Ongoing Management & Tracking of a Marketing Budget

Note: this guide is written with marketing teams of 10 or more in mind.
 

In this third and final installment in our mini-series on marketing budgeting, we’ll focus on the day-to-day aspects of working with your team’s marketing budget.
 
Every organization’s marketing budget process is a little different, but these general recommendations should apply to the vast majority of marketing teams. 
 
What we’ll cover
 
In essence, a marketing budget has just one purpose: communication. A budget communicates all kinds of things between marketers, both about the bigger picture of where money will be invested, and also about the day-to-day status of those funds. Lastly, it’s also a communication vehicle between finance and marketing. 
 
The clearer the communication in your budget is, the easier time your marketers will have with the whole budgeting process, and the sooner they can move on to doing marketing! 
 

Staying Up to Date

The two biggest uses of time in day-to-day budget management are ensuring your expected costs are up to date, and keeping abreast of the status of the activities on your budget. 
 
Like yesterday’s newspaper, a budget showing out-of-date information is just not very useful. Marketers operating a budget need to make sure they’re using the budget to communicate the new info they learn as they execute programs and activities.
 
In a single day, a marketer might learn that a magazine’s advertising rates have increased, a contractor’s estimate has come in lower than expected, and a particular trade show has been canceled. This marketer’s budget needs to reflect these things, pronto! If she doesn’t, she may find herself having over-or under-spent at the end of the month or quarter. 
 
Here at Allocadia, we call such information a forecast. The marketer may have planned to spend $12k, but as the quarter progresses, she realizes she’ll need $2k more: her forecast is now $14k. 
 
Why should a marketer take the time to forecast? By keeping track of the status of your spend in an ongoing way, your team will know exactly how much budget it has left to spend at all times — you won’t have to wait weeks for the finance team to let them know. You’ll avoid overspending and, arguably even worse, underspending. 
 
Forecasts are a good example of how a budget is all about communication — in this case, with the finance team. Up-to-date forecasts help them do accruals, manage their cash, and generally stay aware of what’s happening with marketing dollars leaving the company. 
 
Read more about why your relationship with the Finance team is worth investing in!
 
Our Recommendation
 
Approximately three quarters of companies using Allocadia have their marketers update their forecasts every day, according to Jennifer Cracklen, our Lead Education Consultant. This may be too a little too often for marketers in smaller organizations, but our recommendation is to have marketers update their forecasts no less often than once a week. At a lower frequency than that, it can become an onerous task. 
 
Note: The tricky thing about forecasts is knowing where to capture the information. Allocadia solves that problem with a dedicated column alongside your planned spend. This lets you compare your planned spend vs. forecasted spend, your forecasted spend vs. actual spend, and other very useful metrics.
 

Managing commitments

The other big use of time when operating a marketing budget is keeping abreast of the status of all the various activities on it. How do you know whether another marketer’s trade show has been committed to, paid for, taken place, etc.? You could always ask them, but that’s not very efficient. 
 
This is another area where, used as a communication tool, budgets can come to the rescue. 
 
Imagine a situation where a marketer on your team had planned for the company to exhibit at a conference in California. That item appears in the North America Field Marketing budget. 
 
Meanwhile, you’ve discovered a fantastic one-time opportunity to purchase advertising space at a deeply discounted price. The only problem is, there’s no room in the budget for it — another activity would have to be bumped. 
 
What do you do? To pounce on that ad buy, you’ll need to find some wiggle room. But in an enterprise field marketing budget with hundreds of line items, you need some way of knowing which activities have already been committed to (with contracts, etc.) and which have already taken place.
 
“Tagging” the marketing activities budget like this lets you be opportunistic, reduces inefficient conversations between marketers, and prevents your team from underspending when certain things are canceled or postponed.  As well, in the event of a dreaded mid-quarter budget slash, you’ll know exactly which activities can be cut since they haven’t been committed to. 
 
Keeping track of what’s been planned, committed to, and occurred and communicating that information is an essential part of the day-to-day management of a marketing budget. 
 

Reallocations and Transfers 

Reallocations and transfers are two more situations that pop up frequently when managing a marketing budget.
 
