How to manage a marketing budget?

A guideline for preparing, reporting, and optimising your marketing budget

Peter Desmyttere
December 27, 2023
⏱ 18 min. read

Managing the marketing budget is an essential part of marketing management. After all, marketers must carefully watch over the budget they have been allocated. Are they spending less? Then they haven’t gotten everything out of the budget. Are they spending more? Then they’ve managed their budget poorly. But how do you manage a marketing budget? In this article, I describe the three essential components of a marketing budget and give concrete examples of how to manage marketing budgets well.

In this article, you will learn:


3 elements of a marketing budget

A lot of marketers handle their marketing budget retroactively. They add up all their expenditures at some point during the year, which is then their marketing budget. However, this is only one element of a marketing budget. Other marketers do plan their allocated expenses, but in doing so manage only part of the marketing budget. A professional marketing budget therefore consists of 3 components:

  • the budget: this is the sum that you as a marketer are allocated to do with marketing management within the fiscal year
  • the allocated costs: the part of the annual budget that you can immediately allocate to certain cost items at the beginning of the financial year
  • The spent costs: the sum of all expenditures or invoices for marketing management within the financial year.

Every marketer should therefore take into account these 3 components in the marketing budget. More precisely: at any moment of the year, you should have a status of the realized costs and of the budgetary margin that you still have (budget minus expected costs).

Example of a complete marketing budget

Below is a simple practical example of a marketing budget. The total budget (annual budget or marketing budget) is €20,000. That is further divided into €10,000 budget for advertising and €9,865 for general costs. 

The next step is to allocate costs to each budget. For general costs, you can see in the example that we can allocate €8,102 at the beginning of the year. So we will definitely incur these costs. For advertising, this was little (only €250). This may indicate that the marketing team was not yet sure whether it would spend these budgets. So within the €20,000 marketing budget, €8,352 has already been allocated. We therefore have €11,513 free to spend on unallocated costs.

In our marketing planner Husky you always have a perfect overview of both budget, expected costs and actual costs.

Marketing budget management

As soon as the invoices arrive, add them to the budget items and you can monitor whether you have already received all invoices and if they correspond to the allocated budget. A well-developed Excel file can already help you a lot, based on the example above. An alternative is to use a marketing planner such as Husky. This not only looks professional, but it is also easier for a marketing team to manage a marketing budget within a tool specifically designed for this purpose.

In this example, you also notice that you can budget over the years in Husky. That way, you can quickly look back at budgets and invoices for past projects or campaigns. Another great advantage of a digital marketing budgeting tool is the ability to filter budget data and do targeted exports as a function of reporting to management.

Do you always have to allocate a marketing budget?

No way. If you only want to track real expenses, this is of course fine too. Then you simply leave the allocated budget blank when creating an expense. Still, I advocate using it as much as possible. Otherwise, you will get a distorted picture of your still available marketing budget.   

How do you manage revenue within your marketing budget?

We often get asked by marketers how to deal with revenue from suppliers, for example. For instance, there are wholesalers or retail marketing teams that 'get' marketing budgets from brands or suppliers. These are, of course, an integral part of your marketing budget. You can then start considering them as a kind of negative cost. In other words, they are added to the budget.

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What tools exist to manage and report on a marketing budget?

As stated above, professional budgeting is indispensable in a modern marketing policy. It provides insight into budgeted costs, expected costs and actual expenditure. Both at macro level (plan, project, campaign ...) and within micro budgeting (channels, specific timing ...). Marketers who have to manage without professional budgeting go blind in terms of budget, costs and ROI.

It becomes even more challenging when reporting is required in addition to insight into budgets. Marketers have to report budgets to colleagues, management or marketing agencies. The latter not only have to report budgets and costs internally, their clients also need insight into the budgets and costs. Below, I list the most obvious solutions for sharing your marketing budget with others.

