketing. How do you set a budget that actually drives growth? And I'll kick us off as I always do with some research. And for this episode, I chose an article. This is from Michaela Jefferson for Adweek, and it's titled "Triple Cooked Chips: Ritz's Foolproof System for Marketing Budgets."

This is actually a summary of a talk that Mark Ritson gave at Marketing Week's Festival of Marketing back in 2022. Ritson believes that most marketers are failing at budgeting. He says marketing budgets today are completely effed up. He calls traditional attempts at fixing them overly complex and ineffective. His solution is a simple three-step system inspired by the culinary precision of triple cooked chips or french fries.

For those of us that are American, which is all of us, he wants you to boil and then pan fry and then deep fry. So in other words, follow a clear repeatable method for better results. So step one would be spend about five to 10% of your revenue on marketing. He points to econometric evidence compiled by Grace Kite, Nielsen, and others that supports a five to 10% benchmark. His recommendation is to aim for 10% if you're serious about growth and gaining a competitive edge. Simple, practical, backed by data across categories. Step two is to balance your long and short term investment.

So next is how do you split up that budget? He stresses the importance of both long-term brand building and short-term performance marketing. So drawing from Binet and Field's research, he cites optimal mixes like 62-38 for B2C and 46-54 for B2B. That's for brand and performance marketing. He even suggests 80-20 for categories like financial services. His key message here is you can't succeed without both. But most companies are under-investing in brand and caught in this cycle of chasing short-term wins. Step three, measure each piece properly.

Finally, Ritson warns against measuring everything through the same ROI lens. For brand building, he argues that forcing ROI calculations is misleading and erodes credibility. Instead, he suggests using branding metrics like awareness, consideration, and preference tailored to long-term effects. So let's start with the recommendation he made, that five to 10% of your revenue should be invested in marketing. Does that feel right to us? And why do we think so many marketers have trouble getting to that threshold, Ange?

Angela: I think the experience that we've had with our clients would indicate that's a good range. That's a sound benchmark to shoot for. There's a lot of research behind it. Typically that's enough to generate excess share of voice or give you a shot at it and build that mental availability through broad reach that allows you enough to kind of balance that long-term branding and short-term performance.

And I think a lot of marketers struggle to secure that level because in practice budgeting is as much about internal dynamics and things like organizational psychology at times as it is about data. Many CFOs still view marketing as a cost center versus a growth engine. Short term business pressures, to your point earlier, push teams towards performance metrics they can measure immediately. That can starve those brand investments that take longer to pay off. We've got fragmented org structures that can split budget ownership across departments and marketers, I think themselves sometimes fail to frame budget requests in terms of what the business can understand, like trying to spend to market share growth, thinking about competitive threats or just like long-term profitability for the company.

Rob: Wow. If there's one topic I should not weigh in on, it's this one. I've always been in the spend the money department, growing up as a creative and not necessarily the budgeting department. So I had to do a little research myself just to get a sense. Five to 10%. And what do you guys think L'Oreal spends for their marketing budget? What percent.

Angela: Quite a bit less would be my guess. Three, two?

Elena: I was gonna guess like five.

Angela: No. Wayfair, what do you think they?

Elena: 40.

Rob: Right there, 38%. Eli Lilly, 20%. HubSpot, 50%. TripAdvisor, 53%.

Angela: Where'd you get these numbers?

Rob: Snowflake, 47%. Pinterest, Priceline, 30%. So I am just gonna make the case. The contrarian point of view of five to 10 sounds so high, but is it really? And are we actually radically underspending when you look at high growth companies?

Rob: And it's seen as such a bad line item to spend money on. Oh, it's like the waste money line item, but if you look at high growth companies, you could ask the question, are you radically under-leveraged in terms of what you're spending would be my question.

Angela: Yeah, it'd be so interesting to break that down. 'Cause some of those have such a broad physical availability, which starts to work like marketing in real practice as we're running through aisles and things like that. So yeah, those are just some surprising numbers for some of them.

Rob: I double checked a couple of them. Not all of 'em, but I did double check a couple, but you guys can challenge my math. I'm sure we'll hear about it and that's fine. But I'm actually more asking the question, is five to 10—are we actually setting the bar too low when we're like, oh my gosh, 10% just seems like a lot?

