Most Common. Marketing Budget Pitfalls. Avoiding the Mouse Trap

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1 Most Common Marketing Budget Pitfalls Avoiding the Mouse Trap

2 Regardless of industry, marketers across organizations from those in PR and marketing communications, to those in marketing operations struggle to track their spend on all marketing programs and stay on budget. Even the savviest marketers can be challenged to gain a complete and accurate picture of their marketing spend at any given time. After all, what they plan to spend, what they ve committed to spend and what they ve already spent changes daily. Plus, the information about that spend is dispersed across people, s, spreadsheets and finance systems. As a result, marketers find it difficult to make the most of their budgets and build credibility in the eyes of the finance team. Want to know the secret to gaining that needed view so you can confidently make spending decisions and stay in lockstep with finance? Read on for 10 common budgeting pitfalls to avoid. ONE

3 1 Lack of internal collaboration on the marketing budget We see this all the time one person in the marketing organization heroically tries to come up with the perfect marketing plan, even though multiple people truly own various areas of the marketing budget. Additionally, it s hard to reconcile and roll up input on budgets across teams and regions, making the final budget untrustworthy. Many marketers perceive planning as a top-down process with one person owning the entire budget. But the reality is that everyone spending marketing dollars needs to be involved in the budgeting process and in a streamlined manner. Otherwise, you end up with a giant plan that not only never becomes reality, but is also inaccurate. To secure buy-in to the plan, make sure all relevant stakeholders in the marketing group take ownership of their parts of the budget. They can even create their own section of the budget and the overall owner can roll it all up into a single plan. TWO

4 2 Planning based on last year s budget It s a common scenario the marketing budget is due while you re in the midst of launching campaigns, attending events, and taking care of an overwhelming number of programs and projects. As a result, you rush through the planning process by tweaking last year s budget instead of starting with this year s goals. Ideally you want to kick off your plan by first answering the question, What s our organization trying to achieve with its marketing investment over the next fiscal period? The goal is to clarify this from both the corporate viewpoint and from a strategic marketing perspective. Then you can put in place a plan that supports those objectives. In other words, rather than spending in the same budget buckets as last year, you can focus your investments where it makes most sense this year. three

5 3 Descending into Spreadsheet hell When it comes to planning and managing complex marketing program budgets, many marketers create massive workbooks using Microsoft Excel. In fact, it s not uncommon for one person to create a massive budgeting spreadsheet with multiple tabs and an unwieldy number of columns. While the person managing the budget has a full understanding of the details, anyone else would be wildly confused because they weren t involved in creating and managing the spreadsheet. Plus, countless spreadsheets create version-control problems, and don t offer the integration, visibility, or control needed to track returns and justify spending. This creates confusion and frustration within the marketing department, and results in financial reporting that doesn t meet the needs of the CFO or CMO, who ultimately control the purse strings. To compound matters, you waste your time and brainpower grappling with spreadsheets, calculations and tedious manual tasks instead of spending it strategically on the plan. Some marketing automation platforms offers functionality that replaces time-consuming manual processes, making it possible for your teams to easily share and manage budgets from a single source. A survey by Ventana Research found that: Four out of ten participants find out-of-date information in spreadsheets frequently or all of the time Fifty percent of the respondents said errors in numbers and formulas are common even in their most important spreadsheets Fifty percent said it is common for them to have multiple versions of the same spreadsheet four

6 4 Planning the marketing budget within the finance Framework While you want alignment between marketing and finance when it comes to the budget, there are good and bad ways of going about making that happen. Problems arise when finance assigns a couple of line items to marketing, and marketing builds its entire plan around that finance framework. This satisfies neither finance nor marketing needs. Additionally, the marketing plan doesn t ultimately correlate to the overall finance plan. In fact, fitting marketing spend into the finance department s quarterly and annual reviews can be stressful for marketers they re constantly at risk of mistakes being exposed and losing credibility as a result. And because they struggle to collaborate on and keep track of the budget, marketers often find it difficult to answer the finance department s questions around invoice reconciliation and forecasting. Instead of your marketing group enriching the finance budget within finance s framework, build detail within the finance plan but keep it separate from your stand-alone marketing budget. With this approach, you can ensure the necessary visibility and boost confidence between the two teams. That way, you can help turn around the perception that marketing is a cost center with no handle on spend, and instead show that marketing is budget conscious and supports the company s goals. five

