Let’s face it, Agile marketing will not be that agile if you stick to your old sluggish budget approval processes. Here is how to improve.
Every Agile team requires resources to get the job done. Obviously, resources cost money and money needs to be made available. This is where the budget process comes in.
Where in Agile development the costs per Sprint are predictable, in Agile Marketing the costs per Sprint can fluctuate every time. It is the result of Agile marketing teams being dependent on less predictable external costs related to e.g. agencies, freelancers and the biggest chunk of marketing costs; media buying.
Because of this, the budgeting aspect normally puts a lot more pressure on Marketing sprints than it does on Development sprints. And this needs to be facilitated.
The traditional marketing budget allocation process does not seem to fit the needs of Agile marketing and can even neutralize the advantages of Agile. A different budget approach is required if you truly want to “do Agile”.
In our series describing the 6 fundamental differences between the nature of Agile Marketing and Agile Development it’s time to look at the Sprint costs and how to allocate marketing budgets in an agile world.
But first, how do Agile marketers request budget today?
It is a question I often ask marketers when I do projects, or when I am attending one of the many Agile Meet-ups.
The answer is often a good indicator of how marketing is perceived in a specific company. If the marketing discipline is not considered as a high value adding activity then the budget approval process tends to be more bureaucratic and sluggish to my experience.
I like to start the budgeting conversation with Agile enthusiasts by asking what they think about “waterfall” projects. You’d better buckle up for an emotional response with strong wording. Waterfall is the devil. “Once, but never again.”
When their breathing reaches normal and healthy levels again, I carefully ask the same agile marketer what their budget request process looks like. Don’t be surprised if he tells you that they use a PID (Project Initiation Document) or look for budget in the traditional marketing year plan.
Most Agile Marketers work with a Waterfall type budget planning.
Agile budgets? Yes please!
For many marketers the marketing year plan feels like an artifact of times gone by, when summers were hot, winters were cold and consumers predictable. Today, if management asks for a marketing year plan, the core benefit for you seems to be to defend your ground against other departments and to secure what is yours.
Returning back to the trenches of Marketing Operations, the approved marketing plan doesn’t offer you a lot of help.
Actually, for Agile marketers the year plan can even feel like a legacy and can work counterproductive. To be allowed to reallocate your budget you need to explain to management “why you were wrong” in the first place, while an agile marketer would proudly say “we learned and want to improve”.
“Everyone has a plan till they get punched in the mouth” – M. Tyson
If you want to react to the reality of the fast changing market, you need budgets which are equally flexible to access and allocate. And yes, this is a big thing to change in any organization.
Although the suggestions below are not widely accepted yet, we believe they will help marketers to fully benefit from Agile principles.
The Agile Marketing Plan; Value driven instead of tactics driven
Agile marketers are continuously testing hypotheses on consumer behavior. A/B tests deliver insights and learnings. Bright spots are discovered and scaled up. Tops are shared and Flops are killed. The faster these iterations are executed, the more agile the marketing team and successful the organization. Which content and channels to pick is not the beginning of the plan, it’s the end. It is what you decide last minute.
Agile budget planning should be about the goals you want to achieve and the value they generate. Which channels to use is just a tactic that can be ignored for the initial budgeting.
Caught with your hand in the “Cookie Jar”
Every achieved goal should have a value. Every goal target should have an allocated budget.
If you allocate budgets to goals and objectives, you can create a lot more flexibility without ever losing sight of the bigger business goal. This is where a “Cookie Jar” principle can help.
If you see the goal cost location as a kind of a Cookie Jar, then the scrum master can take out cookies along the way. Based on new insights you pick the Sprint Scope that contributes most to achieving a goal. As long as the level of cookies left is in balance with the level of the goals still to be achieved, then your progress in terms of business value creation is on par.
So, what is the catch here?
There are a couple.
1. It is easier to link a budget to channels than to link it to something more abstract like e.g. increase 1% brand awareness.
Yes, this is a challenge. Channel and reach is easier to monitor than customer attitude. However, isn’t Agile all about customer centricity? With the massive increase in data availability and customer insights this argument will gradually disappear. Different KPIs need to be installed. That’s for sure.
2. It is not always easy to estimate the value of an achieved goal.
Yes, this is a challenge. I think it is an interesting idea to introduce the “Poker game” principle, not only for estimating effort, but also for estimating value contribution of achieved goals. Plus it will help management to be more involved in applying agile principles. Agile is not only about operations.
Every team requires financial resources to get the work done. The budgeting process to finance the resources are different for IT teams and Marketing teams.
• In development: team members are usually employed at the company itself or contracted for a longer period of time working in-house. Development costs are mainly HR costs that are approved per quarter or per year, but they do not have to interfere with the agile nature of sprints.
• In marketing: team members are usually a mix of internal marketing managers, freelancers and external agencies with specialist jobs. Marketing costs are largely agency and media costs which need to be approved on a case-by-case basis. If this is the situation, the traditional budget approval process can neutralize the advantages of Agile. If marketers would follow a more agile budgeting approach like the cookie jar principle and focus on value and goals, not on tactics, then the doors are open to fully benefit from Agile.
The Agile Marketing plan has huge potential to show management how marketing contributes to growth and how marketing is a value driven discipline.
The yearly marketing plan stepped into the ring with Mike Tyson and is K.O.
This is article #5 from the series “6 Fundamental Differences Between Agile Development and Agile Marketing”.
There are some fundamental differences between how software development teams are run and how marketing teams are managed. As a result, not all agile software development routines can simply be copy & pasted from Software to Marketing and remain relevant. In some areas there is a match made in heaven, in some other areas there will never be a match. And in yet other areas it needs tweaking to become useful for marketing too.
A special thanks goes out to Gidion Peters from Scrumcompany.nl. His down-to-earth and practical comments helped us to sharpen our Agile Marketing thoughts.
Read other articles from the series here