07 Apr 2010








Economic Development Budgeting

Mr. Monzon co-founded GIS Planning Inc., one of the fastest-growing 5,000 private companies in the United States, according to Inc Magazine. As developer of the first GIS-based website for economic development, Mr. Monzon is an entrepreneur, innovator and technology professional. With over 15 years of experience developing location-based applications and GIS based websites, he has received multiple awards in both the field of Economic Development and Geographic Information Systems. His work has appeared in The Wall Street Journal, CNN, NBC News, and numerous GIS-related publications. Mr. Monzon has lectured about Internet GIS in Europe, the United States, and Latin America. Prior to GIS Planning, Mr. Monzon worked for Vectiv, an online GIS site selection company focused on the retail industry.

No matter how effective a marketing strategy may be, an economic development organization needs an adequately sized budget in order to have an effective marketing program. Each organization must decide how much of its total budget to devote to marketing, as well as how much to devote to each marketing strategy it pursues.


In our 2008 book, Economic Development Marketing: Present and Future, we learned that the median marketing budget for respondents was $50,000, while the median budget for the organization as a whole was $500,000, meaning that economic development organizations are typically devoting 10% of their overall budgets for marketing purposes. This percentage tracks with typical figures for public firms across all industries. Organizations that indicated they carry out effective marketing also have larger budgets. For further discussion, please see the section in the book entitled, “Practices of Effective Organizations.”


Average budget allocation table

The most effective strategy, Internet/websites, was found to have the highest average budget allocation. However, budgeting priorities are often not in line with what strategies work, as seen in Table 2-1. As an example, economic development organizations spend the next highest portion of their budget on print advertising, even though only 16% of organizations rated this as an effective strategy. Brochures and trade shows/conferences ranked 3rd and 4th in terms of budget allotment, but only were perceived as effective by 20% and 36% of respondents, respectively. On the other hand, public relations, special events, and site selection consultants/familiarization tours received comparatively low budget allotments considering their high levels of perceived effectiveness.


Marketing budgets for websites/Internet experienced the largest increases over the past 5 years, and respondents anticipated they would also receive the greatest boost in the years ahead (see Table 2-2). Organizations also put more funding into out-of-town meetings with businesses, which are expected to be funded even more in the next 5 years. Site selection consultants and familiariza- tion tours are also expected to have significantly greater budgeting priority in the next 5 years, while slogans, logo, and graphic identity are expected to have significantly less budgeting allocation in the future. This may mark an attitudinal shift in economic developers away from a focus on branding to a focus on creating virtual and personal relationships, even though economic developers rated branding rather effective, especially compared to the lower value perceptions of site selectors.


The marketing strategies that receive high budget allotments and low effectiveness ratings warrant more scrutiny, and are discussed in more detail in the following posts.


In the past five years, economic development organizations reported on average that they scaled back their financing of television and radio advertising, print advertising, telemarketing, and videos (see Table 2-2). These strategies are scheduled to be cut again in the next five years. Contrary to strong general advertising trends, economic developers reported on average that they decreased spending on online advertising in the past five years, even though they planned to reverse this trend and increase spending in the next five years.

Comments

Post has no comments.

Post a Comment





Captcha Image