It’s budget season! We recently discussed budgeting on the podcast, and in this article, Jeff Clark shares the Rockstar CMO 5 F’in’ Fundamentals of Good Budgeting.
You can tell it’s budget season. Our LinkedIn connections are blogging their wisdom and posting some interesting data. How much should your organization be spending on marketing?
Well, that depends …
At least that’s what we advisors always say. In my decades of building, spending, and advising on marketing budgets, there are five fundamentally good practices to help you answer that question.
Effective budget planning is critical for B2B marketing leaders, particularly in a highly competitive and ever-changing market. Balancing between driving growth, aligning with corporate strategy, and managing operational constraints requires a thoughtful approach to budget allocation and management. To that end, let’s break down five core principles that must guide B2B marketing leaders in their budget planning efforts. These “five fundamentals” focus on benchmarking, allocation, ROI, and the flexibility needed to respond to market shifts.
One. Benchmark Your Budget Against Your Peers
Benchmarking is an essential first step in budget planning. It involves comparing your company’s marketing spend with that of similar businesses, allowing you to gauge how your budget measures up. In our podcast conversation on this topic, we highlighted data from B2B Mark Calc [link], revealing that businesses typically spend around 5.5% of their revenue on marketing and sales, though this percentage can vary widely depending on company size and industry.
Smaller businesses may spend as much as 20%, while larger enterprises spend considerably less. Note that these numbers are marketing, plus sales, so find a data source that can tease apart those functional budgets.
Benchmarking enables marketing leaders to justify their spending to senior management and rationalize any discrepancies.Benchmarking helps you talk to your executive team and fosters a sense of fiscal responsibility that can strengthen internal relationships, especially with the CFO.
By benchmarking, marketing leaders can not only prove that their spend is in line with industry standards, but also identify opportunities for increased investment if needed. For example, a company looking to boost brand awareness may need to invest more in marketing to reach its goals, while an established business focused on customer retention may require less.
Two. Separate Program Expenses into Campaigns and Shared Services
An often-overlooked aspect of budgeting is the need to clearly differentiate between campaign-specific expenses and shared services costs, such as creative services, marketing operations, and technology. It is critical to maximize the budget allocation towards customer engagement activities—those efforts that directly impact sales or brand equity—while carefully managing overhead expenses like technology and creative resources.
For B2B marketing leaders, this means ensuring that the budget is structured in a way that highlights campaign effectiveness without being bogged down by unrelated shared service costs. This separation is vital to avoid conflating expenses, which can obscure ROI and make it difficult to justify spending. By separating these categories, marketing teams can track campaign effectiveness more accurately and make adjustments where necessary.
Three. Find Your Path to ROI
Return on investment (ROI) is perhaps the most critical metric for any marketing team, and finding a path to measurable ROI should be a primary goal in budget planning. It is important to connect budgeted activity to specific objectives and key results (OKRs), whether they focus on pipeline generation, brand building, or customer retention. This focus on ROI helps marketing teams prove their value within the organization, particularly when ROI isn’t just about revenue, but also about intangible gains such as increased awareness or improved brand trust.
Moreover, it’s crucial to align campaign spending with overarching business objectives to ensure that every dollar spent is driving the company toward its strategic goals. The conversation points out the need to balance high-level ROI reporting with campaign-specific performance to ensure transparency and accountability throughout the marketing budget.
You want to be able to say that you spent X amount of money on specific OKRs, and here is the result. That may be at the campaign level or the whole of marketing.
Four. Determine If You Have the Right Budget Allocation Model
Having the right budget allocation model is essential for efficiently managing resources. There are various models—centralized, functional, geographical, and product-based—that organizations can use to allocate budgets. Each model has its own set of pros and cons, and choosing the right one depends on the structure of the organization and the specific needs of the marketing department.
A centralized model, where the CMO has discretion over the entire budget, might offer more strategic control, but could limit flexibility for individual teams. A functional model, where budget authority is divided among teams such as demand generation or field marketing, allows for more targeted spending but risks creating silos. Geographic or product-focused models are useful for large, multinational companies but can lead to complexities in budget tracking and reporting.
Ultimately, aligning the budget allocation model with the company’s reporting and ROI needs is crucial to avoid inefficiencies and misalignment with business goals.
Five. Identify Opportunities to Experiment
Finally, good budget planning should always include an opportunity for experimentation. Even in tight budget environments, it’s important to allocate some resources toward innovative approaches that may provide future growth opportunities. Whether it’s experimenting with new technologies like AI in content creation, exploring new market segments, or trialing novel customer engagement strategies, having a dedicated experimental budget ensures that marketing teams remain agile and forward-thinking.
It is important to set aside funds for these initiatives early in the planning process. This allows companies to respond quickly to emerging trends, such as AI, which can appear unexpectedly and rapidly transform the market landscape. Look at some things worth investing in the future.
Conclusion
For B2B marketing leaders, effective budget planning hinges on mastering these five fundamentals: benchmarking, separating expenses, prioritizing ROI, choosing the right allocation model, and fostering a spirit of experimentation. By following these principles, marketing teams can ensure their budgets are both strategic and responsive, driving growth and innovation while maintaining fiscal responsibility. In a world where market dynamics can change rapidly, agility and clarity in budget planning are key to sustained success.
Photo by Roman Synkevych on Unsplash
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