Why your budget got cut and how to get it back

TLDR: Commercial, sales and creative teams need to stop suspecting each other of farting if they smell something bad. How working together on creative KPI’s benefits everyone especially when times stink.""

“Oliver. Confidentially, I need to tell you that my budget just got by cut by 50%…”

Who’s been on either end of this conversation? This one happened to me at the start of the financial crisis, it’s one I’m sure is painfully familiar to some of you now.

Everyone has a story of a department being downsized ( ‘rightsized’ is most recent patronising euphemism to suck up ). Change is unavoidable in business but it’s also true that creative budgets are too often among the first to get cut, the last to get reinstated and can take years to creep back up to pre-cut levels.

Why slash creative budgets?

1. Creative is seen as a cost base
2. There is rarely any link between commercial strategy, sales forecasts and tactical creative output (See point 1)
3. We have learned that 'improved relationships with partners' is the most important metric of success for some creative teams but is subjectively and inconsistently validated (See point 1)

Our research confirms what you already knew; leaders looking to trim costs do so based on the evidence of a return on investment any given activity offers. Creatives need to pull on their grown-ups pants and face up to the fact that the work we do can be a black box to other parts of a business. Without evidence for a return on creative, why retain or grow it? If you had to trim costs in your own organisation - what would you do?

Value chain. World of pain?

I see this all the time in brand licensing. There aren’t many disciplines I can think of where the creative is so far removed from the end product. In brand licensing, almost by definition IP owners, licensors, licensees and retail all must play a vital part to extend brands in new, exciting and profitable ways. Creative is woven throughout this process but how do you measure it’s effect?

Imagine the food critic dining at a restaurant where ten chefs rock up to a packed venue, get shown to a table full of ingredients, given a book of suggestions, told of a customer preferences and tasked with creating the perfect meal. With hard work, skill and a little luck dishes begin to stream out of the kitchen and arrive at the tables. But who gets the credit for success...or blame for failure? The owner? The fresh ingredients? A chef? Which chef? (I’d 100% go to this restaurant by the way. Jane Smith - possible extension for Endemol Shine? DM me)

If it’s true that creative is woven through a process then it’s the whole system that needs to be thought about anew. Changes that were already underway are accelerating in 2020 for obvious reasons, leading to creative teams rethinking their role in business. Here are some ways you can build creative performance into your organisation.

Creative performance indicators CPI’s

• Change begins with team, department and organisation wide objectives. Start as high up as is relevant to you
• Be a part of forecasting, make sure the forecasts are based on past performance not a target based on the CEO’s desire for a Tesla
• Agree what part creative plays in meeting the forecast - put a price on that. How could it be met in more efficient ways - put a price on that improvement
• What does success look like? Deals signed? Product ranges sold in? Stock sold through? Fan approval or brand equity raised? Put a value on anything that’s important to the business
• What about over performance? Could there be a value multiplier for over reaching goals?
• Relationships are essential - how is that evaluated? How will you know if they improve? Agree a way to measure this and put a value on the improvement

Get effective or go home!

Creative isn’t what something looks like it’s about solving problems. Creative performance indicators are a shared problem that are better solved together. Rolling up our sleeves and offering solutions that will help the company grow is the best way to get everyone around the table. With a proposition to debate, agree commercial objectives together with creative tactics that fit and arrive at CPI’s that lead to measurably effective executions.

Having robust CPI’s allows more numerically minded teams to relate to the necessary pace and non linear direction of change inherent in creative execution. They can come to view creative output as a trader treats the fluctuations of stock prices, keeping an eye on the long term yield, worrying less about short term volatility.

Creative + performance = profit

Creative will always be a ripe target for budget cuts while organisations treat it like magic and avoid holding it to account. Working on creative performance indicators will bring people with different skillsets together, break down team silos and focus organisations on common purpose.

When the next recession comes and the organisation is looking to ‘rightsize’, will creative remain a cost base? Or will the clear cause and effect of CPI’s reveal something new?

Contribute to our ongoing research by connecting with Oliver Dyer here. Find out more about Skew at skewstudio.com Get insights in your inbox by signing up to our newsletter here.