Overcoming the Fear of Planning a Marketing Budget
There is no question that budgeting season can be stressful or “scary.” The overwhelming fear of uncertainty, possible budget cuts, or the dreaded “use it or lose it” mentality would make anyone a little nervous.
Setup spoke with Paige Farrow, the Senior Director of Marketing at Char-Broil, about the challenges or “fears” marketers face when planning a marketing budget and how marketers can best prepare for marketing costs and spending.
Read Related: The Marketing Budget - Where Marketers Go Wrong & How to Get it Right
Budgeting Fear #1: Unexpected costs
The future is uncertain and consumer behavior is not always guaranteed so, of course, budgeting can be a little difficult. No matter the amount of planning, predictive modeling, or patterns detected from previous years, nothing is set in stone. The market changes like a teenager getting ready for the first day back to school - too often - and sometimes a prepared budget may not be flexible enough to respond.
Advice: Hide 1-2% of the budget
Hiding a small percentage of the budget to account for unexpected costs is a perfect safety net for emergencies. This also saves marketers from dipping into marketing dollars allocated to other needs.
Budgeting Fear #2: Goals not prioritized
Budget cuts are inevitable. It’s easy to add initiatives, but with every new priority, something typically needs to be sacrificed.
Advice: Evaluate marketing efforts
Take a look at the company’s long-term goals and attribute which efforts are contributing to the KPIs (key performance indicators), providing the most value, and leading to the most revenue. A clear understanding of priorities will help when cutting costs.
Budgeting Fear #3: Agency costs
Sometimes brands cannot afford to continue a relationship or pay additional costs to their agency. This conversation is tough and may harm the relationship.
Read Related: The Five Marketing Agency Compensation Models for Brands
Advice: Have a conversation before budgeting season
A continuous conversation about the agency's financial status, the company’s business performance, and thoughts on budgeting scenarios throughout an agency-client relationship will keep both parties on the same page. If the client gives the agency a heads up about their mentality then the agency team can prepare accordingly.
Budgeting Fear #3: Low budget
A lower budget means marketers may not accomplish their goals. This can stem from other departments not understanding or seeing the value of marketing.
Advice: Communicate
Marketing is often viewed by the finance department as a cost center because of empty metrics. Marketers need to communicate the value of marketing to the C-suite with multiple “business metrics” - total campaign conversion rates, generated leads, campaign ROI (return on investment), and CPA (costs-per-acquisition).
Communicate the value of all marketing efforts by breaking down the budget into sections.
Paige Farrow breaks down her budget into four brackets:
Operations (salaries, travel, cell phones, supplies, digital tools, translations, etc.);
Content production (photography, videography, copywriting, banner creation, social post creation, graphic design, etc.);
Agency fees (strategy, account management, measurement/insights, media planning/buying, research, etc.);
Paid media (just the cost of the actual “working dollars” of media, paid social, paid search, radio, tv, etc.)
Confirm the marketing goals with the CEO or boss before creating the budget. Clearly define how the marketing plan impacts the total revenue of the company and articulate how certain goals won’t be met without the proper budget.
Approach the coming year’s budgeting process with ease. There are bound to be bumps along the road, but a strong understanding of overall goals, priorities, and communication across the board should make budget planning as smooth as possible.
Map out your next budget with ease
Free Marketing Budget Template
Avoid budgeting mistakes and miscommunication during your next budgeting cycle!
Click here to download the template for free.
From sales, to product design, to innovation, to finance, to technology, and even to HR - marketing touches virtually every department within the organization and drives each department toward its goals.
In order to do this, however, leaders in the organization need to understand the value of marketing. If CMOs position and communicate themselves better, then progress can be made.
How can CMOs prove their value to not only the C-suite, but the company as a whole?