Have you ever dreamed about implementing zero-based budgeting for your next marketing strategy, but without the correct advertising infrastructure, you haven’t known where to start? Don’t worry; we get it. This is why we’re unpicking what you may have written off as an unreachable dream and explaining how you could make it a reality.
To make sure we’re all on the same page: What exactly is zero-based budgeting?
Zero-based budgeting is a method used by organizations and businesses which scrutinizes every expense on its own merit. Rather than taking the budget from the last accounting period and keeping it generally the same, instead, at the beginning of the fiscal year, your budget starts from a ‘zero base,’ meaning that no expenses or balances from the previous period are carried over.
This method of budgeting allows you to challenge legacy expenditure, question past strategies and tactics, and ask if activities and expenses really need to be replicated. And if so, can you justify doing them again?
How does zero-based budgeting work?
With a zero-based budgeting approach, you input the expenses and requirements you need into the budget, disregarding whether your overall expenditure was higher or lower in the past. When the business moves onto the next accounting period, the budget returns to its zero base.
Here at Net Natives, we’ve had great success working with clients who use zero-based budgeting and have adopted an 80/20 approach when working and justifying line items to finance teams: 80% of the budget goes to channels that are known to work, and 20% is allocated to activity where you can test and learn across different and new channels to get the right data. Starting from that zero-base allows you the freedom to learn and grow, instead of living within the confinements of “we’ve always done it this way”.
Through Akero and our unique enrollment attribution capabilities, we know what the conversion rates of certain campaigns and activities are, and we know how much an enrolled student costs - as always, it is so important to track true ROI. From there, clients can come to us with their student enrollment targets and budget, and together, we work out where to make changes and move campaigns forward. This approach has proven popular as programs shift towards online learning, providing scalability through tracking the current cost of acquisition and creating an optimum model that will yield the best ROI.
The stand-out benefit of implementing zero-based budgeting? You’ll be speaking the language of your Chief Finance Officer. In reality, marketing phrases like “building your brand presence”, “increasing your market share” and “positioning yourself as a thought leader” only impress those in the marketing department. With a zero-based budget, you’re arming yourself with the ability to showcase the profitability of your marketing efforts with demonstrable returns. You’re justifying “brand building” or content marketing in a language your CFO will hear.
Let's take a look at a case study
We worked with NYU Wagner to help them understand their advertising spend in order to achieve zero-based budgeting. The aim was to track advertising ROI against the cost of each enrolled applicant via Akero Enrollment Attribution.
We set up an integration between Akero and Wagner’s student management system, Slate, allowing us to track prospects from initial form submission through the applicant journey to eventual enrollment. The number of prospects at each point of the journey could be directly attributed back to their original source (form submission, platform, etc.), enabling a zero-based budgeting approach. You can read more about how we achieved this here.
“We started working with Net Natives because we wanted to implement and integrate Akero into our current systems. This improved the feedback loop between our marketing team and our admission team, and allowed us to measure the effectiveness of our recruitment efforts. The integration between Akero and our Slate CRM gives us full visibility into the prospective student journey.”- Ciara O’Connor, Assistant Director, Digital Marketing and Recruitment, NYU Wagner
But before you jump in...
A couple of things to consider when implementing zero-based budgeting:
It takes time to build the infrastructureIn order to know your cost per application, cost per enrollment and have the ability to track every student from click through to enrollment, you need the correct advertising infrastructure in place. Only then can you accurately forecast.
Changing your budgeting method requires organizational change and open-mindedness. Be prepared to have the hard discussions of what is justifiable and what is no longer; challenge perceptions.
As you begin to justify and argue for the items within your budget, you will also have to, naturally, forecast the return on investment. But remember, when working within an education cycle, you’ll need to focus on (and present to your CFO) your delayed return on investment.
For example, you would like X amount of money to invest in digital advertising, in order to bring in X amount of enrolled students. But work you are doing in November may not come into fruition until the following September. So working on monthly budgets and quick-turnaround results may not be the most effective way to implement this approach. Think long term, and as long as you plan, communicate and justify your ROI and timescales, there’s a real opportunity in using the zero-based budgeting method.
At the end of the day, zero-based budgeting comes down to maximizing your budget so that you are no longer funneling money into legacy departmental or tactical rubble that has no weight on strategic growth or objectives. Instead, this approach affords you and your team a clean slate to try new things, rid the processes that weren’t doing what they needed to and further understand your true return on investment. In turn, bettering your cost per enrollment. Who doesn’t want more of that?
If you would like to find out more about zero-based budgeting, how Net Natives has supported the 80/20 methodology in the past or how to further understand your CPA or ROI, get in touch today.