Build Your Marketing Budget: Eight-Step Guide

Marketing Budget is that time of year when marketers are trying to figure out how to allocate their resources to meet or exceed their goals for the coming year. Here are some important things to keep in mind when setting your marketing budget for the next financial year or quarter.

Where to start: top to bottom or bottom to top?

The top-down marketing budget is determined based on your marketing investment goals. The CFO or CMO, or both, usually divides dollars into several major spending groups. Marketing leadership generally divides the total marketing spend available by functional area (field marketing, product marketing, etc.) or by cost point. Then, midsize marketing leaders (for example, field marketing directors) will further divide their expenses in the way that makes the most sense for their team.

The bottom-up marketing budget comes when individual marketers start with a long list of programs and companies they want to spend money on and choose what they want to add to their budget, one by one. This approach is common with startups, small organizations, or companies with less mature roles in marketing activities.

Our recommendation? Start with a top-down goal, followed by a bottom-up business plan. This approach gives marketers the autonomy to budget as they see fit while remaining true to the overall priorities of marketing leadership.

The main structure is used by high-performing organizations.

1. Your marketing team

receives its spending goals from the top-down budgeting process performed by your leadership or through marketing activities. Now that you know how much money to invest in the year, it’s time to sit down as a team and make decisions.

2. List all the activities that your team plans to carry out during the year,

along with their estimated costs, and organize them into relevant groups. Remember to take into account any marketing activity or commitments made in the previous year. Thanks to the additions, these items will be part of the marketing budget for the year in which they occur, not the year in which the money was spent.

3. While shortening the list to include only what you think fits your spending goals,

start building your budget on the system you use (some companies use a marketing performance management tool like ours, others use Excel) information about any line items you need to report for reporting purposes, such as supplier, audience, product range, region, CRM campaign, etc.

4. Take a step back and evaluate each budget.

Do you agree with your goals? Refinements are likely to be required, and marketing budget software is often used to help you do this. This is the stage where difficult questions often arise: what can we take with us and what do we leave behind? What will be the impact of these decisions?

5. Submit your quotes for internal analysis. Fingers crossed.

6. In this phase, there is an adjustment process, where the budget is made between marketers who define the budget and its leadership.

Two-week cycles are common here: two weeks to define the initial plan, another two weeks for the initial assessment, another two weeks for further adjustments, and so on. On average, the whole process can take about two months, although it can vary a lot, especially if the numbers need to be approved by a board of directors.

7. Marketing management evaluates budgets. They are looking for two things:

  • Compliance: did all marketing teams plan as they should and did it on time? Are your budgets in line with your investment goals?
  • Performance: Marketing leaders spend time analyzing each team’s purpose for their funds. They will pay special attention if the planned marketing investments sufficiently support the overall business objectives.

8. The marketing leadership approves budgets. Now is the time to start marketing!

Start early, review regularly, and remember that this is part of how you manage your marketing so you can do good marketing.