Budget reallocations happen when you need to shift money within the same budget. They’re straightforward — you simply modify the line items within your budgeting tool (Allocadia, or a spreadsheet). As long as the totals stay the same, that’s usually all you need to do. 
 
Budget transfers, that is, moving money between marketing budgets, is slightly more complex. There are times when marketing funds need to move between regions, teams, or functional areas. A number of situations could trigger this, for example if one team has underspent or overspent. Some organizations even have a performance-based system where the highest-performing teams get rewarded with extra budget dollars.
 
Jennifer Cracklen, Allocadia’s Lead Education Consultant, weighs in:
 
"Budget transfers can be messy and time-consuming, often generating a flurry of emails. Most organizations have strict procedures to be followed, and errors can lead to double-counting and other financial management headaches.
 
To ease this burden, we recommend allowing “horse-trading” — empowering marketers to transfer funds between budgets at their discretion, so long as the dollar amount is under a certain threshold and a record of the transaction is captured. The key is to have strong tools and processes that can handle budget transfers without triggering manual work.
 
Some companies, such as those in regulated industries, are forced to disallow budget transfers. But if that’s not the case in your organization, and your company doesn’t yet allow horse-trading, we recommend you advocate for it."
 

Reconciling a Marketing Budget

Before your Finance team can close its books for the month, quarter or year, they need certain information from the marketing team. They’ll have a list of all the expenditures Marketing made throughout the period (known as actuals); now they need to know how to categorize them. 
 
Reconciliation is the process of mapping these spent funds to the various line items on the marketing budget. 
 
For many marketers, the reconciliation process can be one of the more daunting parts of the marketing budget workflow. Without a tool to reconciliations automatically, you’re faced with what is often a complex, time-consuming task: trying to align two spreadsheets created by different teams for different reasons. 
 
We spoke to a marketing operations director at a multi-billion-dollar software company who said that the process of reconciling Marketing’s actuals took so long that by the time they finished, the data was out of date! 
 
Our recommendation
 
Just as with forecasts, reconciling becomes less painful the more often you do it. We typically see marketers reconciling monthly, but we recommend doing it more frequently than that if possible, every two weeks for example. For large enterprise organizations, a daily reconciliation process may even be necessary. 
 

Budget Tracking & Metrics 

The final section in our roundup of daily marketing budget management is all about tracking your budget to maintain visibility into what’s happening, so that you can make tweaks as necessary.
 
Since the various members of your marketing team have different priorities, it makes sense for them to care about different metrics in relation to your marketing budget.
 
The CMO
Naturally, the CMO will want to take a macro view of marketing spend. When the CMO looks at budget data, it should encompass all regions, product lines, teams, budgets, etc, since his or her chief concern will be whether the global marketing organization is spending according to targets. The CMO will also see who’s on track to over- and under-spend, and may make strategically reprioritize budget dollars accordingly.
 
Team Leads
Regional or functional marketing leaders will have the same budget tracking needs as a CMO, but zoomed in one level. They’ll want to see how closely their unit’s spending aligns to investment targets whole, and whether it’s in line with corporate priorities. They’ll also take a keen interest in looking at their investment mix according to spend per persona, product, activity type, etc.
 
Field Marketers
A Field Marketer typically has responsibility for just one or two budgets pertaining to their own job. Staying on budget will be their primary concern.
 
Marketing Operations
Marketing Operations care about all the metrics! Since they’re most often tasked with overall care and maintenance of the marketing budget, MOps folks need to track all of the above metrics, and also keep an eye on the “health” of the budget — that is, whether it reflects all the right inputs from the marketers. Has everyone input their plans and forecasts? Who’s under or over budget? Marketing Operations pros are most often the ones compiling and serving up the metrics to the other marketers in an organization. 
 
Here’s a sample of the kind of budget tracking metrics Allocadia can provide. This particular view shows the overall investment tracking summary, including which regions/teams are on and off track with their marketing budgeting. Other dashboards pinpoint how the investment mix breaks down in different ways, or how the spend is aligned to different corporate strategic priorities.
 
 
This wraps up our three-part series, The Comprehensive Guide to Managing a B2B Marketing Budget! Looking for a better tool to build and manage your team’s marketing investments? Allocadia can help.
 

Also on this topic:

 
The essential guide for anyone who works with a marketing budget!
 

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