Why Using Data to Inform Marketing Budget Decisions Is So Important (with Example)

By: Octerra Team        August 22nd, 2024        6 minute reading

Data is the primary currency of effective marketing strategies. Let’s just get that out of the way right up top. Marketers are on the brink of a renaissance, driven by breakthroughs in data and AI technologies, compelling them to rethink, reconfigure, and recalibrate their playbooks. According to Salesforce’s State of Marketing (9^th Edition), marketers’ top 3 priorities consist of 1) implementing and leveraging AI, 2) improving use of tools and technologies and 3) improving marketing ROI/attribution. Not surprisingly, these also represent some of marketers’ top challenges. What is the common denominator amongst them all? You guessed it – data.

Companies that use data to inform their actions and marketing budget decisions not only gain a competitive advantage but also achieve a better return on their investments. Here we’ll dive into the crucial role of data in guiding marketing budget allocations and highlight by example the benefits of such a data-driven approach.

The modern marketing landscape and the importance of data for marketers

The marketing landscape has transformed dramatically over the past decade. Long gone are the days of gut-based marketing decisions. Advertising is still the largest budget item. However, traditional methods such as print advertising and television commercials have been joined by digital platform newcomers such as social media, experiential, and CTV.

This shift has led to an exponential increase in available data, providing marketers with access to a wealth of information critical to making informed decisions about budget allocation. In addition, the content needed to feed these channels continues to grow as does its related production expense, and it is ripe for optimization.

Source: Salesforce 'State of Marketing' Report, 9th Edition

Implementing a data-driven marketing approach

To effectively use data in marketing budget decisions, businesses first need to follow a systematic approach, according to ChatGPT:

• Collect and Centralize Data: Gather data and centralize it in a unified system for easy access and analysis.
• Analyze and Interpret Data: Use advanced analytics tools to analyze the data and extract meaningful insights. Look for patterns, trends, and correlations that can inform your marketing strategies.
• Set Clear Objectives: Define clear marketing objectives and key performance indicators (KPIs) that align with your business goals. Use data to track progress and measure success.
• Test and Iterate: Implement data-driven marketing campaigns on a small scale and test their effectiveness. Use the results to refine your strategies and adjust as needed.
• Invest in Technology: Invest in marketing technology that supports data collection, analysis, and automation.

For many marketers, trying to implement an AI solution is a big leap forward (kinda like jumping from kindergarten to middle school skipping all those important grades between), especially considering the many pitfalls technology companies have encountered in their own transformation. So, it's best for marketers to look for technologies and solutions that check the boxes without taking on too much or creating undesired effects.

A real-world example of data-driven marketing

A significant area of expenditure that often gets overlooked is production spend. Marketers are increasingly spending more to create more content and collateral faster than ever before, often doing it across agencies. Ultimately, the amount of money spent in this area represents the second largest line item in the marketing budget. Octerra delivers the solution marketers need for sourcing creative production, offering companies several key advantages, including:

Gaining Real-Time Data & Insights on What Is Spent and Why: Marketers are able to manage their production spending using data that is organized, easy to access, and not siloed in various email inboxes. All sourcing activity, including each bid revision, is logged making it easy to identify which version was chosen and why.

Managing All Vendors and Tracking Supplier Diversity: Businesses looking to manage their vendors beyond traditional spreadsheets are able to gain visibility into their entire roster, share critical vendor information and measure vendor performance – all within a centralized platform.

Consuming Accurate Data and Integrating into Critical Systems: Distributed data capture ensures timeliness and accuracy. Because each vendor is responsible for their own bids, and no one else, both the accuracy and timeliness of the data is ensured. No human or AI intervention is necessary to collate and load this data into a database. And because accurate data is consumed, companies are free to integrate with other systems to enhance data-driven decision making.

Knowing Exactly How Much Time Is Spent During Each Stage of Sourcing: Providing stakeholders with complete visibility and transparency at every stage of the sourcing process significantly accelerates decision-making. This enables companies to move from concept to contract 50% faster, while greatly reducing the time and effort required.

Improving RFP Processes, Centralizing Communication and Aligning Workflows: By centralizing stakeholders and communication on a single platform, up to 80% of sourcing inefficiency is removed. All vendors receive identical information simultaneously and can respond securely, ensuring fair competition. Brands and agencies can effortlessly review bids, manage revisions, and compare details side-by-side in an apples-to-apples format.

Tracking Bid Response Rate: Tracking bid response rate is crucial for assessing vendor engagement, ensuring a competitive bid environment, and identifying inefficiencies in the bidding process. Understanding vendor responsiveness can aid in better managing vendor relationships.

Expanding Triple Bid Compliance Across More Projects: Most companies have a triple bid policy but have no way to accurately measure it. Companies can realize up to 30% savings on production bids based on industry best practice and automation of the triple bidding process. Read this article for a deeper dive: 3 Innovative Ways Marketers Stretch Their Budgets During Tough Times.

The bottom line

The importance of data for marketers cannot be overstated. Using data to inform marketing budget decisions is a necessity in today's hyper-competitive business environment. Data not only informs immediate marketing decisions but also helps in building long-term strategies, which are essential for sustaining growth and profitability.

For more information on how Octerra can help, contact us.