Creating the marketing budget

A simple spreadsheet can provide a useful tool for creating and controlling the marketing budget. 

The most important thing is to both have a budget and to monitor expenditure against plan throughout the year. The budget is the financial expression of the Marketing Plan which provides the strategic vision, rationale and implementation programme. The budget also helps impose a discipline and control for the marketing team and is usually approved by management as the authority to invest in the marketing programme.

Some may find it helpful to include detail work sheets that feed summated figures into a summary page. Comment boxes can also prove useful to add explanation to the individual figures without adding line items for each. Of course larger operations may have sophisticated software to record and measure all transaction but it remains important to remember marketing is not accounting, so the budget tool should be an aid not an end in itself.

There are 2 ways of creating the budget:- 1) to ‘cost the need’ or 2) to invest what can be afforded. Cost the need is unlikely to be affordable to the typical b-2-b company so it comes down to a percentage of sales budget. There are no hard and fast rules as to what this figure should be. However some companies apply the percentage to product lines so well established products enjoy larger budgets than new products which actually need more support to gain traction.

Establishing actual costs can come from suppliers or past experience to build up the budget required to support the marketing plan. And finally include a sum for contingencies - the unforseen costs or even commitments made on behalf of the company in a weak moment by the MD! 

Recent blogs have looked at some of the big ticket items in many typical b-2-b budgets and suggested it is time to re-think the marketing mix rather than simply revamp the previous year's budget. Take a look at the index for related articles.

Influencing the great and the good

Prospective buyers can base their buying decisions on what you tell them about your product, what users say about the product and what people they trust for their expertise say about your product.

Product information can be presented at various levels of detail, from a brief overview to detailed specifications and operating instructions. User experience is traditionally in some form of endorsement such as a testimonial or case study and increasingly feedback online in the form of reviews. Thirdly opinion leaders can prove to be important influencers so putting resources into creating favourable support is a worthy marketing task. Opinion leaders can be instrumental in encouraging early adopters to buy new products as well as more generally giving credibility to a brand. In order to get opinion leaders onside the company message needs to be credible and verifiable. To achieve positive recognition the company needs to be perceived as being more than just a supplier of product and to exhibit in depth knowledge of the market applications and needs, the technology and wider legislative and operating environment.

Opinion leaders can be respected gurus within their area of expertise, leading publications, web sites and news channels in the sector, professional bodies, important consultants, conference speakers or respected companies using the product. Recommendations, referrals, specifications and word of mouth support from opinion leaders are essential to cultivate so identifying who these people are, how to engage with then and providing the resource is another important budget consideration,

Does direct mail still work?

Although e-mail has many benefits there is still a space for carefully designed and well executed mailings.

email promotions have  many benefits over mail for b-2-b campaigns - especially postage costs for high volume distribution. Creating a mailing piece, inserting in an envelope, producing address labels and franking soon racks up the cost, so for general promotional messages email will probably be cheaper and achieve higher open rates as well. It can also be linked directly to a landing page offering a seamless 'call to action'. But this does not mean that mailing should be ignored. Using direct mail for carefully targeted campaigns, using novel mailing pieces and including QR codes can be very effective.



A well constructed database should allow the selection of some quite specific target audiences which for many b-2-b companies may be relatively small numbers. This list might be augmented by profiling the target group against the total population and bringing new prospects into the campaign. The mailing piece itself can be quite creative - it doesn't have to be a letter of leaflet. 3D objects are often more memorable that sheets of paper and far more likely to be opened than regular mail. This is where a creative agency can add value to the campaign. The campaign could in fact be  a short series of mailing pieces that build into a complete story. Now with QR codes smart phone users can link directly to a landing page or video, but a follow up telephone call can be very effective  if made soon after the mailing while the visual impact of the mailing piece is still fresh in the recipient's mind. This sort of campaign can work well for introducing the company to prospective clients and setting up meetings.

So when reviewing marketing communications budgets, remember to include some resource for selective direct mail campaigns, but plan these thoroughly right through from getting the target audience right, being creative in the execution to following up and establishing the level of lead.

Putting it to the test

It is rare to find a budget line for market research for b-2-b companies and yet they will invest heavily in new product development and marketing campaigns without testing the market.

Arguably market research should be another high ticket item, but generally it isn't. Typically b-2-b companies regard MR as expensive, they do not traditionally do it and anyway think they already understand the market. A formal MR project can indeed cost several tens of thousands of pounds, but then an R&D project might cost hundreds of thousands so investment in developing and testing the concept first could prove good value compared to a major new product failure. When it comes to marketing communications how many b-2-b companies test the concepts before investing in an expensive advertising campaign or new web site? In fact the brief to the advertising agency should be informed by research in the first place and then the execution of the concepts tested to see if they work before committing to a big media spend. Even if formal and statistically substantiated market research is beyond the scope of the budget, testing and trials with small samples can often provide valuable insight that can influence the marketing communications programme.

A simple telephone questionnaire can often check if your assumptions are on the right track. Even calling a random sample of just a dozen prospects can flag up an issue that may not have been considered or not thought important. For example one company planing a major product launch aimed at encouraging stocking by electrical wholesalers exposed serious delivery problems with existing products over a period of time that needed to be solved first. An online survey can also provide useful information. One company typically spent the biggest share of their marcoms budget on display advertising. But the survey indicated that less than 20% read the market journals at all, with 80% going to web sites for information.

When reviewing the marketing communications budget include some allocation for at least some market research because it can often save wasting investment in other areas.

If a picture speaks a thousand words - how about video?

When it comes to showcasing products, moving images can be very powerful.

The facility to produce and publish videos online is a major step forward from the video cassette or DVD that companies once sent out to customers to promote the company and its products. The big problem then was not producing the video but persuading recipients to actually view it. Twenty or thirty years ago smaller b-2-b companies did not have a television or video player in the work place and most people had just one television and VCR at home. Persuading the family to give up watching their favourite soap and watch a company extolling the virtues of it s new product, or even worse the latest changes on VAT from Her Majesty's Tax and Revenue were hardly compelling alternatives. So the expensively produced videos gathered dust on a shelf or sat in a desk drawer. Consequently allocating a line for video production dropped out of the typical b-2-b marketing budget.

But now with YouTube it is not only easy to publish video online, but due to YouTube's high ranking as a search resource, video is now a must do. So why do so few b-2-b companies actually offer video presentations? Again it is a matter of reviewing the balance of the marketing budget. Video can be used in many ways - to demonstrate what products do and how they work, for PR to interview customers and provide testimonial endorsements and for post sales and service support. Videos should be short, to the point and professionally filmed. Using 'voice-overs' allows other language options to be added with relative ease.

When reviewing marketing budgets, look at the high tickets items such as display advertising, exhibitions and print, for many b-2-b companies there will be plenty of scope for saving that can be reallocated to video production and other new media opportunities.