Elena: I was thinking with this too, a general recommendation's always nice. However, it does really depend on category because you could spend 10% of your revenue on marketing, but if you are significantly smaller than others in your category and your share of voice is still very small in your category, you're not going to grow. There's no perfect way to determine this, but if you wanna use marketing to grow, then you may need to spend beyond this. And you could use ESOV as a way to figure out where am I at right now in share of voice compared to my competition, and how much would I need to spend if I wanted to outspend them.

So that's where I'm with you, Rob. Like it could end up being a lot more depending on the category you're in, who you're competing with. I know that a disruptor—I dunno if you consider 'em a disruptor anymore, but a brand like Wayfair—they have a lot of ground to make up in their category, so they're probably gonna spend more of their money on marketing. I know that that's also an approach that brands like P&G's sub-brands take. They launch a new brand, flood the market with advertising, try to raise their share of voice because they can.

Rob: And for those of you out there that are in my camp, ESOV is excess share of voice. So we probably say that a couple times. It's, we start throwing those acronyms out around here 'cause you guys are smart and some of us aren't.

Elena: Can you outspend your share of voice, which is like your advertising spend in your category? Yeah. Alright, so if you're Rob, you are spending far more than five to 10% of your revenue on marketing. So how could—yes—how could we justify that level of investment, do we think?

Angela: Well, I think you mentioned one of 'em already, just getting that viewpoint on what is your share of voice currently? What is your share of market? Educating the folks within the business that matter around something like excess share of voice and really thinking about our marketing investment as the fuel that's needed to drive business growth. We can't harvest without planting, right? But I think that when you're coming up through the digital world, you maybe have a different perspective of can we create demand? And so it's a bit of a different mindset.

I think beyond ESOV, marketers should be knowing these category-specific benchmarks from the IPA or from Nielsen that prove that underinvestment risks that long-term erosion of your brand salience, even customer loyalty. And I think for performance-oriented leadership, marketers can also highlight short term performance marketing plateaus without long-term brand support. We've seen this time and time again with our clients. So it's a really important aspect to consider. And then just tailoring to the CFO's language. I think that's where we lose the finance team at times. In the marketing world, we are concerned about things like brand awareness and brand salience, but it does need to tie to long-term kind of projected ROI.

What do we think this is gonna mean for lifetime value? Kind of modeling out what that could look like. I think a clear growth thesis tied to both financial modeling and some of the category norms in your space is a strong way to secure that meaningful investment, especially when paired with a narrative that positions marketing as that business growth engine versus a discretionary line item on the P&L.

Rob: And you brought up the need to sell to the finance team and which is so true, and it's like, how do you actually bring them along for the ride and say, "Hey, can you help us model out what it will look like if we don't spend next year? What is that fear of loss story?" And help them do the math with you, versus you trying to go in there and tell them how we should be spending their money, have them be a part of the story.

Angela: Absolutely.

Elena: I think some of our largest clients who, if you looked at it overarchingly, invest the most in marketing, seem to have the most belief in marketing. I also think that they have some of the most rigorous structures for testing what works with their marketing and working with their finance teams and they have very strict, "This is how we prove the incrementality of our marketing spend," which probably explains why they get to spend so much on marketing because they are very disciplined in partnering with the finance team and proving that it's impacting the business.

Angela: You're right that we see that across a broad range of our largest clients. Yep, they've got that confidence.

Rob: And this might be going too far, but you used a great word starve. How does this go from so on one hand, you can make it a very rational conversation, and another hand you make it a very emotional right? You go, are we starving the brand? Are we basically committing corporate malpractice by not applying enough? I mean, in all seriousness, are we being responsible shareholders of the company or are we just looking at too much short-termism in order to be able to grow? You don't wanna starve the Pillsbury Doughboy, right? You poke him in the belly and hear him giggle, so let's make sure we're given that little guy what he needs to be strong in the marketplace.

Angela: Yeah, and it does require discipline and patience, real maturity. I think just in terms of sometimes you can go learn those things. We can learn what the incrementality is of a channel, as long as we're structuring tests in a way that allow us to do so. It might be at the cost of some short term sales to gain that insight and leverage that for the next year, or two years, whatever the case might be. That feels like a space where marketers struggle.

