What Every Marketing Leader Needs to Know about Budget Planning

November 29, 2018 David Schweer

As you may have recently seen, Gartner released the results of its annual CMO Spending Survey. It included a couple findings and insights that I particularly liked, including:

  • The average marketing budget in 2018-2019 is 11.2% of overall revenue, nearly unchanged from last year.

  • “Digital business across the enterprise is now a full C-suite team pursuit, so marketing is a priority investment area…; 57% [of respondents] expect to increase their investment in marketing in the coming year.”

  • “…CMOs must appease the often-skeptical chief financial officer’s (CFO’s) expectations for return on investment (ROI) to justify future budgetary commitments.”

  • In general, there are four buckets where CMOs are investing:

    • Labor

    • Paid Media

    • Agency Work

    • Marketing Technology

As you think about nailing down your 2019 budget, here are some tips to help you with the process:

  • Measure your current year budgets against a holistic performance view of data. It’s critical you understand how your plans performed against expectations, and the way to do this is to tie input costs with in-market metrics. Combining these two categories gives a proper return on investment (ROI). Then you’ll want to distribute the performance reports to your function/budget owners. You want them to compare their ROI performance and exchange ideas on how to improve—then bring all that data to the CFO.

  • Set preliminary department goals knowing they’ll change. A fallacy of goal setting is that once made, it needs to be set in stone. The reality is that goal setting, just like a lot your marketing initiatives, should be an iterative process that evolves in tandem with other business conversations. But, as a theme you’ll see here, it’s better if marketing establishes a starting point in case conversations go beyond the team (i.e. sales gets wind of the plans) rather than receives someone else’s targets that have been made without their input and market knowledge. Being able to bring forward your previous plan is a huge help to establish realistic priorities with the entire C-suite!

  • Allow budget owners to recommend their needs first. If you’re trying to maximize your investments during the budgeting cycle, it’s always best to go into meetings with a number in mind rather than having one assigned to you. Of course, the best way to gather this data is to ask your budget owners--who ultimately will need to deliver on the goals you set. Once owners submit your request, you’ve got your working budget—and promise of ROI—to help appease the CFO’s final decisions.

  • Run the what-if scenarios. The reality of any working marketing budget is that it will likely get commented on; the unchanged marketing budget is like a unicorn…it simply doesn’t exist. However, in my experience, most departments struggle to react to suggestions and inquiries by external stakeholders, which hurts credibility. Structure your budget so you can easily run scenarios and understand the impact on overall outcomes. This ensures that you have the trust of your peers and also clarity when communicating changes to budget owners—especially if funds aren’t going to increase next year, as the Gartner survey indicated.

  • Align tactics and dates to 50-70% of your budgets. When you have your best budget decided, the next step in the process is to set tactics and map out your marketing calendar. It’s important to note that you shouldn’t try and map 100% of your calendar (or spend) right away because you must allow for reactions to emerging market trends. I’ve seen customers map out anywhere from 50-70% of their budget (depending on their vertical market and level of structure that exists in the purchase process). This allows you to set aside budget for items like innovation (i.e. new tactics), increase funding for high performing initiatives, or support for new requests from your CEO or other senior stakeholders that might happen when the entire C-suite team gets involved.

To help marketers gain control over budgets and become more transparent and accountable, Aprimo is pleased to announce the general availability of its new Budget Allocation capabilities. Aprimo Budget Allocation makes it easy for marketers to create marketing plans complete with budgets, expected outcomes, and tactics identified. Further it seamlessly integrates with the rest of the Aprimo platform, so you have complete end-to-end capabilities from ideation to measurement of all your marketing initiatives. 

About the Author

David Schweer

David Schweer is a Director of Product Marketing for Aprimo focusing on solution positioning, field enablement, and managing release information for the Aprimo platform. He has held various roles in Solution Consulting, Product Marketing, and R&D for London-based SDL, plc, Teradata, and Prysm. David received his MBA from Butler University and is based in Indianapolis, IN.

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