Marketing budgets, a critical element in any marketing campaign but difficult to generate, and getting approval seems like an arduous task. That is a general notion, and it comes from what marketing directors have noticed over the years. Despite marketing being an important sales driver, chief financial officers and other top-level finance execs are hardly enthusiastic about the level of resources that goes into marketing.
This begs the question: why the skepticism?
CFOs, since time immemorial, have always been about saving and cutting costs, but there are other acceptable reasons why they might be wary of approving your budget proposal. For example, statistics show there is a significant disparity between high and low earners in email marketing. While the highest earners are getting up to $70 on each invested dollar, low earners are getting returns of less than $5 on the dollar. Most brands dedicate approximately 43 percent of their marketing budget to content, but only 23 percent of CFOs think the brand’s message is correctly curated for their audience and produced timely. Only about 30 percent of email subscribers of a retail chain in the USA have bought from the retailer.
Such stats only go to prove that justifying a marketing budget to the CFO is hard. However, it is not impossible. You need to see through the eyes of your CFO – create a marketing budget that generates maximum yet feasible results. In this article, we covered strategies that can help you budget like a CFO and optimize your expenses on digital marketing.
Elements of a Digital Marketing Budget
Digital marketing typically includes the following elements, mostly determined by factors like the company’s size, goals, audience, and budget. These elements are not compulsory, but they are at your disposal.
- B2B influencer marketing: While many in the B2B industry consider influencer marketing primarily a B2C tactic, it can also work in the B2B sector, particularly for IT products. By engaging its workers as influencers, IBM launched a successful registration drive for a new product, IBM Verse.
- B2B PR: This comprises, among other things, thought leadership pieces, interactive engagements such as AMAs (Ask Me Anything), and features in online publications.
- Content marketing: Includes blog posts, long-form content, whitepapers, webinars, podcasts and image galleries.
- Paid advertising: Your primary options here are Google ads, social advertisements, and display advertisements, all of which may be used strategically depending on your objectives.
- Social media marketing: From LinkedIn, Twitter, and Facebook to TikTok, you need a strong presence anywhere your target audience hangs out.
- Email marketing: Sending regular, high-quality emails can keep your business visible to existing consumers while also aiding the conversion of new ones.
Other line items, such as money dedicated to marketing a product launch or holding a virtual or in-person event, may also be included. Those, on the other hand, should be put into a distinct event-specific budget. The focus here is the techniques and resources included in your basic B2B digital marketing budget. As a side note, the budget can also include service and staffing elements like freelancer costs, agency contracts, and website maintenance and updates.
Creating Your Marketing Budget Like a CFO
There are thumb rules to use if you are still deliberating on what to spend. According to the CMO Survey 2020 by the American Marketing Association, IT businesses spend 22 percent of their income on marketing. That percentage is substantially higher in the B2B sector as a whole: 52 percent for B2B product firms and 46 percent for B2B services companies. For B2B product firms, 50 percent is dedicated to social media marketing, while B2B service organizations commit 37 percent.
Your percentage will probably be an average of these. If you have major campaigns planned for the year, like a new product launch, fundraising, or announcing a merger or acquisition, that proportion will generally be bigger than in less busy years.
Consider the Company’s Objectives When Starting
Before you start punching the numbers, start out the budgeting by noting the primary objectives of the department and the company. The CFO’s aim is primarily to ensure that the marketing spend contributes to the company’s overall strategy. Therefore, if the firm is breaking into new marketing next year, your marketing department’s job will be to spread the word about your brand in that area. Geographically tailored marketing will thus be included in the budget, including social media advertisements, possibly local influencer marketing, and PR outreach to new channels.
Alternatively, suppose your department wants to improve client retention by 10 percent. Accomplishing this will require that you increase your retargeting ad spending, add a new item for a freelancer to drive client testimonial building, and create a new customer loyalty program. You will understand how and where your department’s activities and expenses fit into that bigger picture if you start by laying down your broad goals. And, maybe more crucially, your CFO will also be onboard.
Analytics Should Be Consistent in Every Assessment
Whether you are attempting to persuade your CFO to approve your marketing budget or just budget like one, analytics is a practical tool for figuring out which ideas are working and which are not. There is no scarcity of analytics data out there. Even PR, whose outcomes are notoriously tough to quantify, now has a plethora of analytics systems to select from.
This information may help you figure out anything from the return on investment for certain marketing efforts to how many posts per week are ideal to which ad kinds are most effective—all of which have an impact on your budget.
Use Objectives to Prioritize the Budget, Not Marketing Efforts
When submitting your budget to the CFO, consider structuring it by the business objective each action supports rather than by marketing activity (social advertisements, content development, etc.). Although you will still need to break down the line items, this method of budgeting will make it a lot easier for your CFO to grasp.
Similarly, approaching your budget in this manner will provide you with a new perspective and insight. It will be simpler to understand how everything interacts if corporate goals are put first rather than functions or activities. This will not work for every aspect of your budget, but it will for certain items, such as marketing and new market pushes.
Doing your budget in this way will give you a different perspective and way of understanding, as well. With business goals at the front and center, it will be easier to see how everything connects rather than functions or activities.
Provide ROI Projections
Since marketing ROI is hard to forecast, it is hardly included in marketing budgets. However, include projections in the budget to forecast your outcomes, ROI, or income from a specific marketing activity or campaign in general. This could work if you are running identical registration adverts for recurring events, a social media ad for the company’s yearly conference or a B2B influencer campaign with someone that has worked with the team before.
It is crucial to be forthright if you cannot forecast the ROI on a given action, just as it is beneficial and enlightening for everyone (not just your CFO, but your whole marketing team) to provide estimated outcomes wherever available. You are in an unknown territory if a strategy is new to your firm or if the product you are promoting is new to your target market.
Collaborate With Other Departments
Marketing and sales divisions seldom work together as much as they should, despite their closely intertwined goals and actions. This is also true for other departments. Getting feedback from the sales or customer service teams will likely lead to a more accurate image of what is needed in terms of marketing efforts and a better understanding of what is working and what isn’t. It may also assist in developing new initiatives that should be included in the marketing strategy for the next year.
Monitor and Make Adjustments As Required
Do not become trapped in a rut because you did things a specific way last year or the previous years. Examine your marketing spend from the previous year to know what worked, the fluff and the areas that require improvements.
Your budget will almost certainly need to increase, both because expenses are growing and because some platforms are getting more competitive—but certain things, such as digital PR or sponsored advertisements, will be more worthwhile investments depending on the precise annual objectives you are targeting.
Strategic, goal-oriented thought processes are required when budgeting your marketing expenses like a CFO. The effort will help you drive your leadership team’s excitement for your strategy as well as your own team’s comprehension of how their work contributes to wider organizational goals.
A well-thought-out marketing plan can be the difference-maker in corporate performance, but CFOs frequently object to the expenditure required. You must learn how finance executives think and tailor your plan to meet their professional preferences if you want to ensure a consistent and sound annual budget.
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