How to Prevent End-of-Year Media Budget Overspend
The Situation: It’s early December, the holidays are here. Your team is tired and distracted, and pharma clients start going on vacation.
The Problem: Overspending Approved Media Budget
With nearly 18 years of media planning and buying experience, I’ve seen teams overspend their allocated budget a handful of times.
The Cause: The main reason teams overspend their allocated budget is due to internal miscommunication. Or rather, lack of communication.
Here’s what happens:
At the beginning of the year the client approves an overall DTC (or HCP) media budget, let’s say $1 million. The media agency plans that budget to be allocated across SEM (Google Ads, Microsoft Ads), Paid Social (Facebook, Instagram), Programmatic Display, TV, Audio, Print, Conference Coverage, Point of Care/EHR, etc. Each channel gets a specific budget based on factors like minimum buys, size of opportunity and estimated ROI.
But then reality happens. Results come in. Some partners perform well and some don’t. Budgets are re-allocated based on performance.
The client finds incremental budget and tells the agency who informs the various teams who plan the incremental and then get approvals.
In short, budgets are constantly shifting across channels and partners.
What often ends up happening is that one a single partner or channel is left out of the loop when a budget shifts and so they work with the previous number and spend that budget amount in full. Meanwhile, every other channel and partner does the same.
When the final spends for the year are being calculated to bill the client, the accounting team discovers that the team overspent the total approved budget. Uh-oh. How could this happen - see above. But more importantly, how do we prevent it from happening again?
The Solution: This has worked wonders for my teams over the past 18 years:
At the beginning of December (right about now), while there is still time left in the year, have each of your various media channel teams meet and provide:
Their most updated, actual YTD spend through November
Their planned December budget.
The overall media supervisor or director should total up each team’s numbers and double-check that it equals the total amount approved by the client.
This simple process usually reveals any disconnects and allows the team to correct the issue before it’s too late. Problem solved.
But sometimes that process doesn’t work perfectly, for example if a key team member doesn’t attend the meeting or they provide incorrect numbers at the meeting. However, the process still has huge benefits, because in the very rare case where the process is followed, but there is still a discrepancy at the end of the year, it is very easy to identify the source of the issue. This prevents the media supervisor or director from having to call an all-hands fire drill in early January. Fewer fire drills? Yes, please!
Let me know if there are other tricks you’ve learned about how to prevent media budget overspend and wrap up the year right.
Happy Holidays!