7 5 Hiding the plan, thwarting good decisions You can have the greatest plan in the world, but it s meaningless if no one sees it and it s not well executed. Even if you do connect your plan with this year s goals and strategies, you may capture all that information on a stand-alone document that gets archived as soon as it s approved. Without access to the plan, people throughout the marketing organization cannot understand what they should be doing to achieve their goals and the company s goals. Your marketing plan needs to flow into the day-to-day execution of the marketing business, informing what people are doing on a daily basis. That means it needs to be operationalized, granting people visibility into their parts of the plan and budget. It Takes a Village Putting a marketing budget and plan into action usually involves a majority of the marketing organization and other internal stakeholders. six

8 6 Not knowing what you ve spent so far When you lack reliable access to the data you need, you re unable to associate actual expense with your marketing programs running in real time. To make matters worse, you then struggle to share this information with external decision-makers in a format they ll understand. As a result, you re challenged to make better use of available budgets, justify spend and secure additional funds based on actual performance. After all, it s tough to reallocate budget where it s most needed when you re not clear if the money is truly available. You can t make smart spending decisions without understanding what you ve spent to date. Yet many marketers lack this clarity because they pass the budgeting plan to finance and then rely on the finance group to tell them what they ve spent. You need to make sure you re getting the granular view you need to understand where you are against the plan at any given time. seven

9 7 Not being able to communicate the plan and progress against it Most marketing teams are seen as having a horrible grasp on their budget. And it s no wonder, since it s common for large organizations especially global ones to be running hundreds of marketing programs across multiple regions simultaneously. With so many programs in flight, it s difficult to reconcile against the plan and show progress. One proven way to counter this is to better communicate the plan to your entire team, so you can execute against it. eight

10 8 Failing at forecasting Forecasting isn t just for the sales department; this practice is key to your company profitably achieving its objectives. Yet many marketers find it difficult to accurately forecast their future marketing spend, feeding the finance group s perception that the marketing department doesn t grasp the business. By tying invoices and purchase orders together with marketing programs, you can provide more accurate forecasts on your marketing spend and build credibility with the finance department and the rest of the organization nine

11 9 Struggling to prove ROI Proving ROI is critical to illustrating the value of marketing s contribution to the organization. And there s a growing pressure to do so, especially with the vast amount of data at everyone s fingertips these days. But pulling together costs and data for ROI analysis is a time-consuming and manual process especially when the information is spread across systems, people and spreadsheets. You need software that helps you connect accurate and up-to-date cost data to your marketing programs for effortless ROI reporting. ten

12 10 Adapt or flounder No matter what you do, your marketing plan will never be perfect. Marketers need to accept that reality and design a budgeting and planning process that builds in agility. Look at what you ve spent to date and gauge your results so you can reallocate funds to what works, and stop investing in tactics that aren t working. It s far better to adapt your plan based on what happens as the plan unfolds rather than finish the year within a few percentage points of your original budget. Lock down your baseline, but evolve your overall budget as you go. That means stay open to change and run scenarios and move investments around as needed. eleven

13 Introducing Marketo Financial Management To manage spend effectively, marketing organizations need a system for managing budgets and operational data, just like those used by other departments. Designed specifically for marketers, Marketo Financial Management, part of the Marketo platform, is budget management software that helps marketing teams work together better. Combining budget management and marketing automation in a single marketing platform, Marketo Financial Management helps marketing improve budget oversight and the relationship with finance. The software gives marketers an up-to-date view of marketing spend, so they can forecast accurately, find and reallocate program dollars, and spend to plan. And because it connects accurate and up-to-date cost data to marketing programs, it enables effortless ROI reporting in Revenue Cycle Analytics. This saves marketers time and helps them make better spending decisions throughout the planning and execution of marketing initiatives. twelve

14 Getting spending updates from people across teams and regions in spreadsheets is unreliable and hard to consolidate; Marketo Financial Management s web-based automated approach replaced tedious manual processes and complex enterprise software to make it easy for teams to share and manage. Read more about Marketo Financial Management. Marketing organizations need a system for budgets and operational data, just like other departments. Combining budget management and marketing automation in a single marketing platform is a big win for marketers. We expect Marketo s solution to help marketing improve budget oversight and simplify the relationship between marketing and finance. Kristen Petersen Director, Marketing Operations at F5 Networks

15 Marketing Software. Easy, Powerful, Complete. Marketo, (NASDAQ MKTO) uniquely provides an easy-to-use, powerful and complete marketing software platform that propels fast-growing small companies and global enterprises alike. Marketo marketing automation and sales effectiveness software streamlines marketing processes, delivers more campaigns, generates more win-ready leads, and improves sales performance. With proven technology, comprehensive services and expert guidance, Marketo helps thousands of companies around the world turn marketing from a cost center into a revenue driver. blog.marketo.com Contact Marketo: MKTO sales@marketo.com