Few decisions have as much impact on the success of a brand as does the marketing budget.
Peter Drucker, the father of modern business management, stressed this to generations of business executives up until his death in 2005. Coming from the standpoint that marketing creates exceptional value for an organization, he stated, “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
While Peter’s wisdom continues to ring true today, it does little to soften the resistance many marketers face when marketing budgets are being determined. It’s this resistance that has driven us to dedicate so much time to educating and preparing marketers for one of the most important internal conversations of the year.
The following insights will prove valuable guides as you think through your approach to securing your marketing budget.
Why do some marketers fail to get the marketing budgets they need? There are at least twelve reasons.
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.
The general rule of thumb is that consumer product companies should be spending between 6% and 12% of revenues on marketing, while B2B companies should be spending between 2% and 6% of revenues on marketing.
Often, it is the weaker marketer that lets the finance department muscle in and set their budget.
You should spend more on advertising and marketing if the following conditions exist.
It would be convenient to dismiss the tussle between finance, procurement, purchasing and marketing as “politics”. Unfortunately, it’s a lot more serious than just difference of opinion or even outlook. Because of how they have tended to behave towards each other, both parties have ensured that potentially, huge amounts of money are being left on the table because neither party is fully using their skills to grow the brand to the greatest benefit of the company.
Strong brands have a huge impact on the success of organizations. While researching the benefits of building strong brands we compiled a comprehensive list of proof points based on empirical studies from a variety of sources.
If anyone tells you that brand management is a nonessential cost center, you can rest assured that they have hugely underestimated the financial and business impact of strong brands.
The Blake Project Can Help: Accelerate B2C and B2B Brand Growth Through Powerful Emotional Connections
Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education