Building a Marketing Budget

In the fourth quarter of each year, many companies create a marketing budget to meet revenue and brand recognition goals for the coming year. It might be tempting to simply extrapolate what you did this year. But today, many CEOs require a bottom-up budget with line-item detailed plans and the expected outcomes. Marketing ROI (return on investment) is demanded and scrutinized. So, the best marketing leaders come prepared with facts that back up their budget recommendations.

Marketing budget components.

A comprehensive marketing budget should have multiple components.

First, start with your sales goals, ideally set in terms of retention revenue and then new customer wins. If you operate in multiple channels, break it down so that you can link marketing spend to revenue goals at a granular level. It is helpful to know the revenue value by client, as well as the average value of a new customer win.

Second, describe your sales funnel, meaning how many leads you need to generate, what proportion of those leads turn into successful sales, and what kind of marketing investments have been successful in converting suspects → into prospects → into qualified opportunities → into closed deals. This is particularly helpful for B2B companies.

Your actual experience over the past couple of years can be a useful guide as you can assess what marketing campaigns and tactics were the most effective at each stage of the funnel. The more technical and the more expensive the product, the more that a new prospect will want to learn about your offerings. This is where white papers, testimonials, use cases, webinars and industry events can be influential in advancing prospects through the funnel.

Third, talk about your target audience. Who is the decision maker versus the influencer(s), and which content and messaging have proven to be the most effective in closing sales? What have you learned in the past year that can be leveraged to improve marketing ROI in the coming year? Are price and value more important today? Or do you have a new feature or benefit that is compelling?

Fourth, map out your marketing campaigns. Do you have a new product launch or a product enhancement to showcase? Or are you trying to reach a new user? Based on your goals, you should tailor the number, scope, and cost of your campaigns to have a good probability of generating the revenue reflected in your annual business plan. Be sure to build multi-touch, multi-channel campaigns for an integrated approach that has high impact. In particular, continue to shift spending to digital channels (e.g. emails, landing pages or microsites, social media, videos and marketing content), as you can measure your results quickly and adjust accordingly.

Fifth, outline your marketing expenses to develop and execute your campaigns and manage your department. Be very specific about your assumptions and estimates to be as accurate as possible. Don’t forget your marketing operations and technology expenses as well as your overhead. Include estimates for outside agencies, especially if you are at a strategic or revenue crossroads. Extra resources are a prudent investment to achieve new growth or reposition your brand. Calendarize your spending to match your campaign timing and quarterly revenue goals.

Sixth, provide an overview of your marketing analytics to track your progress and compare results against goals. The more data you collect, the more insights you will have into what is working (or not), and then course correct as quickly as possible.

The days of simply using a percentage of revenues as a guide for your marketing budget are over. Your marketing budget must be focused on achieving goals, being strategic, and staying nimble to be able to respond to opportunities or threats as the year unfolds.

At Forge, we thrive on helping clients get to the next level. We have worked with many clients putting together hard-working and thoughtful marketing budgets for growth.

We are here to be your partner, a member of your extended team, an objective yet vested voice. And we will always bring the conversation back to strategy. Who is your primary target audience going forward? How does your product meet and exceed their needs? How do we maximize the market opportunity and optimize return on investment?  

Importantly, we are pragmatic, focused, and energetic. We get assignments done well, and quickly.

Take the first step to a more successful business today.

1.    Hit “LET’S TALK” to schedule a free 30-minute discussion. No pressure – we promise.
2.    We’ll provide real-world case studies showing the process in action.
3.    If we’re a fit, we finalize details and get started!

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