The Science of Budget Setting

Summary

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The Marketing Architects – "The Science of Budget Setting"

Episode Date: August 26, 2025

Episode Overview

This episode of The Marketing Architects takes a research-based dive into the perennial question: How do you set a marketing budget that actually drives growth? Against the backdrop of budget planning season for 2026, hosts Alena Jasper, Angela Voss, and Rob DeMars examine evidence-backed frameworks for allocating budget, the challenges marketers face in securing investment, and the ongoing quest to balance long-term brand building with short-term performance. They draw heavily from Mark Ritson's "triple cooked chips" approach to budgeting and discuss practical strategies and mindset shifts needed for successful marketing investment.

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Key Discussion Points & Insights

1. Mark Ritson's "Triple Cooked Chips" Budgeting Framework

• Step 1: Invest 5–10% of Revenue in Marketing

  • Based on econometric evidence, Ritson recommends 10% for those targeting true growth.
  • "His recommendation is to aim for 10% if you're serious about growth and gaining a competitive edge." [01:49 – Alena Jasper]
  • Hosts agree this is a sound benchmark, but actual company spend can vary widely by industry and growth goals.

• Step 2: Balance Long-Term Brand and Short-Term Performance

  • Established research (Binet & Field) suggests a 60/40 brand to performance split for B2C, 46/54 for B2B.
  • Many companies under-invest in brand, focusing too heavily on performance marketing.
  • "You can't succeed without both. But most companies are underinvesting in brand and caught in this cycle of chasing short term wins." [02:40 – Alena Jasper]

• Step 3: Measure Each Piece Properly

  • ROI metrics can misrepresent brand-building's long-term impact.
  • Use KPIs like awareness, consideration, and preference for brand; reserve direct ROI measures for performance spend.

[03:05] – Should Every Company Spend 5–10%?

• Angela Voss: "There's a lot of research behind it... budgeting is as much about internal dynamics and things like organizational psychology at times as it is about data." [03:07]
• Many high-growth companies (per Rob) spend far more: HubSpot 50%, TripAdvisor 53%, Snowflake 47%, L'Oreal 3–5%. [04:49–05:04]
• “Are we actually radically underspending? ... Are you radically underleveraged in terms of what you’re spending?” [05:04 – Rob DeMars]

2. Excess Share of Voice (ESOV)

• ESOV = advertising spend relative to category, compared with market share.
• Outspending your competition can drive disproportionate growth.
• “You mentioned one of them already. Just getting that viewpoint on what is your share of voice currently, what is your share of market?” [07:36 – Angela Voss]
• Tailoring the business story to CFO language is critical for buy-in.

3. Challenges in Budget Setting

• Internal Obstacles: Many organizations still see marketing as a “cost center,” not a growth engine.
• Attribution Bias: Over-reliance on digital tracking pushes spend towards easily measurable channels even if that limits long-term growth.
• Organizational Silos: Fragmented budget ownership creates internal competition and confusion.

4. Brand vs. Performance: The 60:40 Rule and Reality

• Many brands fall well short of the 60:40 (brand:performance) ideal, often emphasizing short-term wins.
• “Sometimes it feels like we’d rather have certainty than accuracy.” [13:02 – Alena Jasper]

5. Measurement Mindset

• Short-term Performance: CAC, ROAS, conversion rates, payback periods are useful for the finance team.
• Long-term Brand: Awareness, consideration, preference, share of search, and market share growth are needed to prove impact to boards and the CEO.
• “Meaningful brand metrics are those that connect brand investment to that future business performance.” [16:41 – Angela Voss]
• Geographical holdouts, synthetic control testing, and brand lift studies help bridge the “credibility gap.”

6. Creative Costs: Output vs. Outcome

• Spending more on production doesn’t equate to better results. The quality of the idea matters most.
• "I still don't know if it's a cost question. I think a badly produced commercial, 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." [20:55 – Rob DeMars]
• Pre-testing creative before full rollout is underutilized and can prevent costly missteps.