There's so much going on. They've got new considerations of channels all the time. And at the same time, they've got tried and true channels that are experiencing fluctuations in CPM and spend and—I mean, my gosh, like our clients today are talking so much about the volatility of Meta and Google—it's hard for them to siphon one impact from the other without really structured, thoughtful frameworks for insight and measurement.

Elena: One part of Ritson's article brought up the 60-40 rule, and we talk about that a lot on this show. I liked how in the article he clarified that it isn't a hard rule and it does skew more towards performance for B2B. And we've talked about that before too. But I was thinking about that and wondering, like even with that said, how in different categories it can change. It seems like a lot of the brands we talk to, they aren't even close to like a 50-50 split, let alone 60-40. Would you agree with that?

Angela: I agree. Yeah. It feels like a lot fall into the maybe 30 to 40% brand. Some even lower than that, but those are the folks that I think are on the cusp of trying to make that—we're talking about television, so they're trying to add a channel that they know will drive sales, but also drives brand. And I think that imbalance is driven by a couple of things, some of what we've mentioned already, but just short term pressure from boards, investors, leads us to kind of optimize for just that near term iROI.

And then attribution bias is a huge problem. We hear this every single day when we're talking to prospects, is folks will say, "I don't necessarily believe the attribution models we have in place, but it's all I have at this point and I have to make a decision off something." And if that is favoring digital performance channels, search, social, programmatic, whatever it might be, then that's the data they have. So yeah, it's a real challenge.

Elena: Yeah. Sometimes it feels like we'd rather have certainty than accuracy.

Angela: Yep.

Elena: Honestly, at least it's given us something.

Angela: Mm-hmm.

Rob: Is there also an element of remind of the previous wins? 'Cause you can only say "wait for the payoff," you can only say it for so long, right? You gotta wait for the big moment, but then at some point you have to kind of merchandise the "remember when," remember how, remember in that conversation as well, the power of memory and making sure that they can go, "We remember how we did this, and then we're now feeling this. We need to make that investment again."

Angela: Yeah. And I think that's back to, are we structuring ways to get at those insights? Being able to separate one line of performance from the other when there's a lot going on in the marketing world, there's a lot of seasonality, there's macro factors, et cetera. So being able to find those and evangelize them is a good starting point. If we're not structuring right, we're not gonna get 'em, we can't use them in later months or years because there was so much volatility and variability going on that it's easy to dismiss the "remember when" one.

Elena: I know that's one thing that our analytics team stresses, like before you make an investment like this, how do you set it up in the best way possible before it even begins, so you're not scrambling to try to prove impact? And that leads us perfectly into measurement. I wanted to talk a little bit about measurement in general because if you propose a marketing budget that's five to 10 to 40% of revenue and then also propose a 60-40 split, one of your first questions is gonna be, "How are we gonna prove this is worth it?" And it should, that should be asked. So how do we think marketers should set expectations and then measure the impact of a more balanced marketing spend like this, Ange?

Angela: Yeah, I think it's aligning measurement with the objective and the time horizon of each part of the budget, if that makes sense. So performance spend, which—whether it's 40% or it's 60%, whatever the percentage overall that it might be—what are those familiar short term metrics? CAC, ROAS, conversion rates, payback periods. Those are pretty finance-friendly.

Brand investment on the other hand is slower to pay off and so shouldn't be judged by that same ROI logic as what Ritson says over and over again.

How can we measure the directional indicators of brand strength? Awareness, consideration, search demand is a great one. Market share growth over time. It takes a while. Pricing power, customer retention—they take longer to emerge, but they're really essential for long-term growth and profitability. To bridge that gap between kind of skepticism and belief, what are these test and learn strategies? Geo holdouts, brand lift studies, synthetic control testing to isolate impact and build that credibility.

Ultimately, I think the goal is to demonstrate that the combined brand and performance strategy is driving sustainable business growth. And in order to do that well, we have to tailor the measurement story to the different stakeholders. Give the CFO the short-term efficiency metrics. Give the CEO directional growth indicators. Give the broader org a narrative that connects brand investment to that long-term competitive advantage.

