SINGAPORE: Zero-based budgeting can be effective but marketers need to carefully examine the traditional/digital media divide to find success, according to a senior Facebook executive.
Operating to strict ‘rule of thumb’ zero-based budgeting can be harmful to a brand, according to Reynold D’Silva, APAC Head of Marketing for Brands and E-Commerce at Facebook, as it uses up investments inefficiently and actually diminishes the brand’s share of the consumer’s mental availability.
In an exclusive piece for WARC on how marketers can rethink zero-based marketing strategies to drive better brand growth, D’Silva argues that allocating marketing spend based on where money has been invested historically needs to be challenged.
This is particularly relevant in many Asian markets, where the pace of change makes flexibility even more important. (For more details, read D’Silva’s full article: Zero based budgeting and brand growth are not mutually exclusive.)
“A majority of brand growth comes not from loyalty, but from increase in penetration and recruiting new users,” he says, citing Dr. Byron Sharp’s work on how brands grow. “In media terms, this means it’s critical to get incremental reach amongst potential new users.”
In the case of a brand in Indonesia, a rethink of zero-based marketing strategies recommended reducing TV spend by 15% to reduce wastage, and increasing digital/mobile spend by 70-80% to achieve the same impact. This resulted in significant saving on overall media spend, D’Silva writes.
For brands targeting the lucrative millennial demographic – who are digital- and mobile-first – a traditional TV-led approach may be the wrong fit. A zero-based marketing approach that doesn’t allow flexibility in digital spend may actually harm the brand in this demographic.
“They are the consumer segment least engaged with TV and most engaged on mobile. Not being able to reach this audience would leave the field open for competitors to take away one’s future consumers, D’Silva said.
“Brands continue to do so at their own peril.”
Data sourced from WARC