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Planning a Marketing Budget in 2019 – How Much Should You Allocate for Marketing?

According to a survey conducted by CMO Survey, the budget allocated in marketing has steadily mounted to 11.4% in August 2017 from 8.1% in February 2011. Since consumers are making more purchases online and marketing teams are no longer limited to core marketing activities such as lead generation, advertising, branding, PR, social media, content marketing and many others, but, they are also credited for revenue generation. That’s why companies are allocating more budget in marketing activities – now the question is how much should you allocate of dollars earned from the previous fiscal year into the marketing budget and into which marketing components?

How to begin a marketing budget allocation? 

Many organizations and marketers may find the process of marketing budgeting a bit challenging – that’s why we have broken down the bits of the planning process and mapped things to take into account for creating a strategic allocation model that can be manageable.

Yearly Budget Allocation

Every enterprise creates a formal overall budget planning process and a budget history from the previous fiscal year. The budget for the following year will be an increase or decrease from what was allocated in the present year – hence, marketers can take an estimate from the budget of the following year by considering how much they should spendnext year and compare the performance and goals set for various segments in the current year. Thus, companies can save valuable time by not attempting to create a whole new budget from scratch. 

Start with the human resource cost

The amount of headcount costs is the least changeable part of the marketing budget as it refers to employees and systems-based costs. For this, marketers need to take a cost estimate of employees involved in the marketing process’ such as their compensation, training costs, special benefits, traveling expenses among others. If you find unusual costs related to traveling tied to any program such as an event, can be eliminated from this budget allocation. The accounting department of an organization takes care of diverse estimates including such traveling reimbursement costs – hence, marketing budget calculation can skip estimating such expenditures.  

Cost of the marketing program 

The discretionary marketing budget can omit capital expenditure parts and should rather focus on costs of marketing programs including the development and execution of programs and campaigns including other costs that are additional expenses, including the costs of outside services.

Perform a check at this point

At this stage, marketers need to take a proportional allocation between the cost of marketing programs and the headcount parts of the marketing budget to check where they are spending more and how much they need to allocate their budget. 

Separate Marketing Programs 

In this next phase, marketers need to detach whichever is tied to a marketing action of a campaign from those that are considered out of campaign allotments. Take account of these following expenditures to evaluate those proportions:

Campaign expenditures:  

The campaign represents the combination of four types of programs that are demand or lead generation, sales enablement, reputation building and market intelligence. And the campaign expenditure should take in all expenses that cover asset development in campaigns, field campaign executions and global campaign execution. 

Out-of-campaign expenditures

The out-of-campaign expenditures cover all pending costs and that are not associated with any specific campaigns such as, shared services, one-off tactics, corporate marketing and marketing operations.

Time for second-level check

Are your marketing generating efforts causing the unreasonable ratio of campaign to non-campaign expenditures? Many organizations commit this mistake of having no campaign-based strategies and they end up spending a plethora of marketing approaches that yield no notable results. If your marketing budget allocation is flawed in a similar way, you need to reconsider your planning, strategies and budget allocations.

Take Strategic Turn

When you have isolated discretionary funding between campaign and non-campaign fund allocation, it is time to make strategic goals that need to be prioritized, manageable and achievable by using resources. This budgeting step will enable marketers to prove all activities are aligned with major business goals and stakeholders who impact the business.

There are four key goals that marketers should factor in while adopting the right marketing strategy and these are: 

  1. Business goals
  2. Corporate goals 
  3. Marketing goals 
  4. Sales goals

Once you have identified these major goals, follow these steps below to adopt the right marketing budget allocation strategy:

  • First of all, organizations need to collect sufficient data on these four goals and how they can be attained by conducting out-of-campaign and campaign activities. 
  • Next, define sales goals including channel, overlay, direct and how those can be achieved by using the budget on marketing and out-of-marketing campaigns. Many companies have sales goals that merge with corporate goals such as revenue generation and some goals should be treated individually, like product launches within the industry. 
  • There are services-based goals in organizations that offer support services – they need to make sure their marketing strategies and budget cover those goals. 
  • Finally, companies need to focus on core marketing goals that are events, website evaluation, etc. and must be covered by the marketing budget.

In addition to these major goals, organizations should also allocate funding for human resources such as staffing, training and skill development; and should be considered as prioritized expenditures.

Manage Campaign Funding

After all required and relevant goals are defined along with addressing a host of marketing and out-of-campaigns, the next thing to do is allocating the funding for all the campaigns identified. After defining goals, follow these steps below to allocate the marketing budget for diverse campaigns:  

  • A major factor that needs to be considered while allocating budgets  is that some campaigns can be targeted for specific industries while others are focused on horizontal activities – the funding needs to be divided based on the type of horizontal activities or the targeted industry the campaigns focus on.     
  • Next, focus on how to divide funding into programs. Marketers can prioritize campaigns based on the type of programs such as demand generation, reputation building, market intelligence or sales enablement. They can make proportional allocation decisions based on the impact of these program types in each horizontal segment or industry of a campaign. 
  • After campaign proportion decisions are taken, focus on components of out-of-campaigns which may not support overall business goals. First, define top functions in out-of campaigns such as public relations, analyst relations, shared services and company websites. Then, divide those components within each component, e.g., divide shared services component within analyst relations, creative services, public relations and websites. When funding allocation is clear, marketers can rebalance the budget for out-of-campaign and campaigns.

Customized Budget  

It is wise to live in peace and maintain peace with all marketing units, including business development and sales. Create a customized budget plan which will identify and support specific goals of all marketing constituents as well as show how those can be achieved with planned marketing actions. Start discussing with all teams and declare ownership of the specific marketing plans to achieve those goals to negotiate allocation without causing any conflict. This is a good way to ensure the budget for all constituents that require spending for sales training, product training, list building or other tasks.

The abovementioned tips and pointers will assist marketers and companies in allocating and re-allocating marketing budgets,  which will closely align with all major objectives and ensure that the funding is utilized as per specific business priorities. Later if more funding is required for any particular sales, corporate or marketing goals, then the budget should be augmented, cut down or rebalanced as per the requirements identified. Also, adjusting resources needed for diverse marketing campaigns will be easier with a detailed layout of goals and requirements for budget allocation. If you find these tips work in creating a marketing budget for your organization or you need to discuss your goals with our marketing experts;get in touch with our marketing specialists at (408) 502 6765,  or simply DM us anytime on Twitter and LinkedIn.