Accounting does not follow marketing logic

Accounting offers marketers one certainty: all costs are recorded according to a certain chart of accounts. So every marketing cost is reflected in the accounting system. The disadvantage of the accounting chart of accounts is that it deviates from the way marketing manages its projects and campaigns. Moreover, it is limited to a few overarching accounts. Do you want to report to colleagues what a particular product launch cost? Do you want to convince management to invest more in Facebook Ads? As a marketing agency, do you want to analyse media spend per client? Then an accounting report may not help you any further, unless you are a fan of detailed analysis to achieve overview and insight.

Spreadsheets love numbers

Spreadsheets such as Excel or Google Sheets are more obvious for those who want to work with budgets and budget reporting. There is no marketing budget tool that gives you as much freedom to set up your budget reporting, because you are not bound by the template structure that digital budgeting tools impose on you. So in spreadsheets, you can go 'all the way' and create a budget document that meets your specific marketing needs 100%.

But spreadsheets also have many drawbacks for budgeting applications. The first is the risk of micromanagement. The user then sets up the spreadsheet with budgets and costs in such a way that proper interpretation can only happen with explanation and translation by the author. In a reporting environment (when you want to share insights into budgets and costs with others), this is quite a disadvantage.

Second disadvantage is the potential for fragmentation. Advertising marketers keep track of their budgets and costs in one spreadsheet, event marketers do it in another spreadsheet (with a different structure, of course) and product marketers start keeping track of overlapping costs in their own spreadsheet as well without linking to the other budget docs. As a marketing director, get over that.

A third drawback is the isolating nature of spreadsheets, as budget spreadsheets are separate from communications or campaign plans. It is limiting to see only numbers when you want to analyse a marketing project or campaign.

Marketing budget software: the best of the best for budget management

Digital marketing budget tools like Scoro or Allocadia are built entirely around setting up, managing and analysing marketing budgets with others. They are therefore the cream of the crop in terms of marketing budget management. They go much further in terms of budget analysis than agency software or marketing project management software. However, the question is: how far do you want or need to go?

As a marketing director, do you manage a very large international budget that is spread across different continents, countries, product categories, business units or marketing teams? Then you will find a good ally in marketing budget management software. But for the average marketing team or marketing agency, marketing budget software will quickly feel too heavy for the needs prevailing in small and medium-sized teams.

Marketing Project Management tools: optimal budget management for small and medium-sized teams

Digital tools like Husky combine the best of many worlds for budget management within small and medium-sized marketing teams. It allows you to allocate budgets per plan, project, channel or cost item, as well as schedule expected costs immediately so that you know where you still have budget space at any time during the financial year. Invoices are then assigned to budget lines or cost items so that the actual state of affairs is visible at any time. Here, you combine the ease of use of Excel with the power of a digital tool with predefined modules and charts.

Also reporting budgets with others. Well: is in Husky is a piece of cake. Want to share the budget and costs for one specific project or well-defined campaign with colleagues? Then all the details are accessible with one click (see example above - sharing costs for online ads). Do you want to share budgets and costs with management? Then give them read rights in Husky or immediately pull a PDF report detailing all budget and cost lines. Want to collaborate seamlessly and transparently with your marketing agency on marketing budgets and costs? Then give them access to the projects or campaigns involved so they can manage the budgets completely autonomously within your setup.

Example of pdf budget reporting in Husky within the 'Online ads' project. Each cost is attached to the right channel or relevant cost item within a clear and readable marketing logic. A pdf report is a quick and convenient way to share marketing budgets and costs with colleagues, management, agency(s) or other stakeholders.

 

Pros and cons for the different ways to share a marketing budget plan with others

Software  AdvantagesDisadvantages
Accounting package
  • No additional investment required
  • Figures are always available after booking
  • No marketing logic
  • Mainly reactive cost management, proactive budget management is difficult
Spreadsheets
  • Simplicity
  • Low threshold
  • Free
  • Full freedom (100% customisable)
  • Encourages micro-planning
  • Versioning in corrections can be problematic
  • Rapid information overload
  • Smart filtering is difficult
  • Integration with other schedules is almost impossible
Budget software
  • Ideal for complex marketing budget management
  • Goes beyond all other tools
  • Expensive and useless for small or medium-sized teams
  • Not integrated with other planning tools
Marketing Project Management tools like Husky
  • 100% integration of budget and marketing planning (budget can be assigned to a planning item)
  • Highly shareable with colleagues, management, agencies and stakeholders
  • Not purely for budget management and budget reporting (link with marketing planning is appropriate)

 

Would you like to know more about setting up a marketing budget? Then read our blog 'Roadmap for setting up a marketing budget'.