7. Overspending and “Sacred Cows”

• Budget allocations to pet projects (e.g., NASCAR sponsorships) or committee-driven spending can lead to ineffective spend.
• There’s value in questioning habitual allocations and being willing to “kill a sacred cow” to fund bold new approaches. [33:06 – Rob DeMars]

8. Openness & Flexibility in Budgeting

• Ideally leave 10–20% of budget unallocated for opportunistic investments or market shifts.
• "Get your leadership thinking around an open to buy amount and maybe that starts with 5% and then can it become 10%?" [29:45 – Angela Voss]

9. Advice for 2026 Budget Planners

• Start with the “why” behind budget requests—dig deeper than surface-level objectives.
• "Keep asking why till you get to the real answer." [30:13 – Rob DeMars]
• Understand in-market vs out-of-market audience splits to better balance between brand and activation.
• Share of voice analysis can help make the case for (or against) increased investment. [32:25 – Alena Jasper]
• Review how much budget is going to tools/tech versus media—especially for B2B brands. [33:38 – Alena Jasper]

10. Best (and Worst) Financial Advice

Notable Guidance:

• “Don’t throw good money after bad.” [34:04 – Angela Voss]
• “Compound interest is the eighth wonder of the world.” [35:39 – Rob DeMars]
• “If you want to see what someone values, look at their credit card statement.” [35:53 – Rob DeMars]
• Consider time-value tradeoffs—not just the lowest price, but what you gain or lose in experiences. [36:39 – Alena Jasper]

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Notable Quotes & Memorable Moments

• [05:04] Rob DeMars: “Are we actually radically underspending? ... Are you radically underleveraged in terms of what you’re spending?”
• [09:51] Rob DeMars: “Are we starving the brand? Are we basically committing corporate malpractice by not applying enough?”
• [13:02] Alena Jasper: “Sometimes it feels like we’d rather have certainty than accuracy.”
• [16:41] Angela Voss: “Meaningful brand metrics are those that connect brand investment to that future business performance. These are the leading indicators of growth.”
• [20:55] Rob DeMars: “I still don’t know if it’s a cost question. I think a badly produced commercial, 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.”
• [29:45] Angela Voss: “Get your leadership thinking around an open to buy amount and maybe that starts with 5%...”
• [30:13] Rob DeMars: “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.”
• [33:06] Rob DeMars: “Kill a cow. Kill a sacred cow... 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.”
• [34:04] Angela Voss: “Don’t throw good money at bad.”

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Timestamps for Key Segments

| Timestamp | Segment/Insight | |-----------|--------------------------------------------------------------| | 00:38 | Introduction to budget setting theme and Ritson framework | | 01:38 | Breakdown of 5–10% revenue benchmark | | 04:43 | Real-world examples of companies' marketing spend | | 07:06 | ESOV explanation and application | | 11:29 | Realities of the 60:40 rule in B2B/B2C | | 13:06 | Attribution bias and measurement challenges | | 16:41 | Favorite brand measurement metrics; bridging short & long term| | 20:55 | Creative costs: why spend doesn’t always equal effectiveness | | 26:48 | Leaving part of the budget unallocated for new opportunities | | 30:13 | Advice for 2026 budgeting: "Start with why" | | 34:04 | Best/worst financial advice |

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Takeaways for Marketers

• The 5–10% rule is a strong starting point, but competitive and category dynamics may demand more aggressive investment.
• Excess share of voice is a powerful concept for justifying increased budgets—frame marketing as growth fuel, not a discretionary expense.
• Avoid over-indexing on short-term metrics and beware of organizational inertia, attribution bias, and habitual “sacred cows.”
• Budget flexibility matters: plan for opportunistic (and inevitable) changes mid-year.
• Always know—and be able to defend—the “why” of your budget requests, tailoring the story to each stakeholder.
• Quantify brand impact with meaningful, leading metrics and leverage creative pre-testing.
• Review your budget allocation to minimize invisible costs and maximize efficient spend.
• Don't forget: Know when to quit on failing investments and recognize the value of your (and your team's) time.

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In Summary

This episode offers a grounded, research-first approach to the perennial challenge of marketing budget setting. It blends industry best practices with candid agency insight and a practical, down-to-earth tone, ultimately encouraging marketers to plan boldly, measure wisely, and always remember the "why" behind every dollar spent. The advice and anecdotes shared provide both strategic direction and tactical inspiration for marketers heading into budget season and beyond.

