When it comes to top-down vs bottom-up budgeting, which approach makes sense to use? I recommend that you start with the top-down approach first to make sure that you understand the high-level constraints you are dealing with. If you do your homework, you should be able to set the context for managing your marketing budget before it is handed down to you. Once you have framed out a high-level range of spending, it is critical to map your campaign plans and expected results to the objectives that you are being asked to sign up for.
Ideally, when determining how much to spend on marketing, you should start with a benchmark report that has a segment that can be closely mapped to your company. The survey participants provide exhaustive data that is quite useful for overall insights and trends, but with participants in the survey, you can see how you can resolve down to very small segments.
The report breaks down the participants by economic sector B2B vs. B2C and product vs. But that segment might include a retailer and school - two very different marketing profiles. The point is that even the best of reports like this one from Christine Moorman is only part of the answer when it comes to establishing a marketing budget.
B2B vs. B2C vs. Marketing investment levels, strategies, and tactics vary greatly based on the target buyers and go-to-market model. Product vs. The CMO Survey breaks out products vs. Services typically have a relatively low gross margin because of the labor cost to deliver services. They also have a different level of scalability because of the potential scarcity in labor. Of course, there are lots of examples of high-margin services expensive consultants and scalable service models like Uber , but it does provide a potentially useful lens.
Industry vertical. When it comes to marketing spend by industry, the industry sector can be interesting, but you still see a great deal of variability in regards to the marketing budget inside each sector. Marketing strategy. The marketing strategy employed is a major variable and often overlooked.
For example, if you have a targeted account approach or ABM vs. Buying metrics. The type of buying cycle and related metrics can be quite useful. For example, do you have a highly considered, expensive offer with a long sales cycle or a candy rack item sold in e-commerce stores?
Insource vs. A key decision based on your marketing strategy and your available resources is the level of outsourcing you use for your marketing.
If you have a heavy content-based strategy, you may need to consider hiring a staff of content strategists and creators, or you may decide to outsource. In most cases, insourcing makes sense if you have a well-established strategy, but it may change the way you think about your marketing budget. Not every marketing team includes the same stuff.
Marketing may be responsible for some of the sales technology stack, like the CRM system, while others include those investments in sales. In addition to benchmarking you need to consider the financial metrics that are specific to your business. This should not just be the average percentage of revenue that should be spent on marketing by industry.
This is a great way to increase your return on investment and develop content that directly impacts your bottom line. Many of the top marketers tend to use this approach to continually refine their campaigns.
For example, if you're promoting a white paper using Facebook ads, you may be seeing high engagement through likes and comments, but that doesn't necessarily translate into conversions. If you're not actively tracking performance on the back end, you may miss out on the chance to optimize your strategy and bring new customers into your marketing funnel.
While analyzing and testing new ideas is important, there's no one-size-fits-all approach. If you're still in the startup phase of your business, focusing on budget-friendly content and social campaigns can be a powerful way to increase brand awareness and grow your audience. If your company is more established, a robust mix of tactics can help you take your efforts to the next level.
Whether you're just getting started with content marketing or looking to make it a bigger part of your road map, it can be hard to know the best budget allocations right off the bat. This is where a flexible approach comes into play. By outlining your goals and creating a testing plan, you can determine which strategies are most helpful for growing your client base and your revenue.
Forbes Agency Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify? This is a BETA experience. You may opt-out by clicking here. More From Forbes. But, I almost never see a line item in their budgets for marketing costs. Plans and support materials are great, but how much will these things cost and where is the most effective use of your marketing funds?
Not being intentional about developing the budget that will support your marketing plans is like purchasing a car and not determining if you have enough money to buy the gas to run it. Marketing efforts have a direct bearing on your revenues. Without a solid budget, you can accidentally overspend on marketing costs or underspend and lose valuable time during the market season to capture sales.
So, how do you determine how much of your budget to assign to marketing? Ten percent is often the number most cited by industry experts. But does that apply to your business? A Chief of Marketing Officer CFO survey conducted by the American Marketing Association and Duke University found that the averages for marketing investment as a percentage of revenue varied by business type:.
Developing a marketing budget requires you have a good handle on your numbers.
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