While Kanye West often makes headlines (admittedly not always for good reasons), he’s one of the best-selling artists of all time. He’s racked up impressive awards and recognitions – including twenty-one GRAMMY Awards and an MTV Video Vanguard Award. He also has his own fashion line and was named as one of Time’s 100 most influential people in 2015.
So how in the world can an accomplished artist like Kanye claim to be $53 million in debt?
It got me wondering, too. And then I thought, maybe it’s as simple as understanding basic marketing budget terms. Every organization, no matter how big or small – and even successful artists like Kanye – need to have a handle on marketing planning and budgeting. If you don’t, it’s easy to find yourself in the red.
We’re here to the rescue with your go-to essential marketing budget glossary.
Begin with the Marketing Budget
A crucial part of marketing, a marketing budget is the estimated amount of cost that will be required to promote a company’s products or services.
Marketing budget can be a synonym for plan, as in “We don’t have the budget to re-do our website this year”. Many marketers also use budget as a verb to describe when they want to add something to their plan, like “Let’s budget for a new booth at this year’s trade show.”
In the case of Kanye, when he decided to launch his fashion line, he should have begun with a marketing budget – setting aside a predetermined amount of money to market his clothing. Then, when he partnered with Adidas on his Yeezy shoe line, good questions to ask would have been “Do we have the budget to live stream the line launch to 50 theaters around the world?”
Lesson from Kanye: Don’t start spending without knowing your budget.
Set Investment Targets
Investment targets are top-down numbers that represent an organization’s strategic priorities. The CMO or corporate finance leaders usually set investment targets. Many organizations set functional investment targets, allocating money to specific regions, teams or cost centers.
Some organizations have embraced strategic investment targets, funding marketing initiatives based on prioritized objectives.
As part of Kanye’s planning process, setting investment targets across his diverse initiatives would be a smart choice. For example, if the top priority is to promote The Life of Pablo, he’d set a strategic investment target and direct a chunk of his marketing budget to album promotion versus his clothing line.
Lesson from Kanye: Set your investment targets based on your organization’s priorities.
Track Investment Actuals
The total amount of money spent on a marketing program or campaign. Despite your best efforts,investment actuals may be different than what was originally budgeted or planned.
For Kanye, understanding and tracking exactly what was spent would’ve prevented a $53 million dollar surprise. After all, every marketer knows you can’t spend more than you have.
Lesson from Kanye: Precisely track how much you’re spending.
Most marketers don’t have the luxury of sending a plea to Mark Zuckerberg to bail them out for mismanaging their marketing budget. Understand these terms and use these three lessons to successfully plan and manage your own marketing budget.
Learn other “need-to-know” budget terms, plus the rest of the instructions your marketing budget should have come with, but didn’t. Bookmark our quick Marketing Budget Glossary or download the full Your Marketing Budget: An Owners’ Manual.
The post The Essential Marketing Budget Glossary: Lessons from Kanye West appeared first on Allocadia.