Elena: I wanna double click on brand metrics for a second because it seems time and time again talking to marketers that wanna invest in brand, the biggest struggle is "How do I prove it's working?" And I was curious for us, what are the most meaningful brand metrics? You just listed a lot. There's a lot we could do to try to prove the impact of brand, but what have you seen have been the most successful with clients?

Angela: Yeah. I often feel like, especially performance marketers that are moving into top of funnel channels, they have disdain over the brand funnel and traditional brand metrics and so it might seem obvious to some folks listening, but for those that haven't historically been tracking brand, this is a real question, like "How do I move into this space without feeling like I'm abandoning my roots of accountability?"

It's not super tricky. Meaningful brand metrics are those that connect brand investment to that future business performance. These are the leading indicators of growth. So among, I would say the most consistently effective is unaided brand awareness. That's the true mental availability by showing how easily your brand comes to mind without prompting.

Consideration is very powerful. It's a critical metric that helps us understand how people would actively think about purchasing from the brand. Brand preference or some type of like first choice status helps us sharpen this view by indicating the emotional alignment and the potential pricing power, I would say, in their space. And then I think in more digital environments, share of search has become a real time, cost-effective proxy for brand interest. And we have seen it closely correlate with market share growth. So those are some—I think folks go, "Well those are the obvious." It's like those have been in play for a long time because they do work.

Rob: Ange, would I be Pollyanna to throw in that mix some of the softer aspects of just the stories, like the CEO is like, "Oh my gosh, we've got customers that are calling in and singing our jingle at the call center." Or you have celebrities or TV shows that are talking about your product just because they're becoming a part of the pop culture conversation. I know it's not as exciting for the CFO, but those tend to be the things that get merchandised around a boardroom table.

Angela: Yeah, there's that earned brand impacts on the business and they do, they have power in them. Harder to trend of course. If you're trying to go, "Is what I'm doing making an impact?" But yeah, absolutely.

Elena: I think even third party stories can be helpful too, Rob. I think a lot of times brands wanna see that too. Like, "What can I expect based on what somebody else in my category has done before?" So that can be helpful too. You don't even have to be your own.

We've been talking a lot about brand metrics and I wanted to do that because I think that comes up a lot in marketers budgeting, looking at next year. I think almost all of us would like to do more brand work, but quantifying that and making the case for that is hard. We do come from, as an agency, a performance-driven, direct response background. So Rob, I was curious, do you think that has shaped the way that we as a company think about budgeting?

Rob: I think test and learn is in our DNA, no matter what kind of campaign we're talking about. And I do see it show up at times contrarian to probably what others would potentially say to a new advertiser when we have a new advertiser coming into the television space. We'll often recommend a smaller budget over a larger budget because we feel we can learn what we need based on the KPIs established upfront. So we're not sitting there trying to pitch them on a huge budget. Let's learn first, but let's apply that learning when it's time to scale and feel the big move.

So I think we're in our history, we've tended to be on the nerdier side of how to apply budgeting. But at the same time, we have to challenge ourselves. Just like Angela was saying, there's only a certain amount we can measure in the short term, even in an initial test, and then not lose sight of those macro effects that we're gonna be measuring six months down the road.

Elena: Agreed. Another thing I was thinking about with MA and our personal history is we've produced a lot of radio and TV campaigns, and I know that we've talked a little bit in the past about how creative costs translate to performance, and I think that's an interesting topic for this conversation because so far we've been talking a lot about media spend and measurement, but when a marketer's looking at their overarching budget, a big line item for that is going to be creative. So Rob, how do you think about that? Like budgeting for creative cost relative to performance? Is there sort of a "too cheap" level that comes along with production?

Rob: I still don't know if it's a cost question. I think a badly produced ad, whether you've spent a lot of money on it or a little amount of money on it, is still going to impact your brand equally. Especially in today's environment, the ability to create amazing looking assets at a reasonable cost has never been easier. So I really think it comes back to investing the mental energy into "What's the big idea?" And the assets will take care of themselves. Once you've figured out that great idea, how you deploy that idea using whatever technology's financially reasonable, but again, I don't think it's a direct correlation: spend a lot of money and you end up delivering on great brand assets or vice versa.