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7 tips to optimise your marketing budget

By now, are you convinced of the usefulness of complete marketing budgeting? Do you not only want insight and an overview of budgets and costs, but also a tool to convince management? Then I will give you 7 concrete tips below that will help you turn your marketing budget into a gem of financial insight into historical, current or future projects and campaigns. Thanks to these tips, you will no longer be floored by managers or directors who juggle your budget needlessly or without any prior knowledge. On the contrary, you take control and counter their actions with a professional marketing budget that leaves no room for discussion.

Tip 1. Don't float on repetition or gut feeling when setting your budget

'As next year's marketing budget, I suggest repeating this year's budget'. Is that your motivation to back up your budget? Faint right? The first 'data-driven' manager, director, CFO or CEO mows the grass from under your feet in no time. Even worse is the statement 'I think we'll get by on €125,000 (example) next year'. The above executive will carry you straight to the stake. 

Act like a professional by hanging your marketing budget on one of the following 4 motives:

'Within our industry, 15% of sales (example) is used as a benchmark to determine the marketing budget - we cannot do less if we want to win the competition with our main competitors.'
'I suggest using a percentage of turnover as a guideline for the marketing budget from now on - as a marketer, I contribute to the growth of the company, if the company grows I would like to reap the benefits - conversely, I also respect the cost savings if the company would not do as well in terms of turnover.'
'I want to tie my marketing budget to the company's key commercial challenges - if ambitious targets are set within business units or product lines, I want a marketing budget that matches those ambitions.'
'I want a "free and unlimited" budget - but... for each budget question, I will submit what I am proposing in return in terms of ROI, based on proven results.'
Admit it: the last one is bold. So you don't often find 'performance-based budgeting'. But it exists!

The other three statements are common among marketers with professional budgeting. I advise you to analyse them thoroughly for your specific situation.

By the way, did you know that an average marketing budget is 10% of sales? The US research institute CMO Valley has been researching marketing budgets (among other things) every year since 2008. B2B companies tend to spend an average of 8% of turnover, while B2C companies spend an average of 12% of their turnover on marketing.

Tip 2. Don't just take sector averages for granted

There you are, with CMO Valley's report in hand. As a marketer in a start-up, in a growth company or in a company marketing SaaS software. Then, with a marketing budget of 10% of sales, you really are a sucker.  So there are a lot of exceptions to the rule. Do you do the marketing for a start-up, are you launching a new product on the market, do you need to shape the entry into a new market, do you work for a growth company with ambitious growth plans or are you a marketer active in the software or technology sector where speed-to-market and hyper-growth are needed to make a difference? Then you will have to aim higher. 

A start-up marketer will have to budget according to objectives. With say €20,000 marketing budget, you might not stand a chance when launching new software. As a marketer in a growth company, however, it is best to link the budget to growth objectives. 

Tip 3. Spend a good portion of your marketing budget on digital marketing

I don't need to convince you that the modern consumer is mostly catching on online, do I? Digital marketing is also "horribly" measurable. That fits perfectly into the picture of budgeting, cost management and ROI calculations. Nothing easier to ask for more budget for digital marketing, than on the basis of proven results. 

Tip 4. Budget at macro, meso and micro level

Quite a few marketing budgets get stuck at a macro level. 'I have a budget of so many euros for marketing', point to the line. Nice, but then show me how and why you are going to distribute that marketing budget. That's called the meso level: you cut your macro budget into sub-budgets that follow the logic of your project or campaign structure. Your website gets a budget, just like every campaign or your entire social media policy (owned, paid and earned communication).

