If you’re a marketer, what percentage of your spend should be allocated to emerging channels, e.g. social media and mobile platforms? And within those channels, how should investments be directed? Instead of giving in to the most persistent sales person or using a dartboard to randomly make decisions, adapt an approach from financial services.
Budget allocation is the process of spreading your spend among different engagement channels. Different media react to changing market conditions in different ways. Neither diversification nor budget allocation ensures a profit or guarantees against loss.
According to Fidelity, there are three key considerations in asset allocation:
- Unique financial situation
- Comfort with investment risk and flexibility
- Retirement goals and time frame
Which can be roughly converted into:
- Your company, unit, and personal skills and budget
- Corporate risk tolerance and appetite for innovation
- Business goals and measurement intervals
Those factors are unique to each marketer in a particular role. For example, you could quit today to go work for your nearest competitor and all three factors would be at least slightly different. Another way to look at the combination on aggregate would be as the basis for strategic positioning.
So with your personal situation in mind, next comes the asset allocation. We can use high-level asset classes similar to the the Fidelity example:
- Bonds = traditional media
- Domestic stock = digital media
- Foreign stock = social media
- Short-term investments = cash reserve providing flexibility to quickly boost positions in any of the three
A certain amount of risk is necessary for any portfolio to grow; conversely, too much risk puts brands and careers in jeopardy. There is a marketing equivalent of the collateralized debt obligation – promotions giving away free stuff with no value capture plan.
If you’re not in the marketing department and understand what I’ve outlined here – be suspicious of what’s going on if you see your brand’s portfolio wildly out of balance. Black swans make for good movies, not corporate events.