Transcript

[Angela Voss]

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.

[Alena Jasper]

Marketing Architects hello and welcome to the Marketing Architects, a research first podcast dedicated to answering your toughest marketing questions. I'm Alena 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 Voss]

Hello everybody.

[Rob DeMars]

Hello.

[Alena Jasper]

We're back with our thoughts on some recent marketing news. Always trying to root our opinions and 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, which 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 going to 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. Ritson'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 5 to 10% of your revenue on marketing. He points to econometric evidence compiled by Grace Kite, Nielsen and others that supports a 5 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 Bennett and Fields research, he cites optimal mixes like 6238 for B2C and 4654 for B2B. That's for brand and performance marketing. He even suggests 8020 for categories like financial services. His key message here is you can't succeed without both. But most companies are underinvesting in brand and caught in this cycle of chasing short term wins. Step 3 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 5 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?

[Angela Voss]

I think the experience that we've had with our clients would indicate that's a good range. That's just 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 and 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 DeMars]

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 of 5 to 10%. And what do you guys think L' Oreal spends for their marketing budget? What percent?

[Angela Voss]

Quite a bit less would be my guess. 3? 2?

[Alena Jasper]

I was gonna guess 5.

[Rob DeMars]

30?

[Angela Voss]

No.

[Rob DeMars]

Wayfair. What do you think they spend? 40 right there. 38%. Eli Lilly 20% HubSpot 50% TripAdvisor 53%.

[Angela Voss]

Where'd you get these numbers?

[Rob DeMars]

Rob Snowflake 47% Pinterest, 30% Priceline. I. So I'm just going to make the case. The contrarian point of view of 5 to 10 sounds so high, but is it really? And are we actually radically underspending? When you look at high growth companies, it's seen as such a bad line item to spend money on. It's like the waste money line item. But if you look at high growth companies, you could ask the question, are you radically underleveraged in terms of what you're spending? Would be my question.

[Angela Voss]

Yeah, it'd be so interesting to break that down because 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 some surprising numbers for some of them.

[Rob DeMars]

I double checked a couple of them, not all of them, 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 ten, are we actually setting the bar too low with when we're like, oh my gosh, 10% just seems like a lot.

[Alena Jasper]

I was thinking with this too. A general recommendation is always nice. However, it does really depend on your 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 want to 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 and share a voice compared to my competition, how much do I need to spend if I wanted to out 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 like a disruptor. I don't know if you consider them disruptor anymore, but a brand like Wayfair, they have a lot of ground to make up in their category. So they're probably going to be spending more of their money on marketing. I know that. That's also an approach that brands like PNGs, sub brands take. They launch a new brand, flood the market with advertising, try to raise their share of voice because they can.

[Rob DeMars]

And for those of you out there that are in my camp, ESOB is excess share of voice. We probably say that a couple times. It's, it's, it's. We start throwing those acronyms out around here because you guys are smart and some of us aren't that can you.

[Alena Jasper]

Outspend your share of voice, which is like your advertising spend in your category. So if you're rob, you are spending far more than 5 to 10% of your revenue on marketing.

[Rob DeMars]

So make it rain.

[Alena Jasper]

Yes. How could we justify that level of investment, do we think?

[Angela Voss]

Well, I think you mentioned one of them 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 esav, 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 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 going to 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 you know, a discretionary line item on the P L. And you brought.

[Rob DeMars]

Up the need to, 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, and help them do the math with you versus you trying to go in there and telling them how we should be spending their money, have them be a part of the story.

[Angela Voss]

Absolutely.

[Rob DeMars]

And this might be going too far, but you used a great word earlier, Ang. Starve. And how does this go from. So on one hand you can make it a very rational conversation and another hand you can make it a very emotional one. Right. 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 want to starve the Pillsbury Doughboy. Right. You want to poke him in the belly and hear him giggle. So let's make sure we're giving that little guy what he needs to be strong in the marketplace.

[Angela Voss]

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, two years, what. 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 fluctuation and 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.

[Alena Jasper]

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 role 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 and like, even with that said, how in different categories it can change. It seems like a lot of the brands we talk to there aren't even close to like a 5050 split, let alone 60 40. Would you agree with that?