Elena: Yeah, I think, Ange, one thing we were talking about the other day when it comes to creative where brands could probably save a lot of costs is pretesting and just how little pretesting is happening at large, but how it's gonna be easier and easier to do. And that could be a way to make sure you're not overspending on creative either, is pretesting to get to the right message before you produce it.

Angela: Yeah.

Elena: Agreed.

Rob: Yeah.

Angela: Agreed.

Rob: Good point.

Elena: When we see that a brand is overspending on creative or media, where do we think that disconnect usually is?

Angela: Even a point that Rob just made, the big idea. We have internally gotten obsessed with the big idea, and I think you can take that too far, at least creatively. Maybe even on the media side too. It's easy to throw shade at the Super Bowl and things like that, but just staying on creative for a second—does the disconnect happen when you start chasing the output versus the outcome? We've talked about creative consistency, the use of distinctive assets, and marketers become tired of their creatives far before consumers do.

If you're going for fame, you cannot be forgettable. You need story, you need emotion—all these things that we've said matter, but also we get obsessed with our own big ideas and are willing to put a lot of dollars against them. And maybe that's not necessary.

Rob: Output versus outcome. Did you make that up, Angela? Or—I like that. That's good. That's a good one.

Angela: I like little handles in my brain.

Rob: Yeah.

That's a good one. I like it. I think the other place it can show up—I think this is akin to what you were talking about, Angela—is just blatant ego. Why are you sponsoring a NASCAR beyond the fact that your CEO just really likes NASCAR's? And I'm using that as an example, but we've all been there, we've all felt that like, "Wow, that's a disproportionate amount of money invested in a passion project for a very large company."

Angela: Yeah, we see that and yeah, it's hard. There are cases when it can be done well, but it's a space that's really hard to quantify the impact.

Rob: Well, I'm not making fun of NASCAR. I'm just saying if you're the right brand on a NASCAR, it makes all the sense in the world. It's just if you don't belong on a NASCAR, except for the fact that you get the golden tickets or whatever and you get to—I think the other place it can also show up is when you have budget by committee. It's just too many KPIs shoved into an initiative and you're just trying to please everybody and you end up funding way too many things that shouldn't get funded.

Elena: Yeah, I think, Angela, good point about creative consistency and like that new research that's been getting shared more and more out of System One is really interesting 'cause it's showing that we don't probably need as many iterations as we think. We'd be better if you stuck with a core idea. So I think that could definitely be an area for marketers to look at. And then agreed, Rob, I think that if you are spending a lot of money on marketing activations like that, you do not already have a consistent presence on national TV. I'd argue you should not be doing that yet.

Those could be great things to add on for incremental reach and the kind of tentpole opportunities. But a lot of times you see brands doing it that don't have any consistent mass reach advertising, which we know is going to drive a better long-term result. So I think you can do that stuff, but like you said, if you don't already have a consistent presence on a channel like TV, you probably shouldn't be messing around with that.

Angela: Mm-hmm.

Elena: I'd also add that I think marketers could probably think more going into next year about their different partners and each channel they're spending on. Am I spending in the most efficient way possible? Since we know nothing really matters more than your effective CPM, how can you reach your audience the most efficient way possible? And we know that there's a lot of, especially digital platforms where you could be overpaying 2x, 3x, 4x, 5x depending on who you're working with. And do you understand the supply chain and the journey that happens from you giving your marketing dollars to a partner and it ending up in front of a consumer?

Because I think that's a huge competitive advantage if you can figure out for all your channels, how can I find the most efficient, but still high quality options out there? You could end up saving a lot of money that you're currently overpaying on media. And I think there might just be a general lack of knowledge in the industry about how high those hidden costs can become. It all matters when you're trying to compete in your category. All right, I was curious about this question. Sometimes you can have a great plan and then it can fall apart or need to be adjusted for a good reason, like new opportunities come up.

And marketers, we probably wanna leave a little bit of leeway for that because a great opportunity could come up. And if you don't have any freedom to test or explore—AI could create something totally new in the middle of next year, and if you don't have some budget left over to try that, you're gonna be missing out. So how much budget do we think marketers should leave unallocated to allow for real time adjustments during the year?

