What does ZBB mean for marketing?

Zero-based budgeting (ZBB) is the new normal for brands but what does it mean for marketing?

If it hasn’t already, zero-based budgeting (ZBB) is likely to come up soon in a marketing meeting happening near you.  Diageo has described it as ‘the new normal’ and Coca Cola and Unilever among the world’s biggest marketing spenders have both introduced it.  At its most basic, it simply means all expenses have to be justified for each new period – i.e. no assumptions that the £10 million advertising budget for one year will be more or less the same the following year if the world hasn’t changed too much.  It’s difficult to argue with allocating budgets on their merits.  Indeed, after ZBB was developed at Texas Instruments in the late 1960s, it was taken up by Jimmy Carter as Governor in Georgia, and then on into the US federal government when he became President.

However, ZBB has had a bit of a bad rap, partly because of its popularity with 3G Capital (the Brazilian private equity firm whose acquisitions include Burger King and Kraft) and its reputation for cost-cutting.  This has had a higher profile since the 3GC-led bid for Unilever by Kraft Heinz – the so-called ‘battle for the soul of capitalism’ – was rejected by the Unilever board, with Reuters describing ZBB as 3GC’s ‘secret sauce’.

ZBB may or may not be your cup of tea, but making the most efficient use of finite resources is on everyone’s lips.  One way in which we’re seeing brands enjoy success in this ZBB world is in stretching the use they make out of their most expensive content, typically film – ‘sweating the assets’.  Much of the focus in this area has been on TV ad ‘wearout’ – how long can a campaign run before its effectiveness starts to diminish?  And there is plenty of research showing that ‘true “wearout” of a TV ad is rare, and many TV ads could have a longer useful life than advertisers realize.’

But running the same campaigns for longer isn’t the only way to stretch assets, and isn’t necessarily the answer for all brands.  The opportunity now for brands is to stretch those same assets in multiple directions. At a time when ‘brand storytelling’ is the goal, film remains the great storytelling medium.  Smart marketers are therefore asking themselves how they can use this asset in more creative – and cost effective – ways.  We’ve been seeing strong results when brands use their film content to engage audiences through micro-influencers.  When Sunsilk started combining film and micro-influencers in 2014, they reached 1.8 million girls in two days through organic social media posts.  Now, that isn’t the same reach as can be achieved when large budgets pump-prime views and likes.  But it is genuinely organic and consumer engagement is increased thanks to the credibility of the influencers. We’ve seen brands like Lifebuoy use their film content as part of their advocacy efforts.  And we’re seeing companies like Heineken apply the same sort of creativity to their HR films as their advertising.

ZBB may be a relatively new concept in marketing discussions, but the principles behind it are enduring: don’t just repeat what you’ve done in the past; measure what you do; do more of what works; and sweat your assets.