70-20-10

The 70-20-10 Formula

I am instinctively wary of formulas. I know from long experience that the formula for the best tomato soup really isn’t. I know that the formula for sand to cement to water required major adjustment. And I’m still trying to nail that formula for homemade window cleaner.

So when I heard about this formula for allocating marketing expenditures I didn’t rush in. I was a late adopter.

Over time, however, I have come to trust this formula. My reasons are twofold. First, it recognizes the importance of focusing on what works. At the same time, and here is the second reason, it “forces” me to think about continually refining and improving.

Let me explain.

The 70-20-10 represents, in percentages, how to allocate your marketing expenditures.

Seventy percent of your marketing dollars should be spent on activities that you know work. They worked last year (or month) and nothing has really changed. These are your standbys, your go-to strategies. Notice that I am not describing what strategies to use. Instead, I am focusing on effectiveness.

Twenty percent of your marketing dollars should be spent on activities that have a high likelihood of working. Perhaps you heard about a new strategy at a conference or read an article in Currents. Or, as we will see in the next paragraph, perhaps they are something you tested last year with great success.

Note that this is only a 20 percent investment. I am not betting the farm. That wager is accommodated in my 70 percent.

The final allocation, 10 percent, is my wing-and-a-prayer investment. I want to use these dollars to roll the dice on something new—something that has the potential to be a game changer. But remember, I am hedging my bet at this point because I have my 70 and 20 percent investments.

Over time, marketing strategies move among these three buckets. Twenty years ago the web was in the 10 percent category. Now it is in the 70 percent bucket. Print was the mainstay of many marketing strategies for generations. Now, in many cases, it is on the decline. Social media and content marketing are receiving lots of buzz in the 20 percent and even 70 percent buckets.

The effective use of this formula requires two commitments on your part. First, you must be committed to marketing return on investment (mROI). You must be willing to invest the time, dollars, and political capital you need to measure the effectiveness of the activities and strategies you have in play.

Second, you must be media and channel agnostic. In other words, you never fall in love with a strategy because falling in love with a channel or activity undermines your ability to critically evaluate its effectiveness. Rather than channels, you are in love with results.

In a world awash with formulas, it’s nice to know that at least one is working.

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