MARKETING PLANNING FOR 2021 (Part 2)
Last updated on October 15, 2020
6 Secrets to Maximizing Your Marketing Budget
Marketing is a fundamental ingredient for business growth and profitability. A marketing plan and a marketing budget go hand-in-hand. You can’t have one without the other. To grow your business, you need a strong marketing budget that aligns with your business goals.
Budgeting can be a difficult and time-consuming process. It’s always surprising when I hear how many companies simply estimate their budget based on the previous year’s spend. When you use the previous year’s budget as a template, that can stifle creativity and slow the shift to adopting new marketing tactics.
Although an estimate is better than nothing, you should try to pinpoint accurate numbers to ensure you are staying on target with estimated costs versus actual costs. Not only does budgeting provide a sense of direction for management (finance, operations, human resources, etc.), it effectively allocates financial resources. If you don’t have a budget, you may make impulse marketing decisions—haphazardly marketing throughout the year, making spontaneous decisions that don’t generate the necessary ROI. This results in spending a lot more money than if there was a plan in place.
Throughout the year, CFOs are constantly monitoring actual financial results to budget. They are also forecasting on a quarterly basis for the remainder of their current year. By the conclusion of Q3, they have a pretty good idea 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 the company’s financial goals. The CFO is interested in the bottom line—What’s the return on the marketing investment? Did it generate sales and/or increase revenue?
Like the marketing plan, there are many benefits to finalizing your marketing budget before the new year. When your marketing budget is complete in Q4, you can address the pressing questions that every staff member has at the start of a new year:
- Where are we going?
- How are we getting there?
- Can we afford it?
To grow your business, you need to approach your marketing budget like an investor—allocate your capital in a way that helps you achieve your business goals. Many companies fail simply to grow because they halt marketing during an economic downturn or do not budget enough money for marketing.
When done right, marketing delivers solid returns. In Part 1 of Marketing Planning for 2021, Jeffrey Barnhart, CEO and founder, outlined his top tips for creating a marketing plan that gets results. Now, in the final quarter of the year, it is time to shift your focus to planning for the next 12 months. Having a marketing budget in place at the start of the year gives you the ability to begin executing on the strategy and tactics right away because financial approvals are complete.
Here are six secrets for maximizing your marketing budget to drive growth:
Secret #1: Review the previous year’s marketing campaign
Take a look at what worked and what didn’t. Then, decide if you can expand on those successes or if you need to generate new ideas. Do you need to grow your social media presence? Should you shift spend to digital marketing? Or is it time to implement a content marketing strategy?
In reviewing last year’s successes, you should also take a look at how failed campaigns impacted your marketing budget and return on investment (ROI). This process should be straightforward and factual, as it’s where accountability and financial resources come into play. 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. When a tactic doesn’t generate the expected ROI, it can miss the mark for several different reasons and can be the result of anything from macro-economic trends to the experience of the sales team. It’s important to note them, as the CFO will ask more questions about the unsuccessful tactics than the successful ones because that is the area where money was lost. 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.
Secret #2: Determine a budget allocation
Next, think about what your marketing budget allocation will look like for each part of your plan. In 2021, driving tactical planning based on ROI will be imperative. Look to diversify, instead of spending too much in one area. Be sure to choose and prioritize tactics and channels based on effectiveness before allocating your budget. Then distribute your budget depending on how much you’ll need to launch a successful campaign. If you underestimate how much you need for a specific campaign or tactic, you’ll likely hinder the success.
Amid continued market uncertainties resulting from the pandemic, flexibility and measurement will be key in 2021. It will also be important to periodically revisit your plan and review your budget. 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, digital advertising and website design, to name a few.
The pandemic has accelerated many organizations’ move online and that will continue. Looking ahead to 2021, content marketing will continue to trend especially with the addition of video. Live streaming, paid search and digital marketing, which command consumer attention, will also remain as powerful marketing tactics. Of course, social media will continue to hold strong.
Secret #3: Demonstrate ROI
When it comes to marketing, determining your ROI can be complicated. After all, it can take between 11 to 13 marketing touch points for a message to be heard.
To increase the chances that your marketing budget will get passed, start with the ROI and answer the question: Why should this money be spent on marketing, as opposed to other departments? Project the outcome of marketing tactics, but also understand the impact of individual line items—those that are unproven when it comes to driving returns, are most likely to be cut.
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. Ensure that you clearly define the measures of 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.
Secret #4: Finalize the marketing budget
Work with your team to put the resources together. 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.
In finalizing your budget, you should rely on as little guesswork as possible so that you can be confident that your marketing dollars will be spent efficiently.
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.
Secret #5: Present the budget for approval
You’ve done your research, now it is time to present the final budget for alignment and approval. To increase the chances that your budget will get approved, make sure the plan clearly defines “marketing.” For example, if the goal is to build brand awareness, the marketing goal could be defined as the conveyance of information through thought leadership. This might result in fewer opportunities, as your purpose is to present knowledge, but likely will result in a higher qualification for sales.
On the other hand, if it is defined as capturing more market share for a product line, then it’s described as a lead generating strategy. This approach will result in more opportunities, but less qualified leads. As a result, sales will need to conduct more follow up to further pre-qualify those leads. It is not unusual for a business to require both types of strategies, at which time you should outline the plans for each. Likewise, demonstrate why it makes sense to invest in your marketing plan, as opposed to the other items in the business’s budget. Be sure to highlight past positive results and ROI.
In addition, when your budget is aligned with business goals, communicated in broad campaign themes and validated by past performance, you greatly improve the chances of budget approval.
Secret #6: Plan for change
Once you’ve finished your marketing plan and budget, it’s time to execute. Keep in mind that once in place, they are not set in stone. In 2021, measurement will need to be ongoing and transparency regarding ROI will be key. You’ll need to identify which marketing tactics are essential versus the ones that can be cut if needed. Businesses will need to measure ROI on a continual basis, to determine if the strategies are on target or if they need to be changed—mid-year or earlier. Amid the pandemic, this will be critical. However, the marketing rule of thumb remains the same—meet your customers where they are and show the value of your products and services.
At CMA, throughout the COVID-19 pandemic, we have focused on how to pivot our day-to-day strategies and processes, while helping our clients shift theirs. Now is the time to remain forward-thinking—not reactive—while continuing to market, investing in a strong rebound. Although many businesses are still facing uncertainty, CMOs are optimistic about marketing spend in 2021.
Amid the pandemic, it may be tempting to reduce your marketing budget this year. Instead, plan to be flexible. By knowing how and when you can modify your marketing plan and budget, you’ll be prepared to make informed decisions to maximize your impact. Businesses that are continuing to market, positioning to serve customers now and when recovery comes are likely to instill brand loyalty and come out ahead when this crisis ends.
Are you scheduled to begin working on your 2021 marketing budget? Contact us today, to get started.