The end of the golden ratio in planning marketing investment

Viewpoint November 2019
The end of the golden ratio in planning marketing investment

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Using econometrics to shape marketing investment

Introduction

The rise of digital platforms and channels has led to a fundamental shift in how brands should allocate their marketing budgets. In today’s Ecosystem, there are more links in the media supply chain than ever, and more ways for brands to interact with customers. The established norm of using golden ratios – such as the often used 80/20 rule for working and non-working media allocation – has had its day. Instead, advertisers now have all of the tools available to build their marketing plans from the ground up, based on overarching business objectives, using data and evidence to guide investment decisions. As a result, brands should now move beyond simplistic approaches to budget allocation, the most common being fixed ratio targets for working versus non-working media.

Photo of Laetitia Zinetti

Author
Laetitia Zinetti

Managing Director, Continental Europe

Laetitia is Managing Director of Continental Europe, and is responsible for overlooking Ebiquity’s European activities. She has more than 20 years’ experience planning and implementing media and marketing strategies, with senior roles client-side at both Qantas and Nissan. She is based in our Paris, France office.

Photo of Mike Campbell

Author
Mike Campbell

Head of International Effectiveness

Mike leads Ebiquity’s International Effectiveness Practice, helping brands to optimise marketing investments across multiple markets. He is based in our London office. Prior to joining Ebiquity, he spent 12 years as MD of Ninah Consulting’s London office and global head of its FMCG Centre of Excellence, working with Nestlé, Diageo, and General Mills.

What it covers

In this viewpoint paper, we explore why it is now time for brands to rethink the use of golden ratios. Instead, brands should leverage new approaches– such as brand equity modelling – that draw on data and analytics to inform better marketing investment decisions.

The journey for building marketing budgets should now begin with overall business objectives.