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What shape is your 2011 marketing budget?

I imagine that there are currently a fair few marketers dusting off a twelve month marketing budget for the year ahead, which makes this a great time to challenge you to ask yourself, what shape is your marketing budget?

This was the third of my tips at last year's B2B Marketing Conference 2010 for 'Getting finance to love marketing'- and I'd argue the most important.

The questions I most often get asked about marketing budgets are:

  • How much should I spend as a percentage of turnover?
  • Should I benchmark against competitors?
  • How much shall I spend on each discipline (PR, DM, Events, Ads, etc.)?

All totally reasonable questions, but the answers won't give you a strategic edge like knowing what shape it is will. Seriously, it is the most important question there is on the budgeting front. So, let me tell you what I mean.

A decent marketing programme is centred on a sales funnel, onto which you’ve mapped the decision making process for your target audience. From this you can put together a programme of activity that moves a person from awareness to a sale. Different marketing tools perform different tasks, and each marketing technique has a different level of influence at each stage of this process. You need to determine the level of influence at each stage, then apportion this across the funnel.

There are a few ways to decide the amount of influence each technique has:

  • Workshop with the sales and marketing team to agree the apportionment.
  • Surveys or focus groups amongst new customers to get them to assess what they saw at each stage (this can be tricky, as people often post-rationalise decision-making, meaning that emotional triggers are downplayed).
  • A best guess (hey, we’ve all got to start somewhere).
  • A combination of all of the above.

From this exercise you now have a powerful tool for designing programmes and allocating budget.

Now analyse your budget in the same way:

  • Split your spend into each technique.
  • Apportion this spend as per the influence amount you’ve worked out for that technique (for example, if you worked out that PR has 40% influence at awareness, 10% at interest, 40% on close and 10% on loyalty, and you spent £1000 on PR, then £400 goes against awareness, £100 on interest, £400 on close and £100 on loyalty).
  • Do this for each area of spend.
  • You now have an actual shape for your budget that looks something like this...

Compare your actual budget shape to the ideal budget shape you’ve established to maintain a free-flowing sales funnel. This allows you assess where you’re spending too much or too little, and to adjust your spend according to the funnel requirements.

Now, if you have a budget cut, or find a pot of cash, you again have a powerful tool to decide how to adjust your spending. The crucial factor here is to maintain the shape. So, rather than cutting a project that happens to be the right level of spend, you can cut evenly across the funnel ensuring that you’re not leaving any gaps.

Video: The approach is outlined in this 10 Minute Marketing video

This is adapted version of an article that originally appeared on the Marketing Clear Thinking blog.