Angela: This was a tough question because I so easily just wanted to go to "as much as possible," which is not super helpful, probably. Can you get 10 to 20% of your annual budget unallocated? I think would be a good starting point, but I think the better mindset would be, are you walking into your planning season trying to create unnecessary consistency in your media, and channel by channel, this might be different, but the nature of how 40% of the media is acquired through the upfronts puts us in a mode of a set number of TRPs per week or—and look, there are different needs for different businesses.

Some of 'em have limited time offers and things like that where you've got kind of a fixed window where you need to push communication out. But there is a lot of volatility, supply and demand variability in the marketplace that allows for marketers to capture efficiencies and gain reach when they can operate outside of a fixed budgeting mindset and process. And so the more you can do that, we ask the question all the time, at what point in television from an investment standpoint, do we need to be placing the upfront?

It's well north of 300 million, and it's shocking to people that they don't need to place in the upfront. So I think the more you can recognize the advantageous dynamics of a channel to a marketer when used correctly, the more you're gonna gain out of thinking about unallocated spend going towards opportunity to help you grow.

Rob: This is why I have no business talking about this topic at all. 'Cause I am in the "all in" camp. Just spend it all. Don't put anything aside for a rainy day. If you have a plan, put it on paper and go do the plan. And if opportunity arises, you go kick the CFO's door down and say, "I need more money." But it all starts to become so funny money the larger the company gets. I remember working on massive brands where they'd be like, "We have to spend this money in December, or we don't get it next year."

Like, this is the dumbest thing I've ever heard. Like that makes no sense whatsoever. So I just say, go all in. Believe in your plan. If you don't need that much money, then don't spend as much money. There's a weird idea. Do what you need to do, what you feel good about. And then if you need more later, then just go kick the door down. Easier said than done from my cheap seat.

Elena: Yes. But it becomes kind of that corporate—you're right, we hear that all the time. "If I don't spend this much—"

Rob: "I gotta spend the same amount."

Elena: It just doesn't make any sense. Yeah, it makes no sense, but it happens. It's something that marketers are dealing with all the time. But you're right, you should, in a perfect world, you'd be adapting in real time to opportunity and be able to shift your budget accordingly.

Angela: Get your leadership thinking around an "open to buy" amount, and maybe that starts with 5% and then can it become 10%? And there are business operational considerations of course, whether you can handle another 5% or 10%? Are you lead gen? Are you hard inventory, that type of thing. But it's a good thing to think about.

Elena: Alright, what advice do we have for marketers that are walking into a 2026 budget planning meeting? Where do we think they should focus first, and Rob, why don't you kick us off?

Rob: I love giving advice on a topic I have no business giving advice on, but I do. I think the question for me is to focus on the why. So why are you wanting to do what you want to do? And keep asking why till you get the real answer. If it's, "Well, we need to grow," well why? "Because revenue's been flat for six quarters." Okay, but why is revenue flat? "Because we've been bleeding category share to brands that are outspending and out-storytelling us."

Okay, but why? "Well, because they have stronger, distinctive assets and we don't." Ah, great. So we're gonna go invest in distinctive assets this year. Like, whatever that might be. But just making sure you're not being assumptive in your buying decisions and really getting to the ultimate why.

Elena: I like that a lot, Rob, actually. 'Cause I think you have to remember that we are marketers too. And what's the story that you're telling around the year and why you need the budget, what you're going to do, and—yeah, that probably shouldn't be left out of even a conversation about budget and metrics and numbers. You need the story for sure.

Angela: Start with why?

Elena: Well, maybe not. But—

Angela: Thank you, Simon.

Elena: Ange, what about you? You got any advice?

Angela: I agree with Rob. If there was one improvement I think that marketers could make to their budgeting process, it would be in the process of trying to get to that why, just trying to gain a clear understanding of your in-market versus your out-of-market audience split. I'm always surprised at how few kind of understand that split. And I think that single insight can improve how budget is allocated between sales activation and brand building. Most brands are going to over-invest in short term activation. It delivers those fast, measurable results.

But the majority of future revenue lies with a much larger group of buyers who are currently out of market and reaching them requires that consistent brand investment. I think by analyzing buyer cycles, category purchase frequency, customer journey data, we can better estimate what portion of the audience is ready to buy now versus later. It's just a great starting point.

