In this post, we’ll provide recommendations for building out a marketing budget — things to keep in mind as you itemize a marketing budget with all the activities and funds for an upcoming financial year or quarter.
What we’ll cover
- Top-down vs. bottom-up budgeting
- Building out a marketing budget: step by step
- Avoiding marketing budget pitfalls
Effective marketing budget planning takes time. We recommend that organizations start the process 3-6 months before the start of their fiscal year, so the various marketing teams have ample time to define those tactical plans."
- Your marketing team receives its spend targets from the top-down budgeting process undertaken by your leadership or Marketing Operations. Now you know how much money you have to invest for the year, so it’s time to sit down as a team and make some decisions.
- List all the activities your team may want to execute during the year along with their estimated costs and organize them into relevant groupings. Make sure to consider marketing activities or commitments you’ve made in the previous year. Thanks to accruals, those items will be part of the marketing budget of the year in which they occur — not the year during which the cash went out the door.
- As you pare down your list to only include what you believe will fit into your spent targets, start populating your budget in whatever system you use (Allocadia, or a spreadsheet). Note all the information about each line item you may need to state for reporting purposes, such as vendor, target audience, product line, region, CRM campaign, etc. In Allocadia, this is done with the details panel; in a spreadsheet it’s done with additional columns.
In Allocadia, the fully-customizable details panel captures all that crucial extra information about each budget line item.
- Step back and assess each budget. Does it align with your targets? Refinements are likely necessary. This is when the hard questions typically emerge: what can we take out, and what should we leave in? What will the impact of those decisions be?
- Send your budgets off for internal review.
- At this point, there’s a process of adjustments, with the budgets going back and forth between the marketers who’ve built the budget and their leadership.
Two-week cycles are common here: two weeks to define initial plan, two more weeks for the first review, two more weeks for additional adjustments, etc. On average, the full process may take around two months, although this number can vary wildly — especially if the numbers have to be approved by a board of directors.
- Marketing leadership assesses the budgets. They’re looking for two things:
- Compliance: Did all the marketing teams plan the way they should have, and did they do it on time? Do their budgets align with their investment targets?
- Performance: Marketing leaders will spend time analyzing each team’s intended uses of their funds. They’ll pay particular attention to whether the planned marketing investments adequately support overall corporate objectives.
- Marketing leadership approves the budgets. Now it’s time to get out there and start doing marketing!
- Not remembering marketing activities that carry over from one budget period to the next. It’s easy to forget about subscriptions, retainers and pre-paid vendor agreements (such as conference exhibit fees). These are non-negotiable pieces of this year’s budget, and failing to include them in the plan will create confusion later on.
- Not capturing your originally-planned budget amounts. Undoubtedly, your budgets will undergo many modifications throughout the year. The line items will change, and so will the amounts. This is natural. As this happens throughout the year, too many organizations simply overwrite the original budget. They lose the ability to look at metrics such as plan vs. forecast (to help stay on budget) and plan vs. actual (to see how accurate the budget planning was). Make sure you have a way of capturing your original budget plan.
- Not allowing enough time. Year after year, we hear from organizations who are taken by surprise by how long the budgeting process can take.
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