Daniel Burstein

Marketing 101: What is baking in?

October 3rd, 2019
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Marketing has a language all its own. This is our latest in a series of posts aimed at helping new marketers learn that language. What term do you find yourself explaining most often to new hires during onboarding? Let us know.

In a recent MarketingSherpa article, ConversionXL Research Director Ben Labay says, “I think we are getting better as an industry at baking in an experimentation process and culture into our organizations.” (from Ask MarketingSherpa: Maturity of conversion rate optimization industry)

That raised the question — what exactly is meant by “baking in” in a business and marketing context?

If you click on that link and read the final article, you’ll see that we chose to include the parenthetical statement “[including as an integral part]” to clarify the term baking in.

Baking in means including, in a sense. But that misses the nuance. When you’re baking something in, you’ve considered it from the get-go. So that’s why we went with “[including as an integral part]” not just “[including.]”

Not just a cherry on top

Just like when learning a new language, understanding the nuance to a term is crucial to speaking the business lingo fluently in an industry. In this case, the nuance is meant to communicate that the thing being discussed is not just included, but included as an essential, core part from the very beginning.

I suspect the analogy comes from baking itself. You could just add icing to the top of a cake. Or a cherry on top.

But when you bake something in, it’s really part of the dessert.

Words mean what people think they mean

Language is a funny thing. As marketers, we may be trying to convey a certain denotation (literal meaning) or implying a certain connotation (the idea of feeling invoked by a word), but if our audience doesn’t get the essence of what we are trying to communicate, that communication has not happened.

So I wanted to reach out to some others and get their thoughts on the term “baking in” to see how it aligned (or diverged) with my own understanding. And perhaps with yours as well.

It’s a pretty interesting little experiment. We take this business lingo for granted. But miscommunication happens when we assume we know what the other person is talking about, and professionals (especially newer workers in a field) rarely like to admit their ignorance of an inside term.

As you read the responses below, note how we all generally tend to agree on the meaning of the term. And yet, we all add our own little nuances to the meaning. A good example of why we should always confirm that others understand what you’re talking about, especially when using insider lingo.

(This blog post was originally published in the MarketingSherpa email newsletter.)

An inseparable part of the whole

Actor and entrepreneur Rio Rocket’s understanding was much in line with my own.

“The term ‘baked in’ became prevalent in the technology space. It has seen early usage in describing a piece of software or hardware that is incorporated into a whole system. The previous term was ‘native.’ Whether there was a decision to move away from that term as a negative connotation is up for debate. Recently the term became commonly used in political journalism used to describe pre-existing voter or electorate support, but its roots are primarily in technology and sales. In the tech space, it’s important to understand that it also implies it is an inseparable part of the whole, and in modern usage, best describes the pricing of products and services: Baked into the price of the product is the cost of monthly tech support for one-year.”

Taking into account

SelectSoftware founder Phil Strazzulla’s definition brought an investment banking perspective in which the term doesn’t imply the integral nature as much.

“For me, ‘baking in’ is the same as taking into account.  Many times when I was an investment banking analyst, we’d ‘bake’ something into the model. For example, maybe we’d bake in a business’s growth slowing in 2020. Or, maybe we’d bake in the upside from a new product which would increase revenues and profits.”

Already taken into account

Rob Powell of Rob Powell Biz Blog added some historical context.

“In a business context, the expression ‘baked in’ means something that is included in something else and inseparable from it. For example, software developers might say that ‘the location-tracking service is baked in to the new app.’ Or, in a company takeover, the contract might stipulate that the current managers of the acquired company remain on staff. This provision is said to be ‘baked in to the acquisition.’ It’s generally accepted that the term was first used by Walter Wriston, former head of Citibank. Wriston characterized the inevitable consequences of late 1970s monetary policy by saying: ‘It’s baked in the cake that we’re going to have a recession in 1980.’ Since then, the term has come to mean something that is included, projected, expected, or already taken into account.”

