It all started with a conversation.
Agency: “We notice your brief doesn’t mention budget – what have you got in mind?”
Client: “We don’t really have a budget as such but that shouldn’t be a problem”
Agency: “OK, we might give you a couple of options at different levels then”
Client: “Sounds great”
Sometime later…
Agency: “How was that cost proposal for you?”
Client: “Well it was a lot more than we were expecting and… twice as much as Agency X who we’ve since gone with.”
Sound familiar? It’s a conversation between all manners of agency and client as old as time.
And it’s a complete waste of time for everyone involved.
For the client, they’ve wasted valuable time with an agency they were never going to work with, and this could have been established inside a 10–15-minute phone call.
They’ve also sacrificed the opportunity to conduct a worthwhile comparison exercise with a more relevant potential agency partner. Instead they’ve been left with the impossible task of attempting to decipher why one agency solution is twice the price of another, inevitably drifting towards the economic sanctuary of “going cheaper”.
The agency has also diluted their proposed solutions with energies divided between solution A and solution B. No wonder they didn’t win. Agency X might have gone in cheap but they did so with all their discounted conviction.
Some clients will always have a max budget in mind and choose not to share it. Others simply have no idea how much to spend and take a scattergun approach.
Within this article I want to help the latter and give the former good reason to reconsider approach.
Determining budget
If you’ve read this far and are currently struggling where to start in terms of identifying a budget for a new branding project, then sorry to disappoint but there’s certainly no magic formula or algorithm to work out a precise budget figure. It doesn’t exist and every single combination of factors will nearly always be unique.
Any attempt to suggest a % of overall marketing spend or turnover or potential uplift in sales are crude at best and misleading at worst. Numbers would vary wildly across sectors, challenges, access to cash and ultimately, attitude to risk.
However, there are some important considerations to determine an appropriate budget and to help provide a business case to your board to invest suitably. The buy cheap and buy twice mentality doesn’t belong here – branding is too important to get wrong.
Hang on, has this been done before?
Benchmarking is a good place to start.
Look around at other companies that might have recently re-branded or evolved their brand. Do your homework and find out which agency was engaged in delivering this. One recommendation would be to look through the Transform Awards list of winners in previous years. Here, you’ll find the cream of the crop of branding projects across Europe. Our case study section also comes highly recommended.
If something looks and feels relevant, contact the agency involved and quickly ascertain a rough budget to do similar. Two or three of these should give you a feel where to peg your budget ambition. Take this number back to the board and see how such a level of expenditure might fit within overall budgets and cash-flow. If it fits, you’ve quickly established an appropriate level of spend through a simple case of benchmarking upfront rather than plucking a figure out of thin air and then hoping it works for the agencies you’d like to work with at the end of a process.
A brand investment is not just for this financial year
Investing in your brand adds instant intangible value to your balance sheet. In other words, it’s more akin to capital expenditure – and yes, that investment might depreciate over time (until it needs revisiting again) but it doesn’t deserve to be considered in the same bracket as annual marketing spend on the P&L.
We rebranded Eric Wright Group in 2005. The fee then was probably circa £30k. They haven’t changed that identity one iota since. Was that a good investment? Less than £2k per annum. Was it more worthwhile than the competitor who might spend half that total sum every few years, papering cracks?
Things might happen within fast-growth businesses that mean a brand requires more regular attention but a robust approach and visionary thinking (allowing for product or service expansion and further sub-brand development) will maximise shelf life.
Marketing budget belongs within a financial year, but brand budgets should be thought of as an investment across the lifetime of a brand cycle.
Think outside marketing
It makes me nervous when a brand brief, budget and client project team feels exclusively marketing centric.
Clients think of brand as primarily being the platform upon which to hinge sales and marketing activities and of course this matters as the brand needs to speak to and resonate with customers. But our approach to branding is inside out. It has to work internally first and foremost.
So if I was determining what an investment in brand is worth to a business, I’d also be looking at internal functions to determine potential ROI. I’d put people at the heart of this process and consider how your brand currently attracts and retains talent. Do you look, sound, feel and act like a company your desired talent want to work for? If not, what would be the value of the positive impact of a brand that resonates and connects in a more relevant way. Lower costs to hire, higher levels of employee engagement and reduced staff turnover. Impacts that all go straight to the bottom line.
Creating a seamless brand experience will also lead to streamlined and efficient operational delivery. Saving costs. Do we do things at Company X one way or several different ways? Brand should determine and govern this, saving money and improving customer experience at the same time.
Finally, time and again, we’ve worked with businesses who’ve invested in their brands as a precursor to exit strategy or external investment. Either way, maximising asset value. The right brand platform will magnify investor attraction and increase the chances of realising higher multiples.
Thinking around all these areas and the commercial benefits can sharpen a financial focus on what an appropriate brand budget might look like. It should probably be more than you think.
Budget for the unexpected
Finally, always have some contingency up the sleeve. Even the best laid plans can encounter uncontrollable curveballs – Covid was one – or situations can materialise where it’s absolutely justified for someone to change their mind and to go two steps forward, we need to go one back.
“Well we’re on this pathway now, let’s just keep going” thinking in the face of incontrovertible evidence, halfway through a project is wrong. Quickly get back on the right path and pay the small financial penalty rather than blow the entire budget on something that won’t do you justice.
And if everything goes exactly to plan, then you’ve just found some extra budget for an enhanced brand activation programme. But that’s probably another blog entirely.
How we can help
At Studio North, we can assist with all of the above. For a relatively inexpensive consultancy fee, we can help you build the business case, define a budget and ultimately create a brief for a rebranding project. We’ll assess the business numbers that really matter and help define what success might look like. Once we have this perspective and have looked at your sector and competitors, budget figures can start to be assigned to tasks and goals.
You’ll then be in a much stronger place to conduct a thorough selection process involving some carefully selected potential brand partners. And that’s another blog coming very soon.
If you’re looking to engage with a branding agency to support you in defining your brand (and your budget), we’d love to hear from you.
