Learn Your Clients' Budgets

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Dec 11, 2023 by Sean Luce

Imagine coming to work tomorrow morning and looking at the smoldering remains of what used to be your Media Property. Your desk and everything in it, toasted. Your computer and all the backups, singed. Nothing left; all documentation of your accounts went up with the fire. How would you project what your accounts would bill next month? Next year? Actually, you would probably be better off.

Here is a typical forecasting meeting, occurring on a monthly or annual basis:

Sales Manager: Let's see... Barry's Tire did $20,000 with us in billing last year. What do you think it will do this year?
Account Executive: I think it will do about $22,000 this year.
SM: Why do you think it will do $22,000?
AE: I don't know - that's maybe a 9-10 percent increase. That sounds good, doesn't it?
SM: Yeah, not bad. Any idea how you are going to increase it by $2,000?
AE: Not yet, but they are probably good for it.
SM: Okay, how about...and it goes on and on.

What's wrong with this picture? The AE has no idea how he or she will increase this account (if it will increase). In most cases, AEs have no idea how much the account is spending annually in advertising and no idea of the account's competitive expenditures in other media. If you pay attention to what other media take in percent of advertising dollars out of the market, we create a self-fulfilling prophecy because we compare our competitive only to what other properties take from the market - if we're lucky enough to get that information. We are too afraid to ask the questions:
- "What is your annual advertising budget?" 
- "How do you allocate your advertising dollars?"
- "Is your budget variable or fixed?" (It should be variable.)
- "Currently, what media do you use, and how much do you spend in each - annually and monthly?"

In most cases, we don't think we have the right to ask them, or the prospect will say, "It's none of your business." Excuse me, but it IS your business if you are going to help their businesses, not by peddling a bunch of packages but by being a consultant with expert media knowledge and problem- solving skills.

If an account is spending $600,000 - or $50,000 per month - in advertising and we are getting $40,000 per year or $3,333 per month, we slap ourselves on the back - that's a big order. Yet, it's only 6.6 percent of their annual dollars. Before the next order is entered into your traffic system, make it mandatory that the AE have the following information on the order or it's not cleared: (change your order forms, if necessary). 
- What percentage is this order of their annual advertising budget?
- What percentage is this order of their monthly advertising budget (if the order is turned in monthly)?

We must stop feeling that, if we take our Media brethren's dollars, we are doing a good job. Find out how you're doing against the media that are cleaning your clocks. Pat yourself on the back when you take 20-30 percent of their overall dollars.

In doing due diligence on New Zealand, I found that, for instance, Radio in New Zealand takes 13.2 percent of the total advertising dollars compared to just 8% in the United States. Just think what a few extra questions might do for your property!

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