Demand Gen Daily – Ep 27: Long term vs short term budgeting
With the start of a new year fast approaching, there is a heavier focus on budgeting and what should be done about it leading up to 2023. When budgeting, regardless of the time of year, it’s important to consider short, medium, and long-term goals and planning to determine your overall investment in your marketing.
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Here are some key takeaways from this episode:
- When investing in the long term, the cost per conversion will always be lower whereas, for short-term tactics, the cost per unit will be higher.
a. It will cost more to get things off the ground but the longer you invest the lower the cost becomes. - When looking at how much to split your budget in short term vs the long term, it depends on the future outlook of your business as the main determining factor.
a. If your next quarter to six months of sales is looking very strong, you need to start shifting more investment into more medium/long-term investments and tactics. This is because you know you can service those sales in the short term but you’ll need sales later down the road to keep the business going.
b. Think ‘how much can I afford to push into the future’? - We don’t recommend putting more than 80% of your budget into short-term tactics because while you may need sales immediately, at some point you will get into a vicious cycle of needing more sales and needing to spend more to acquire those sales.
a. In doing this, you’re raising your break-even point - Your break-even will drop over time if you keep some investment in longer-term tactics to ensure you’re planning for the future.
- As you shift the budget, slowly massage the budget to reduce the total percentage put into short-term tactics and shift 10% of the budget to split among short and medium tactics
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