It's that time of year again, when marketers are figuring out how to allocate their resources to meet or beat their goals next year. Here are some important things to keep in mind as you build your marketing budget for an upcoming financial year or quarter.
(These tips are ideal for marketing teams of 10 or more, but the best-practices within apply to all.)
Where to Start: Top-Down or Bottom-Up?
Top-down marketing budgeting is done according to marketing investment targets. Usually the CFO or CMO, or both, divide dollars up into several big buckets of spend. Marketing leadership will typically divide the total marketing spend available according to functional area (field marketing, product marketing, etc.) or by cost center. Next, midlevel marketing leaders (directors of field marketing, for example) will further divide their bucket of spend in a way that makes most sense for their team.
Bottom-up marketing budgeting occurs when individual marketers start with a laundry list of programs and activities they'd like to spend money, on and one by one they pick which of those will be added to the budget. This approach is common in startups, small organizations, or businesses with less mature marketing operations functions.
Our recommendation? Jennifer Cracklen, our lead education consultant who helps enterprise marketing teams get set up their marketing budget processes, recommends a hybrid approach: Start with top-down target-setting, followed by building a bottom-up activity plan. This approach gives marketers the autonomy to plan their budget the way they feel is most appropriate while still staying true to the overall priorities marketing leadership has established.
Eight Steps to Building Your Marketing Budget
When it's time to actually build out your budget, here's what the process might look like. Of course, there will be lots of organization-specific variations, but this basic structure is one used by high-performing organizations.