MARKETING PLANNING FOR 2019 (Part 2)
Secrets to Develop a Marketing Budget to Drive Growth
In Part 1 of “Marketing Planning for 2019”, Creative Marketing Alliance (CMA) president and CEO, Jeffrey Barnhart, shared marketing plan steps to get results. As planning season continues, I’m excited to reveal to you some secrets to develop a marketing budget, which is a critical piece of the plan, to drive growth.
Throughout the year, CFOs are constantly monitoring actual financial results to budget. They’re also forecasting on a quarterly basis, for the remainder of their current year. By the conclusion of Q3, they have a pretty good idea of where their year will end financially. Therefore, businesses need to have a sound marketing budget and plan, to demonstrate how it helped create opportunities to achieve their financial goals. The CFO is interested in the bottom line—What’s the return on the marketing investment? Did it result in generating sales and/or increasing revenue?
Like the marketing plan, there are many benefits to finalizing your marketing budget before the new year. They encompass answering these pressing questions, which every staff member has at the start of a new year:
- Where are we going?
- How are we getting there?
- Can we afford it?
In addition, having a marketing budget in place at that time gives you the ability to begin executing on the strategy and tactics immediately because all financial approvals are complete.
The following are some secrets to how to prepare a marketing budget, to drive growth:
Establish success areas
Begin the process by examining which areas have been successful the prior year. Then, determine if you can expand on those successes or if you need to generate new ideas. This also gives the marketing team a chance to outline ways they can expand their efforts and help support the growth metrics. With that said, although results from the previous year will give you key information, it should not be the only determining factor for the upcoming year’s budget which brings me to my next point.
Examine what didn’t work
Look at what didn’t work and ask why. This process needs to be open and honest, as it’s where accountability, skills and even financial support come into play. Hence, you must leave your emotions at the door. Financially, you need to address the costs that you applied, what your expected results were and why those results weren’t met, which led to a low ROI. This scenario can happen for a myriad of reasons, which range from internal and external factors. It’s important to note them, as the CFO will ask more about the unsuccessful tactics, than the successful ones because this is where the money was lost.
Ascertain a budget allocation
Next, think about what your marketing budget allocation will look like for each part of your plan. Look to diversify, instead of spending too much in one area. Depending on your current business situation, industry trends, goals and competitors, you might spend more in certain areas and less in others—which likely will change from year-to-year. Some examples of those areas can include advertising, digital marketing, public relations, influencer marketing, social media and software, to name a few. Speaking of industry trends, WebStrategies stated that Forrester Research and eMarketer reports reveal the estimated allocation of marketing budget for online versus offline and across the digital channels. Results show that investment in paid search, display advertising, social media advertising, online video advertising and email marketing is predicted to account for 46 percent of all advertising by 2021.
The real secret to getting your marketing budget passed is to start with ROI and answer, “Why should this money be spent on marketing, as opposed to in other departments?” This could be a challenge for many marketers. In fact, CMO.com identified that according to the recent Nielsen 2018 CMO Report, marketers are struggling with tools, technology, data, analytics to measure ROI, effectiveness and attribution as they now have responsibility to report marketing ROI and delivered value to the C-suite. Depending on your business and goals, you can determine ROI based on the number of referrals, sales, new customers and/or leads. As part of that, it’s essential to financially address ROI calculations. This provides a full picture of execution and the cost/profit because of those efforts. Insure that you clearly define the measurables for success and that they are consistent across all tactics. In addition, they should align with the business goals—specifically marketing with sales, finance and product development.
Finalize the marketing budget
Finally, put the costs together as a team. They should be inclusive of current resources (labor), a skill set evaluation, additional resources needed (including freelancers), production cost estimates (including software) and equipment, as well as any other out-of-pocket expenses. Once you complete those steps, the finance team will drop the costs into the overall budget and determine if the figures are supported with revenue or if the team needs to pare down their recommendations.
Get the budget approved
One of the main goals each year for a marketing manager or CMO, is for the CFO to approve his/her marketing budget. To increase those chances, make sure that he/she understands how the plan is defining marketing. For example, if the goal is to build brand awareness, the marketing goal is defined as the conveyance of information through thought leadership. This might result in fewer opportunities, as your purpose is to bestow knowledge, but likely will result in a higher qualification for sales. On the other hand, if it’s to capture more market share for a product line, then it’s defined as a lead generating strategy. This approach will result in more opportunities, but less qualified. As a result, sales will need to conduct more follow up to further pre-qualify those leads. A business might require both strategies, at which time you should outline the plan, then subset, based on the specific strategy. Likewise, demonstrate why it makes sense to invest in your marketing plan, as opposed to the other items in the business’s budget, including past positive results and ROI.
Adjust as needed
CMA works in tandem with its clients on their yearly marketing budgets and plans. I’ve run into all scenarios. In some cases, we’ve needed to adjust our tactical execution and shift our goals downward because a business had to trim its budget. When that’s the case, you need to be clear that reduction of the marketing plan might skew results negatively or extend the time needed to achieve the goals.
Finances are the backbone of a successful business. An effective marketing budget and plan should produce demonstrated results and drive growth. Keep in mind that once they’re in place, they’re not set in stone. Businesses need to measure ROI on a continual basis, to determine if the strategies are on target or if they need to be changed, even this happens mid-year or earlier.
Are you scheduled to begin working on your 2019 marketing budget? Contact us today, to get started.