More than the sum of its parts

Out of the Box Innovations managing director Jason Lavis references the centrality of a baked-in element. Also, when it comes to analogies, it seems that he’s much more of a bread guy (and I guess I’m a cake guy).

“When we make bread, we use different ingredients, that transform into something far more than the sum of its parts. Each component becomes fundamental and integral to the process and finished result. For the software equivalent, we can add features and processes into the code, each adding an ingredient. The finished result is something that combines utility, user experience, and an added zest of coolness (like the smell of freshly baked bread). ‘Baked in’ is something that becomes the core of the offering, unlike a ‘bolt-on’ option.”

Already assumed

Hank Berkowitz of HB Publishing & Marketing Company also prefers the financial industry definition – something that has already been taken into account.

“Yes, ‘baked in’ has become one of the popular business buzzwords. Not 100% sure of the origin, but it is sometimes used as ‘baked into the cake’ especially by business execs from Europe and Australia. Either way, it’s an expression to describe ‘already assumed’ or ‘already taken into account.’ For example, ‘an expected interest rate hike this quarter is already baked into our earnings forecast.’ Or, ‘The new product release is already baked into our sales forecast.’ It can be an effective shorthand when used very sparingly, but like so many expressions that are overused ‘baked in’ starts to sound like a lazy person’s way of saying ‘Yada yada yada.’”

M&A terms

This is a meaning of “baking in” I hadn’t heard before, but again, it illustrates the challenges of communicating with business lingo when one person could mean one thing while the person listening could have a very different interpretation.

To Annastasia Kamwithi, senior editor, SocialFish, “This is a term that is mostly included in business contracts that mostly have to do with acquisitions, and it is a provision for the acquiring company to retain the existing staff. The existing staff are supposed to become ‘baked in’ to the new company.”

Baked in to our daily vocabulary

Just this morning in our local newspaper, The Florida Times-Union, I read this line in a story about city politics “He said the bill should have ‘baked into it’ a commitment for how the city would handle JEA’s pension obligations.” (from Jacksonville City Council committee supports taking on JEA pension debt by  David Bauerlein). I can’t remember the last time I read an insider marketing term in the local paper.

Which is why I’ll give the last word to Richard Howe of Colour Rich who illustrates why “baking in” is probably the most challenging term we’ve addressed in this series of marketing lingo definition blog posts so far — it’s not just a marketing term. It spans many industries. And each industry adds its own shade of meaning to the term.

“The adjective of baked in, means ‘built in’ or ‘included.’ One of the first instances of the term being used in a financial sense was by former CEO of Citibank Walter Wriston who said ‘It’s baked in the cake that we’re going to have a recession in 1980.’ Since then, the term has become more commonplace in the business arena with tech companies ‘baking in’ what’s included with their platform or gadget — ‘Samsung has shown off the Exynos 980, its first mobile processor to come with 5G baked in.’ It’s a term favored by businesses, lawyers and politicians as a metaphor that everybody can relate to — whether it’s describing a contractual deal or the certainty of an event. Baking in really has been baked in to our daily vocabulary.”

You can follow Daniel Burstein, Senior Director, Content & Marketing, MarketingSherpa and MECLABS Institute, on Twitter @DanielBurstein.

Related Resources

Marketing 101: What is CRO (Conversion Rate Optimization)?

Marketing 101: What is funnel creation?

Marketing 101: What is a mobile breakpoint?

Daniel Burstein

About Daniel Burstein

Daniel Burstein, Senior Director of Editorial Content, MECLABS. Daniel oversees all content and marketing coming from the MarketingExperiments and MarketingSherpa brands while helping to shape the editorial direction for MECLABS – digging for actionable information while serving as an advocate for the audience. Daniel is also a speaker and moderator at live events and on webinars. Previously, he was the main writer powering MarketingExperiments publishing engine – from Web clinics to Research Journals to the blog. Prior to joining the team, Daniel was Vice President of MindPulse Communications – a boutique communications consultancy specializing in IT clients such as IBM, VMware, and BEA Systems. Daniel has 18 years of experience in copywriting, editing, internal communications, sales enablement and field marketing communications.

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