Bulletproof Your Marketing Budget

As marketers, we’re all familiar with the adage “Half my advertising dollars are wasted – I just don’t know which half.” During the past decade, our CEOs and CFOs have given up worrying about which half it is – they’ve just slashed the marketing budget, and left you to figure out where to make the savings. And if you want more budget, you’d better have a bulletproof case for it.

The key to bulletproofing a budget is to let metrics drive the conversation, using a return on investment model that demonstrates the dollar value of marketing. Without hard numbers, finance will drive the marketing budget conversation, with predictable results.

A robust Return on Marketing Investment model for your budget should be based on three key factors: pipeline, spend saturation and program attribution.

1. Know your pipeline. The key to demonstrating the return on your marketing investments is to understand how marketing has affected the sales pipeline. First, start with what revenue has been generated in the past year and tie this revenue to marketing’s lead generation program. Second, look at the current active pipeline and see what marketing has done to drive it. Finally, examine every stage of the sales process to understand where marketing activities are helping improve the sales team’s close ratio.

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BtoB Benchmark Take-Away

According to Gartner, high-tech providers are reporting a 13 percent increase in 2013 marketing budgets over 2012. One-third of the 383 high-tech companies surveyed  are planning to spend more than 8 percent of revenue on marketing and 15 percent are planning to spend more than 10 percent of revenue on marketing in 2013.

Marketers must challenge the budgeting process and ask the question, “What are we truly trying to achieve this year, and will we invest appropriately to make it happen?” Then, the budgeting process will become strategic. Read more.

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2. Saturation – when is enough, enough? A second – and oft-forgotten – key to building marketing ROI is understanding when a specific program has reached its saturation point. An example may be helpful here. A few years ago, a client was running an extensive pay-per-click ad campaign, which was proving very effective. So effective, in fact, that the CEO wanted to double or triple the paid search spend, and take the money away from other programs. We tried it for a month. As it turned out, doubling the spend increased leads by roughly 5 percent. In effect, the paid search effort was already saturated at the lower spend levels, so spending more was not going to drive significantly more leads or revenue.

3. Attribution – can a marketing program get some respect? Perhaps the hardest part of demonstrating return on marketing investments is correctly attributing where a lead came from. A prospect may read about you in a trade pub, or see you at a tradeshow, and later does a Google search to find you. SEO gets the credit, rather than your successful PR and tradeshow programs. One approach is to take all direct searches – searches for your company or product name – and attribute them to other programs, not Google. After all, if the prospect already knows your name, it’s thanks to some marketing effort.

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More on Budgeting in New Arketi Insights 2012 Tech CMO Roundtable

Sometimes it seems as if setting the marketing budget is little more than a game of chicken. But with the right approach, budgeting can be a strategic tool for driving business. For more on bulletproofing your marketing budget, download the free Arketi Insights paper.

Requests for invitations to the sixth annual Tech CMO Roundtable are now being accepted.

If you’re a CMO or Vice President of marketing or public relations, apply today to join the dialogue.

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Framing the Conversation

With metrics in hand, the conversation can shift from projections created by finance to what investment in marketing will be required to achieve those projections. While some in the C-suite may quibble over your numbers or formulas, at least the discussion will have moved on from the “budget you’re getting” to the “budget required for us to fill the pipeline, improve the close ratio, and meet our revenue objectives.”

If the ROI model is strong enough, it will not only protect your marketing budget, but even increase it. Now, that’s a budget that is bulletproofed.

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