[Angela Voss]

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 roi. 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 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 it's a real challenge.

[Alena Jasper]

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

[Angela Voss]

Yep.

[Alena Jasper]

Honestly, at least it's given us something.

[Rob DeMars]

Is there also an element of needing to remind the stakeholders of the previous wins? Because you can only say the game, you can only say it for so long. Right. You gotta wait for the big. But then at some point you have to kind of merchandise the remember when, the remember how remember in that conversation as well. Just kind of being the merchant 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 Voss]

Yeah. I think that's back to are we structuring ways to get at those? 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. Being able to find those and evangelize them is a good starting point. If we're not structuring right, we're not going to get them. 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 I.

[Alena Jasper]

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 5 to 10 to 20, 40% of revenue and then also propose a 6040 split, one of your first questions is going to be how are we going to prove this is worth it? And it should, that should be asked. So how do we think ang marketers should set expectations and then measure the impact of a more balanced marketing Spend like this?

[Angela Voss]

Yeah, I think it's, you know, aligning measurement with the objective and the time horizon of each part of the budget, if that makes sense. So performance spend, 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 is 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.

[Alena Jasper]

I want to double click on brand metrics for a second because it seems time and time again talking to marketers that want to 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 for clients?

[Angela Voss]

Yeah, I often feel like especially performance marketers that are moving into top of funnel channels. They're 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, you know, 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 DeMars]

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, you know, 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 Voss]

Yeah, there's that earned brand impacts on the business. They have power in them. Harder to trend. Of course if you're trying to go or is what I'm doing making an impact? But yeah, absolutely.

[Alena Jasper]

I think even third party stories can be helpful too. Rob in I think a lot of times brands want to see that too. Like what can I expect based on what somebody else in my category has done before. So those can be helpful too. 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 are budgeting looking at next year. I think almost all of us would like to do more brand work. But quantifying that, making the case for that is hard. But 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 DeMars]

Look at I think test learn optimizes in our DNA. No matter how much, you know, whatever 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, not a larger budget because we feel we can learn what we need based on the KPIs established up front. 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 tended to be on the nerdier side of how to apply budgeting. At the same time we have to challenge ourselves. Just like angel was saying is 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 going to be measuring six months down the road.

[Alena Jasper]

Agreed. Another thing I was thinking about with MA and our personal history is we've produced a lot of, well, radio and TV campaigns and I know that we've talked a little bit in the past about how creative costs translates 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 is 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 DeMars]

I still don't know if it's a cost question. I think a badly produced commercial, 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 world, 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 can deploy that idea using whatever technology is financially reasonable. But again, I don't think it becomes a direct correlation. Spend a lot of money and you end up delivering on great brand assets or vice versa.

[Alena Jasper]

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 pre testing and just how little pre testing is happening at large. But how it's going to be easier and easier to do. And that could be a way to make sure you're not overspending on creative either is pre testing to get to the right message before you produce it.

[Angela Voss]

Yeah, agreed.

[Rob DeMars]

Yeah, that's a great point.

[Alena Jasper]

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

[Angela Voss]

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. We've. 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. You know, 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 when maybe that doesn't. Maybe it's not necessary.

[Rob DeMars]

Oh, 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 NASCARs and I'm using 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. So that, that tends to be one of those. You're like, yeah, yeah, yay.

[Angela Voss]

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 to.

[Rob DeMars]

Well, I'm not making fun of nascar. I'm just saying if, hey, if you're the right brand on a nascar, it makes all the sense in the world. It's just if you're. I'm not going to call out any particular brands right now, but sometimes you don't belong on a nascar, right? 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 had like budget by committee, 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.

[Alena Jasper]

Yeah, I think, Andrew, 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 because it's showing that we don't probably need as many iterations as we think it'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 and you do not already have a consistent presence on national tv, I'd argue you should not be doing that yet. Those would be great things to add on for incremental reach and the kind of tent pole opportunities. But a lot of times 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. 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 2x3x4x5x 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, you know, 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 want to 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 going to be missing out. So how much budget do we think marketers should leave unallocated to allow for real time adjustments during the year?