Elena: Along that same line, I think that—I know I'm obsessed with share of voice at the moment, but that could be something at least to look into before you walk into the budgeting process or before you begin the budgeting process, because it might help you make a really good case for more investment. If you find out that your share of voice is very limited in your category, then what are the best channels we can invest in to go raise that? So if you haven't done a share of voice analysis, it might be something that could help you make the case when you're budgeting.

Angela: That's a great point.

Elena: Rob, did you have any kind of improvements you thought people could make or are you staying with why you're starting and finishing with why?

Rob: Well, is that the next one? That's the next question. If a marketer could improve—I do have one. Kill a cow, kill a sacred cow. That's what I would say is an idea. So take one channel. I don't care what it is. Sponsorship, some MarTech—

Angela: You like to put sponsorship on the table to be slaughtered.

Rob: Kill it and take that money and put it on just some crazy moonshot. Make sure you have a diversified portfolio. So challenge yourself to look at what you just continuously default spend on and go, "Maybe it's time to kill that one and go for something big."

Elena: Yeah, that reminds me, Rob, another great thing could be look at how much of your budget is going towards like tools and tech and operations versus actual media spend. Because I think that can be scary, especially for B2B brands. Like how much are we actually spending on advertising compared to—are you overpaying for tools? I love that. Okay, let's wrap up here with something a little more personal. What's the best financial advice you've ever received? Or maybe the worst. Pick either.

Angela: I've got a good one and I'll see—I know Rob knows this. Elena, you probably know it too. You probably know who gave this advice. The advice is "don't throw good money after bad." Anybody know?

Rob: Do I know who said it?

Angela: Who offered this advice to us? Maybe?

Rob: Well, I mean, I've heard it a thousand times, but from our CFO, Brent Long.

Angela: Okay. I was gonna say, Chuck, our—well, when it comes to finances, their voices just blend together as one.

Rob: Sure. Sometimes not.

Angela: No, but I'm like, "Don't throw good—" Yep, yep. Nope, that makes sense.

Angela: Yeah.

Elena: Do you wanna explain that one a little bit for the listeners?

Angela: Yeah. It's just knowing when to cut bait and consider something a loss versus continuing to throw your good money at a solve. Just operating with that mindset and being willing to consider something an investment in—whether it was development and it's time to move on from it, or whatever the situation might be. A bad retail strategy. Just being able to—as we do, as we call within Marketing Architects—"stop doings" is a good exercise to consider.

Rob: So I think this as a personal thing, what have you personally taken on it. So do you apply that to your personal life? Do you go, "Hey, Pete, let's not throw good money after bad?"

Angela: Yes.

Rob: I, because I do, I find myself in the—like in my—I know you don't throw any money after bad. You buy everything brand new.

Angela: I'm kidding.

Rob: No. That's an issue. That is true. I've got two. Because one is, it was so obvious, I just had to say it out loud. To all you young folks out there, compound interest is the eighth wonder of the world, and the earlier you invest, the better off you'll be in the long run. I know that's—I'm like, okay, thank you Dave Ramsey. But I just thought I would throw that out there as a public service message. But my second one that I always loved is, "If you want to see what someone values, look at their credit card statement," and I think that's a really good reflection to put some sort of dashboard in place for yourself. Go use like Quicken's got a free product called Simplify. It's great. It creates dashboards, it shows you where you're investing your time and not just from a bottom line, checks and balances standpoint, but is it, at the end of the day, is your money going where you really want it to go in life? And I just, I found that to be a really good piece of advice.

Elena: I like both of those. I was thinking about the sunk cost fallacy, which is similar to "don't throw good money after bad." And Rob, agreed with you on compound interest and starting when you're young. I think that was great advice. I got "open a Roth IRA when you're young." But the one I was thinking of was I think I've been taught in a good way to recognize the value of your time. I think just as an example, I had a friend that went to a wedding and they didn't wanna pay extra for an earlier flight, so they drove, but then they got there late and they missed an entire day with all their friends, which could have been a reunion with everybody.

So you missed 12 hours to save 200 bucks. Is that worth it when these are people that you don't see often anymore? They live in different states. You might not see 'em again for years. But I think consistently we make decisions like that and you can understand why. 'Cause usually you want the lower cost option, but what's the trade off in your time and is it really worth it? Or should you just invest a little bit more to have a better experience? I think that's probably some good advice.