It’s hard to believe, but now is the time for businesses to shift focus toward prioritizing their marketing efforts for the upcoming year. You may think, “We’re only just starting the fourth quarter! Why start planning now?”
For many CMOs and marketing leaders, October marks the deadline to finalize their marketing budgets for the following year. It’s important to find your seat at the table during these budget discussions.
A New Perspective on Marketing
Budget processes are changing as businesses recognize marketing teams are more than just brand custodians—they are strategic partners with a direct impact on profitability. This shift underscores the significance of the budgeting and planning season for marketing teams.
It’s heartening to see businesses acknowledge that marketing isn’t merely about showcasing the brand; it’s a powerful driver of growth. To excel in this role, marketing must have a say in the decision-making process and a stake in the outcomes. The staffing and recruiting industry, in particular, is rapidly evolving, recognizing the importance of marketers in becoming exceptional advocates for their businesses, for the employers they serve, and even for the talent they put to work.
Budget Allocation Trends
Marketing budgets typically range from 8-12% of a company’s revenue. However, in recent years, especially since the COVID-19 pandemic, we’ve seen a slight decrease in marketing budgets across most industries.
Gartner’s 2023 CMO Survey revealed that marketing budgets accounted for 9.1% of revenue in 2023, down from 11% pre-pandemic. In the talent industry, businesses tend to allocate substantially less. In our experience at ClearEdge, we see budgets ranging anywhere from 2% to7% based on the size, reach, and industry focus of the organizations.
If all this talk about budgeting has you feeling the pressure, you’re not alone. The report from Gartner zeroed in on the pressure marketing leaders face. Seventy-five percent of CMOs said they are facing increased pressure to “do more with less” to deliver growth.
This is where we are really excited to help so early in the process. You are in the 2024 budgeting season, and we are going to help you learn how to build a smart and thoughtful marketing budget now that will provide a business case for your marketing plans AND deliver marketing and profitability results across 2024.
Building a Strategic Marketing Budget for 2024
The place to start with your 2024 budget is with high level business goals—revenue being one of them. If your company plans to break into a new market or launch a new service in the coming year, additional marketing budget may be required.
Marketing’s efforts and goals need to be in line with the revenue goals the business has set out. Collaborate with the finance team to acquire the essential revenue figures that will serve as the foundation for your marketing strategy. Additionally, understand the rationale behind these revenue goals by engaging with top-level executives.
Once you have a grasp of the revenue goals and the “why” behind them, you must also consider the sales efforts and objectives for 2024. What targets and timelines are the sales teams pursuing as they work toward the same revenue goals?
For some, revenue goals, business visions, and sales strategies may already be well-known and communicated. In other cases, marketing may need to engage with various teams, including finance, leadership, and sales, to gain a comprehensive view of the 2024 revenue targets.
Analyze Past Performance
Looking back is a crucial step in shaping your marketing plan. Analyze the performance of your campaigns in 2023 to identify areas for improvement. Dive into your metrics to determine which channels yielded the best results, which media garnered the most responses, and which tools proved effective or ineffective.
Understand How You Acquire Your Ideal Client Profile (ICP)
Evaluate your Ideal Client Profile (ICP) and portfolio. Determine which ICP clients were acquired during the year and through which channels. Assess whether they met revenue expectations and still align with your marketing team’s focus.
Identify your most significant successes and the strategies behind them, aiming to replicate and amplify these efforts in 2024. Simultaneously, reflect on the investments that didn’t yield desired results and analyze the reasons they fell short.
Craft Your Marketing Budget
With a wealth of performance data and a clear business strategy for 2024, it’s time to create your budget. You know what worked, what it cost, and what can be eliminated. Moreover, you understand the expectations and goals of the business, leadership, and sales teams. Collecting these insights over several days or weeks is essential to build a realistic and justifiable budget that can garner support from all stakeholders.
Link Expenses to Growth Goals
When structuring your budget, tie expenses directly to growth goals. Demonstrate that your anticipated results are grounded in past successes. The more real-world data and experience you can bring to the budgeting process, the more evident the value of an adequate marketing budget becomes to decision-makers.
Provide Evidence for Budget Requests
If you’re seeking budget allocation for untested tools or programs, bolster your case with industry case studies and examples that prove their effectiveness. Building a budget isn’t just about presenting numbers; it’s about conveying a compelling vision and plan for contributing to success and growth. Internal data is valuable, but external examples can be equally persuasive in justifying your budget requests.
Avoiding Marketing Budget Pitfalls
It’s essential to steer clear of potential pitfalls in your marketing budgeting process—here a few we see most often
1. Define Inclusions and Exclusions
Clarify what falls within the marketing budget. For example, where do client entertainment and business development expenses fall? Ensure that marketing leaders don’t overextend their budgets by accounting for costs that could belong to other teams or projects.
2. Anticipate some ad hoc
No matter how solid your marketing plan is, unplanned expenses will likely arise. You may find out several prospects will be attending an event that wasn’t initially budgeted for. It could be a unique advertising opportunity to support a campaign or a piece of content to support a sales initiative. In preparation, reserve some budget to address ad hoc needs throughout the year.
3. Address Paid Ad Spend
Paid ad spend is a significant line item in modern marketing budgets. While you can’t determine exact spend without finalized programs, make thoughtful forecasts, considering the tendency for ad prices to rise annually. Ensure you account for paid ad spend appropriately.
Remember that your budget may need to adapt as the year progresses. Marketing plans and programs can change, as do market conditions, so be prepared to negotiate for additional resources once you start executing your marketing plan and see results.
Adapting to a Smaller Budget
We wish all marketers could be allocated the budgets they deserve. But if you find yourself facing a smaller budget for 2024, there are strategies to make it work.
Manage Expectations
Reset expectations for leadership and sales to align with the new budget’s limitations. Be transparent about the constraints, such as higher ad costs, and communicate the expected impact of these limitations.
Focus on Strategic Goals
Be realistic about what your team can achieve. Set three well-aligned business goals and concentrate your team’s efforts on these objectives. A focused approach ensures your budget limitations don’t hinder your ability to support business goals effectively.
Realistic Forecasting
Base your forecast on prior experience and market data rather than making unrealistic assumptions to excite teams. Establish achievable goals and strive for successful execution while aligning with business goals and strategies.
Marketing plays a pivotal role in driving growth, but success requires robust strategies and well-crafted budgets. As you enter the 2024 budgeting season, remember the 1-2-3 process: align with revenue and business goals, leverage past marketing performance, and craft a budget that combines vision and knowledge.
With alignment on strategy and expectations, your marketing team can pave the way for a successful 2024!