[Angela Voss]

This was a tough question because I so easily just wanted to go to as much as possible, which is not super helpful. Probably like it's 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 them have limited time offers and things like that, where you've got a 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 and mindset process. And so the more you can do that, we get asked 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, 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 going to gain out of thinking about unallocated spend. Going towards opportunity to help you grow.

[Rob DeMars]

This is why I have no business talking about this topic at all. Because 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. Yeah, 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. They're like, well, there's a weird idea too, 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.

[Alena Jasper]

Yes, but it becomes kind of that corporate. You're right, we hear that all the time. If I don't spend this much this.

[Rob DeMars]

Year, I gotta spend.

[Alena Jasper]

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 Voss]

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 operation considerations of course, whether you can you handle another 5% or 10%, are you lead gen hard inventory, that type of thing. But it's a good thing to think about.

[Alena Jasper]

All right, what advice do we have for marketers that are walking into, you know, a 2026 budget planning meeting? Where do we think they should focus first?

[Rob DeMars]

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. You know, if it's well, we need to grow. 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? Because they have stronger distinctive assets and we don't. Ah, great. So we're going to 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.

[Alena Jasper]

I like that a lot, Rob, actually, because 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 metrics and numbers. You need the story for sure.

[Angela Voss]

Start with why.

[Alena Jasper]

Well, maybe not like thank you Simon.

[Angela Voss]

But thank you Simon.

[Alena Jasper]

Ange, what about you? Got any, any advice?

[Angela Voss]

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.

[Alena Jasper]

Along that same line, I think that. I know I'm obsessed with share 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, might be something that could help you make the case when you're budgeting.

[Angela Voss]

That's a great one.

[Alena Jasper]

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

[Rob DeMars]

Well, is that the next one? That's the next question. If a marketer has one thing to improve. I do have one thing.

[Angela Voss]

Sure is.

[Alena Jasper]

What? What is it?

[Rob DeMars]

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 kind of martech, whatever you.

[Angela Voss]

Like to put sponsorship on the table.

[Rob DeMars]

To be slime, Kill it and take that money and put it on. Just some crazy moonshot. Like, 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.

[Alena Jasper]

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? And compared to, like, are you overpaying for certain tools and. 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? You could pick either.

[Angela Voss]

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. Who gave this advice. The advice is don't throw good money at bad. Anybody know?

[Rob DeMars]

Do I know who said it?

[Angela Voss]

Who offered this advice to us? Maybe.

[Rob DeMars]

Well, I mean, I've heard it a thousand times, but from our cfo, Brent Longval.

[Angela Voss]

Okay, I was gonna say Chuck.

[Rob DeMars]

Well, I. When it comes to finances. Their voices blend together a little bit sometimes.

[Angela Voss]

No, it's not.

[Rob DeMars]

But I'm like, don't feel good. Yep. Yep. Nope. That makes sense.

[Angela Voss]

Yeah.

[Alena Jasper]

Do you want to explain that one a little bit for the listeners? Yeah.

[Angela Voss]

It's just knowing, I guess, when to cut bait and consider something a loss versus continuing to throw your quote unquote 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 DeMars]

So I think Elena means 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? Yes, because I do. I find myself in like, oh, I know.

[Angela Voss]

Life going, okay, you don't throw any money at bad. You buy everything brand new.

[Rob DeMars]

No.

[Angela Voss]

I'm kidding.

[Rob DeMars]

That's an issue. That is true. I've got two, because one is that it was so obvious I just had to say it out loud. But 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 know 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.

[Alena Jasper]

I like both of those. I was thinking about, like, the Sunk cost fallacy, which is similar to don't throw good money after bad. And Rob agreed with you on like, 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 want to 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. And is that worth it when these are people that you don't see often anymore, they live in different states, you might not see them again for years. But I think consistently we make decisions like that. You can understand why, because usually you want the lower cost option. But what's the trade off in your time? Is it really worth it or should you just invest a little bit more to have a better experience? So I think that's probably some good advice. That's it for this episode of the Marketing Architects. We'd like to thank Taylor de Los Reyes for producing the show. You can connect with us on LinkedIn. And if you like the podcast, please leave us a review. Now go forth and build great marketing Marketing Architects.