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Brand Management

How To Get The Marketing Budget You Need

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Marketing Budget Request

This is the time of year when many marketing departments decide how their particular share of the industry’s enormous marketing spend will be applied in the following year.

In practice this means senior marketers make predictions for the coming year, perform an objective review of the performance of the previous year’s expenditure and then finally allocate their spend across their chosen marketing investments.

The vast majority of firms still use a top-down budgeting system. Senior managers decide on the total marketing budget for the year and leave marketing to allocate it accordingly. This figure is usually calculated in one of two ways. In its most pathetic form, top-down budgeting involves senior management looking at last year’s budget and then increasing it or decreasing based on expectations of turnover.

Or else they apply an ‘advertising:sales ratio’. Senior managers estimate how much they expect to sell in the coming year and then apply a completely arbitrary percentage to this estimate. Thus the marketing budget is set.

The problems with a top-down approach should be obvious. It is non-strategic, takes no account of new initiatives within the company, and ignores changes in the external market.

It also involves estimating how much a firm expects to sell before making any decision on marketing spend, thus inferring that marketing is an inconsequential expense, rather than integral investment. Firms that use the top-down approach are hindered in their marketing strategy, long before that strategy has even been devised.

An alternative bottom-up approach is, of course, the correct one. Reject the amount senior management allocates. Explain that as strategic planning has not yet been completed, you have no idea what resources you will need yet. Indeed, you may need less than they’ve allocated.

Then convene marketing for a one-day meeting. Review lessons from the previous year and then discuss the strategic goals for the coming year. With a series of strategic objectives agreed, break each one down into the practical, tactical challenges that need to be met next year.

The marketing department then works with its service providers to economically price each challenge. Finally, set realistic metrics of what can be achieved by the end of the year if these challenges are met. Once everything has been calculated, you present all of this to senior management. The emphasis will be on what can be achieved if senior management provide the investment you request.

If senior management reject your marketing budget request you can ask them why.

By making a strong case, the emphasis shifts from your request to their decision. If they still reject your budget you must withdraw all your estimates of success – your predictions were based on a certain level of investment. Return later with a smaller budget request and lower estimates of success. Of course, if you get approval you’d better make damned sure you deliver the promised results. Accountability works both ways.

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