Previously we have highlighted 4 crucial pillars of b-2-b marketing - the business model, the marketing plan, the budget and the CI Manual. Today we take a brief look at the marketing budget. The first obvious question is - do you have one? Even when there is no formal budget a historic record can probably be assembled by the accounts department tracing through invoices paid. At least this will give us some point of reference and highlight where money has been spent. And here is the first issue, that word spent. It implies a reactive, even negative cost incurred, why not approach the budget as making an investment. An investment that should demonstrate valid returns. If the company was investing in new production equipment for example, then the company directors would be expecting no less than a proposal that set out the benefits and return for that investment and judge this against other proposals competing for what are typically scarce resources.
The marketing budget holder will often be the marketing manager or marketing director and the scope might include staff salaries and employment costs, an allocation charge for floor space and overhead contribution, marketing communications, travel expenses and intellectual property such as trademarks and patents. Clients often ask me what percentage of sales turnover should the marketing budget be? Well, this will be influenced by the scope - what's in and what's out - the nature of the business and what can be afforded.
There are two ways of looking at this. To 'cost the need' - that is to outline the plan for staffing and marcomms judged appropriate to reaching the business's financial targets, or more likely decide how much can be afforded. Client/agency meetings provide the forum where such a disclosure is usually revealed.
In practical terms the next stage is to create the budget - a spreadsheet can be very useful and allow further analysis. I tend to use an application such as Exel or Numbers utilising features such as formulae and relational spreadsheets to do the number crunching and comparisons. I find it useful to provide a line for every type of marketing activity, even though some will have a zero figure entered. Also build in a contingency for unexpected expenditure. The MD is often good at signing you up for an exhibition you don't need but is in a location he would like to visit - but that's another story.
Finally having prepared and presented your marketing budget, monitor it versus 'actuals' and take the appropriate action if you are spending too much against the plan
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