How not to let your marketing budget blow your mind (or blow out)
Updated: Aug 17, 2020
While marketing is supposedly a creative role, we spend an extraordinary amount of time crunching numbers. Successfully managing a marketing budget isn’t easy and requires diplomacy, negotiation and arguing power any global leader would be proud of.
The budget is also a primary area of concern for most CEOs, who also frequently ask: “how much should we be spending on marketing?” Before we get to the answer - let’s explore a couple of issues around marketing budgets.
Be mindful of what gets coded to your marketing budget
Firstly it is amazing what gets coded to marketing. If we take a look in the General Ledger very often around 30% of what is attributed to marketing - isn’t. Invariably it is coded to a marketing line because:
there was nowhere else more obvious to put it
it involved a logo
it is a subscription and that was deemed a marketing code
and about half a dozen other reasons why it is in marketing and not sales, product or HR.
At the end of the day, where things are coded won’t make the slightest difference to how the CFO balances the books and reports the annual results. However, it makes a huge difference when you’re fighting for the life of your marketing budget and team.
Imagine how much better that marketing ROI would look if 30% of expense was attributed elsewhere.
Be agile with your tech marketing budget
Secondly, marketing budgets aren’t a ‘set and forget’ item, particularly if you’re a tech marketer. It is virtually impossible to know exactly what you’re going to need budget for across a financial year. Product roadmaps change all the time, new opportunities and markets present themselves in unpredictable ways.
All of a sudden you find yourself running a series of trade shows in Australia that weren’t in plan or having to run a whole lot of ad campaigns in the US due to new demand that’s sprung up thanks to Covid-19. These are all wonderful things for the company but seldom do you get any more marketing budget to deliver them.
The result is a constant juggling act of reprioritisation, accrual and contingency. The CFO and CMO should be best friends for the amount of time we spend together. At least a monthly catch up, a quarterly recalibration and an annual planning (debating) session.
We’re raising this now because as things get tight for many of us, eyes invariably head straight to the budget. If you haven’t got a good handle on your marketing spend and a clear process to proactively keep track of what you’ve engaged, then it is difficult to make good decisions based on what to spend where.
How much should I spend on marketing?
To answer that initial question of how much you should be spending? You aren’t going to like the answer: “It depends.” One of the best steers for New Zealand tech marketers comes out of the Market Measures survey. The 2018 results suggest successful tech companies spend 27% of revenue on sales and marketing including salaries.
However, the variables are many. The type of product you’re selling. The price points. How you’re going to market and where those markets are located. The size and stage of your company also has a role and your business strategy drives the marketing strategy and spend.
No matter what those variables are however, you do need to understand your spend priorities - what just keeps the lights on and what primes you for growth. You also need to be right across how your marketing spend is being coded and reported to ensure everyone is on the same page.
Learn more in TechWeek
It’s why we presented a webinar on this topic at TechWeek and shared some highly practical tips, tricks and templates. Never has it been more important that tech marketers take the lead in helping the company move forward. A big part of that is having an accurate marketing budget to match your marketing plan. Download our marketing plan template now to get started.