• Eric Siano

Marketing Investments (Budgets) 2021 and Beyond

Updated: Jun 2, 2021

Marketing Budgets

By Eric J. Siano

Developing marketing budgets has never been easy, yet some general guidelines have existed. Historically established companies spend 6-12% of gross revenue on marketing, while newer companies spend 12-20% of gross revenue. The current global crisis has blown this model to bits.

Data, studies, and experience suggest that while firms that decrease marketing spend during a downturn lose a small amount of market share, firms that remain steady gain a small amount of share, and those that increase their spend see a more meaningful share increases.

“Stopping advertising to save money is like stopping your watch to save time.”

Henry Ford

“If you are marketing from a fairly static annual budget, you’re viewing marketing as an expense. Good marketers realize that it is an investment.”

Seth Godin

What to do? Adapt, innovate, and invest to not only deal with today's situation but also to plan for recovery and to operate post-recovery.

Before you start a budget, build a marketing plan that outlines marketing activities by month, by quarter, and by year. Generally, a marketing plan includes:

  • A description of the current market position

  • An overview of short-term and long-term marketing and advertising goals

  • A timeline of tasks and activities to be completed

  • Technology, people and process needs to enhance customer experience and maximize spend efficiency

  • A description of the target market and customer needs

  • Ways in which success will be measured and reported

Volatility will linger, so the first step is to fine-tune the marketing plan to focus on growth and efficiency. Be prepared to pivot: The marketing plan should be agile in order to adjust spending priorities with the changing environment.

With the marketing plan in place, you can begin to build a budget. In unsettled situations, it is best to start with a zero-based marketing budget. Invest in what matters and include all discretionary marketing spend that helps achieve marketing and corporate goals.

Use the two-speed marketing model to find a balance between brand building and short-term objectives. Determine the percentages by channel that are appropriate to spend on acquisition, optimization (share of wallet), and retention campaigns to drive brand building and revenue. Adjust these budget numbers based on economic, industry, and company factors.

Innovation in marketing can take many forms, including better ways to address customer needs as well as to open new markets and enhance a firm's product with the objective of increasing revenue. It is important to use data and insights to rapidly test, monitor, and adjust. Personalization can transform innovative communications.

It may seem counterintuitive, but investing in efficiency is also very beneficial. Data and analytics that improve targeting or help reduce churn are sound investments. As is Martech, that allows for cheaper, better, faster execution.

If anything, these tumultuous times are the most important times to proactively consider where you should invest your marketing dollars.

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