Every year, marketing departments face the same challenge: developing budgets that flow up to overall corporate budget. Some are also faced with the pressure of spending their entire marketing budget, or else the C-suite will decrease the budget the following year. It’s important to develop a thorough, strategic marketing budget, but first, here’s what you should avoid.
Most common budgeting mishaps
Often it is difficult to dedicate the time necessary for in-depth planning, resulting in some common budgeting mishaps.
- Budgeting the same as last year (or adding/subtracting 10% based on internal directives).
- Using no data or analytics from last year’s performance.
- Only considering channels that you have used before.
- Neglecting to tie strategies directly to goals.
- Not allocating dollars in accordance with changes in the company (i.e., new products or services, expansion, acquisition, competitive pressures, industry trends).
- Not budgeting to accommodate changes in the marketing industry. For example, before the internet there was no need to include ongoing web maintenance in the marketing budget.
The 3 Ws
Consider these three important factors before you begin developing your marketing budget.
- When: Budgeting for the next fiscal year should begin at least one quarter before the end of your current fiscal year. If you are planning for a big event, product launch or campaign next year, begin even earlier.
- Who: Everyone responsible for spending marketing dollars should be involved from the beginning. This creates ownership of the budget and produces better results throughout the year.
- Why: It’s important to budget for marketing because it can and should impact your company’s bottom line. Because of this, you should always begin with your business goals before determining your marketing plan.
To get started, answer these questions
To plan strategically for next year, you need to analyze past marketing executions and conduct market research. But at the very least – let’s say, if you don’t have enough time – try setting past budgets aside and starting with a clean slate. These questions will help determine your budget:
- What are the company goals?
- What has changed in the market (customers, competitors, regulation, etc.)?
- What worked last year? What didn’t?
- Are there upcoming events that will require dedicated budget (ie. trade shows, product launches, etc.)?
- Where and how are our customers absorbing information?
- What could we test that would allow us to be more informed at this time next year?
- How can you measure marketing executions?