Marketing budgets vary from company to company. They are usually the result of bottom-up planning in the first step of the planning period and top-down planning in the second step. Many times the actual marketing budget can be expressed as a percentage of anticipated revenues.
This percentage, however, depends on many factors, such as the type of industry, next year’s marketing objectives, the market position of the company versus its competitors, the business model, the relevant sales channels, and the state of the economy. Percentages between 2 % and 10 % are very common, but again, this depends on the above mentioned factors.
Marketing executives sometimes feel they have to juggle with their marketing budget. Allocating their marketing dollars to the different marketing measures can be all but easy, especially after top-down budget cuts. Marketing objectives rarely seem to be modified accordingly. So in the end, it sometimes feels like being asked to reach the same goals with less money or to perform a miracle.
As frustrating as this may seem at first, most marketing budgets do actually leave room for optimization. Many times, our planning in the bottom-up phase is budgeting “in an ideal world”. Some marketing teams do not even have the workforce to actually realize all marketing measures defined in their marketing plan. So there must be room for adjustments. The question is: What measures, tools or programs are you willing to cut?
Our advice is: Don’t pour out your marketing dollars with a watering can! This means: Don’t try to do a little bit of everything, just because your company has done so in the past. Marketing plans over the years tend to get more complex, rather than leaner. New measures are added easily, but it seems hard to say good-bye to old concepts. This is a shame, because the little-bit-of-everything-approach will be hard work for your team with little success in the end.
Think about your main objectives and which tools to employ to achieve those. Create your marketing plan with the most promising and effective tools. Plan marketing measures where you can actually make a difference in the market. If all of your competitors are placing print ads in the same magazines, maybe you can launch a new social media campaign instead that actually reaches your target group with a big wow. Or vice versa.
Think of abandoning old concepts. Are you exhibiting at the same trade show with very few interesting sales leads for your marketing dollars? And are you just going, because you have done so for more than ten years or because somebody on the Board of Directors thinks it might be a bad sign not to go? Just prove how expensive those leads are compared to one of your direct marketing or Internet campaigns. In the end, your work needs to help increase your sales revenues. And a watering can just won’t do the job.