Thursday, November 13, 2014

Time for budgets

For many companies the end of 2014 will also be the end of the budget year and marketing managers will be thinking about the budget for 2015.

Hopefully there will be a formal budget and not just a sum of money allocated to marketing. And that budget should be detailed, typically on a spreadsheet to show how the investment is to be deployed in accordance with a marketing plan. I use the term investment because the whole point of a marketing plan and the accompanying budget to implement it, is to achieve a return on the investment just the same as if investing in new plant to improve efficiency for example.

A problem with budgets is the tendency to take last years' numbers and add a few percent for inflation. This lazy approach prevents new ideas being funded and perpetuates spend on things which may no longer be valid, so it pays to rethink the marketing strategy,  marketing plan and supporting budget.

A question I sometimes  get asked is how much should the marketing budget be? Some people would like this expressed as a percentage of sales, but this will vary from business to business and what needs to be achieved. One approach is to decide the marketing strategy and write the marketing plan, then figure out the cost of implementation - 'to cost the need.' The reality for most companies is driven by affordability and then prioritising the budget for most effect.

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