126. SPN: 2025 budget planning

A formula to determine investment buckets; CRO tests to deploy; Ad spend trends; and, Jobs that took my fancy

Nov 11, 2024

A very warm welcome to all the new subscribers. I’m thrilled to have you as readers and truly appreciate your feedback and support.

This is the 6th Giving Season

That I’m operating

Within the best-in-class warm glow

Of Fundraise Up’s feature-rich and scalable donation platform!

Why? Because it helps me raise more money. Period.

Game-changer? It is for me!

In this week’s SPN:

Role and value-add of agencies
2025 Budget planning
Ad spend trends
CRO test ideas
Lots of Jobs that took my fancy this week

Ad Spend Trends

Anyone interested in charts?

TL;DR

1. Surprising market share for independent agencies. This is often smaller accounts but look at how it adds up!
2. Enormous gains in direct brand investment. Much of this went to Google, Meta and more recently Amazon following the 2019 transparency hoopla.
3. Holdcos hurting. However, they still have most of the largest accounts.

This chart from EMarketer really grabbed my attention. It shows the change in distribution of ad spending over time in the US, split between Holding Companies, Independent agencies and brands doing it themselves/other ad spending.

The standout for me is that Agency Holding companies have lost a third of their share of the media market since 2019. In the same time brand direct spend share i.e. Orgs placing their own media, is up 300%. (NB this is all organizations, not just nonprofit orgs).

Back in my formative years, the idea that Orgs could buy media direct and penetrate the media agency/publisher closed shop of agency discounts and rebates was laughable. But then again, back then there were only 3 commercial TV channels available to me in the UK ;)

Staggering as that is (the shift in spend pattern, not that there was a time when only TV channels existed), it’s not surprising.

Today more Orgs are more exposed to the media market and understand the value available rather than blindly following their agency just because they’re “big” or “must know”.

At the same time technology, while fragmenting the market, has also opened up choice through smarter solutions not driven by scale and volume.

While there’s more choice, it can also be daunting.

Some Orgs I speak to think they’re too small for an agency, so try and go it alone. Some think they’re too big for an independent and feel they have no choice but to stick with a big Holdco, even though there are misgivings about trust, transparency and service quality. I’ve sat in both seats.

The truth is every Org has a choice.

Buying one reach point or frequency, even targeted, has never been easier and it’s just a few clicks away for anyone making direct buyers. BUT, I know for me at least, the smarts, media skills, and advisory skills that are housed by the few very good agencies will evolve but also remain (enormously) relevant for the long term.

So, ahead of 2025 establish what’s important to you and what you want to achieve, do some research, and find a partner, or partners, that work for you rather than just spend your money.

If you’re unsure where to start in this journey for ‘25, if you don’t know whether you’re getting the most out of your current agency or direct buying arrangements, hit reply on this SPN and let’s chat.

Jobs & Opps 🛠️

New York Restoration Project: Individual Giving Officer ($110,000)

MSF International: International Digital Knowledge & Capacity Building Advisor

Parkinson’s UK: Brand & Marketing Lead (£52,890)

V Foundation: Director, Partnership Development

BBC Media Action: Director of Fundraising

Imagine H20: Vice President, Growth and Strategy ($150,000- $170,000)

American Diabetes Association: VP, lead the Obesity Association, a Division of the American Diabetes Association $154,000 - $180,000

American Eagle: Lead, Foundation and Corporate Philanthropy

World Food Program: Individual Giving Product Lead

National Gallery of Art: Manager, Platform Development ($163,964 - $191,900)

Mosaic: Development Director

Climate Works Foundation: Director, Climate Philanthropy

→ More jobs updated daily to SPN’s sister website: www.pledgr.com

Explore: Build Your Tech Stack (link)

Searching for new tools or trying to trim down your tech stack? Play around in this infographic. I add to it most weeks.

2025 Budget Planning

It’s that ~~fun~~ time of year again when every fundraiser is spread thin between ramping up spend post-election, ensuring all the EOY dominoes fall as planned, and building next year’s budget in free time.

I built an annual budget formula for media channels and campaigns in SPN #104. But before budgeting for media dollars, there are at least three non-media questions I battle with every year:

Question 1: What am I supposed to do?! The fundraising target has increased, every vendor is calling me to renegotiate (raise) prices, and my budget is flat or up less than the revenue target.

Question 2: How do I budget for new tools?

Question 3: Where and with what am I testing or “innovating”?

Below is a formula to determine investment buckets and answer these questions.

I use a nominal $100 budget in SPN to break out spend.

First, reserve (lucky number) 7!
This is your untouchable reserve of $7 for experimentation, tools and learning new stuff.
Allocate 3% to YoY cost increases in each bucket, which means
- $1.75 from a one-time bucket
- $0.27 from monthly
- $0.66 from mid-level
  - For a total of $2.68
Only permit cost increases for Partners who have improved their performance by at least 5% in the last year. Tell everybody else they need to work at the previous year’s cost.
The breakdown of the remaining $90 should mirror last year’s revenue composition, as viewed through your Donor Lifecycle lens. Most Orgs I speak to make around:
- 65% of the digital mass-mid revenue from one-time cash donors.
- 10% of revenue from recurring monthly donors.
- 25% of revenue from mid-level donors.

The budget allocation should match that revenue breakdown i.e.,

$59 (65% of $90) for all current tools, vendors, and initiatives focused on one-time cash donors
$9 for monthly donors
$22 for mid-level donors
- For a total of $90. Adjust the figures accordingly if your revenue composition is different. Tools and partners that serve two or all three donor types will be funded from several sources.

