How much money should you be allocating to each channel in your marketing mix?
One simple answer is that you should calculate the ROI of each channel and then shift your budget from the less profitable channels into the more profitable ones. But, even leaving aside various challenges with measuring ROI across a multitude of digital and offline channels, this approach is problematic even assuming you could get accurate numbers. It fails to take all sorts of factors into account, such as the value of emerging channels versus established ones, the difference between awareness marketing and lead generation, and the impact of one channel on another to create a sum greater than its parts.
But the opposite approach — not measuring at all, but simply planning budgets by instinct or by what “feels” right, is even worse. If you have no idea how your various tactics are performing, then you’re flying blind. And as demonstrating ROI becomes increasingly important for marketers, there’s no way that such a laissez-faire way of planning is going to work for very long.
It occurs to me that we need a different approach — one that takes a holistic view of multiple channels and tactics, and drives towards a common goal, but which allows for different performance objectives for each tactic.
Such an approach exists. Our friends in the financial planning industry have been using it for years. They call it portfolio planning.