SPN Tip: Even if last year’s monthly donors’ revenue is less than 10%, allocate 10% of next year’s budget to that bucket and lower the one-time donors’ budget accordingly. It will help ensure you don’t allow outliers such as emergencies or one-time campaigns to discolor your budgeting.

Steps 2 and 3 above set the foundation for your budget spreadsheet and answer Question 1. Follow the formula I shared in SPN #104 to break down the dollars to media channels and campaigns within each bucket. As a result, you’ll get a portfolio that will generate (relative) $109 from a $90 investment, allowing your fundraising revenue to steadily increase year on year.

*****

Now, let’s return to our reserved $7 from bullet 1. This is crucial for your team to innovate, tinker with tools and toy with new approaches.

Set $2 aside for any implementation efforts. Be sure to separate implementation from any experimentation budget - don’t bundle the two!
- Outside implementation support: onboarding a new agency, hiring a contractor, extending scope with one of your current agencies.
- Building in-house implementation capabilities: hiring a new team member, investing in training for the existing team.
Then crack open a Notion document or get a blank sheet of paper, put your supporter hat on and start to think through areas in need of improvement/optimization in your donor journey. Which means - gather quant and qual insights, and evaluate elements of your digital donor experience. How?
Like this → →
Start with Historical Data
Look at each step in your conversion funnel (e.g., page visits, clicks, form completions, donations) and identify drop-off points. These points highlight where donors are losing interest or facing friction.
Dive into engagement metrics - email open and click-through rates, time on page, event registration rates - to spot any areas where engagement is low compared to benchmarks you’re seeing in industry reports or your quarterly/annual goals.
Collect Feedback
Take insights from donor surveys to understand your donor experience. (Side note - in 2025 commit to sending these out monthly - they’re useful engagement sends and break up fundraising asks). Questions about donation/registration/event forms, ease of navigation, or overall site experience will reveal pain points and opportunities.
If you have channels for volunteers or beneficiaries tap them for feedback and use that data to understand usability issues, unclear information, or barriers to engagement.
Donor Journeys
Map journeys by audience. And review each step for any donor experience (UX/UI) challenges.
Live the experience - how many extra words are in the CTA making it not as crystal clear as it could be, or how long does that landing page really take to load, or how user friendly are the forms you’re serving supporters to fill in? Tools like Google PageSpeed Insights or UX testing platforms can help pinpoint areas where supporters might encounter difficulties.
If you run through the above, you’ll already have developed a well-rounded understanding of where there are optimizations to be made, and you’ll likely have a hypothesis of what can drive the most value. Then you can focus your efforts (and remaining $5) on areas with the greatest potential for impact and the tools required to help you do so. See below.
Put your remaining $5 (5% of your budget) into running experiments, and the tools and support you need to deploy optimizations.

It’s likely these optimizations will drop into one of the following: donor engagement, landing page effectiveness, or campaign analytics.

Look at other Orgs’ tech stacks (you can use Pledgr > Org brand page > Tech Stack) to analyze what and how technology is being used by others.

Make use of free trials, run head to head tests, pilot programs, and get them actually set up/running/AND tracking so you can say it worked/or didn’t. In terms of budget distribution, I’m usually in the 70% ball park to proven tools with high ROI potential and 30% to tech totally new to me that may have some unique benefits or is being used in a different sector that I can see some use cases for in my world.

All in all, you’re spending 5-7% of your budget every year on researching donor needs, testing, and adopting new tools while hitting your revenue targets. That’s a win!

Final thought - Quality over quantity

One thing that stuck in my head from Optimizely’s Opticon event last year was the term “experimentation velocity”. I don’t really believe there’s a specific number of tests you should run a year - team size and digital maturity are big considerations - but if a 2025 goal can be to increase tests year-over-year, while ensuring quality over quantity by carefully planning each experiment, then you’ll be carving out a very nice path for your Org.

If helpful for audience/test prioritization – and who will affect your Org’s revenue more - I’d prioritize monthly donors (monthly recurring revenue), then one-time cash second, and mid-level third.

Bonus:

Beyond donation form testing (which as a client of Fundraise Up they’re always doing in the background so you can focus your efforts elsewhere), here are some high-impact areas for testing to stick on your roadmap for 2025:

Volunteer sign-up forms: These can be optimized similarly to donation forms, focusing on simplifying the process and removing friction (take inspo from how Fundraise Up design their donation forms). Test short vs. long forms, optional vs. required fields, and incentives like swag.

Event registration pages: Whether virtual or in-person, test page layout, event descriptions, urgency-based messaging, and the placement of registration buttons. Test offering early bird or limited-time options to boost conversions.

Impact reporting pages: Test layouts and interactive features on pages that showcase program outcomes and impact. Experiment with different storytelling techniques, videos, or downloadable reports with shareable links.

Landing pages for campaigns: Test messaging, images, or CTA placements that promote specific programs. Play with impact-driven headlines, donor testimonials, or interactive elements, which highlight program goals, encourage sign-ups or shares.

Email: Optimize subject lines, preview text, CTA buttons, and email layout to improve open rates, click-through rates, and ultimately conversions to donate. Testing segmented email content will also provide insights into which messages resonate best with different donor groups.

Homepage CTAs and navigation: Try different placements, button colors, or highlighted sections to see what drives engagement most effectively.

Social proof/testimonials: Experiment with placement and format for donor testimonials or endorsements from high-profile/influencer-type supporters. Test adding social proof elements like “trusted by” or Corp Partner logos or impact numbers to landing pages to build credibility.