The diagram above nicely shows the structure according to the macro-meso-micro principle.

You start from a global marketing budget (the macro budget) that you divide up according to the methodology by which your marketing plan is divided into projects and campaigns. This is useful for allocating costs to each project or campaign at a later stage. When the budget is then measured against actual costs, you gain insight that helps you make important decisions as a function of new budgeting. Perhaps you overestimate the cost of certain exhibitions, or underestimate the cost of advertising campaigns through social ads? Budgeting at project or campaign level makes you much wiser in this area.

Another advantage of project or campaign budgeting is the link to ROI (Return On Investment). Developing dashboards that compare budget, costs and revenues is not far away. And you immediately have the ideal tool to teach your management what does and does not work. So that they stay away from budgets that deliver results. 

Finally: professional marketers budget even down to micro level. Within a project (an event in the example below), budget is then allocated and measured at the level of each channel or cost item. This may sound a bit overwhelming, but once you get into this routine, it won't let you go.

Case study - project budgeting without expected costs.

Tip 5. Visualise your expected costs

Is your budget ready? Good. You can now enter the new budget year with peace of mind. But beware! Your 'free' budget will go downhill at lightning speed. Why? You sign contracts with media, you approve the quote for a new website, you take commitment to be present at 5 trade shows or the marketing agency has managed to convince you to do work on a completely new corporate identity. Although no invoices are coming in yet, this all comes off your budget. So it may well be that 60% of your marketing budget is already 'committed' by the end of January.

Case in point, where expected costs are higher than effective invoices.

Above you can see an example from our marketing planner Husky that nicely illustrates this effect. In the bar chart, the purple column represents the entire marketing budget. The green column next to it represents the status of the free budget, or the sum of all committed budgets. In this example, there is hardly any budget left to commit, so this is probably a snapshot towards the end of the year.

In professional budgeting, you have this not only at the macro level, but also at the meso to micro level. In the (event) example above, there is an 'Estimated' column to the right of each project and project group next to the budget column that represents the committed budget. After all, special deviations in the budgeting of projects and campaigns can occur throughout the year. Just think of a social ads campaign that generates more clicks and costs, or a trade show participation that suddenly involves only half the cost of the stand due to a special deal.

Tip 6. Book your actual costs according to the same logic

Scroll back up for a moment to the image with the three bar charts. The third or right-hand diagram here represents costs incurred, or the sum of all approved invoices. In professional budgeting, you do this at macro level (how many invoices have I already approved within the entire marketing plan), at meso level (invoicing within a project level) and at micro level (actual costs at channel or cost item level). In our marketing planner, we keep budget, allocated budget and costs neatly together. Because that's how it should be. If you work with Excel or another budget planner, be sure to check whether (and how) you keep track of invoices according to the same logic and structure.

In practice, however, I see an extensive Excel sheet with budgets and (sometimes) allocated costs. The status of invoicing is left to accounting. Invoices are received digitally, approved and forwarded for payment. But... no trace of it sticks in marketing budgeting. And that's a shame. Because accounting may give you a nice overview of costs incurred, but it is built following accounting logic (or did you expect otherwise?).

The solution: develop a method to have the invoices you approve booked according to marketing budget logic. This can be done with codes, for example. Then accounting draws a list that you can read and analyse. Another option is to book the invoices after approval yourself into your own marketing budgeting, neatly within the right project and according to a certain cost logic. This takes a bit of time, but offers the bonus that you really are on top of the numbers. At any time. If you have a lot of invoices, look out for an application that can enter multiple invoices at once (a 'quick input' module). 

Another sting in the relationship with accounting are combo invoices, like e.g. an invoice from Google or Facebook. These contain costs that relate to several projects or campaigns. In this case, though, you are forced to do the decoupling for each project or campaign yourself.

Tip 7. Make the bridge to ROI (Return On Investment)

A marketing budget is inextricably linked to results or ROI. You budget marketing, you incur costs within projects and campaigns to achieve results. How to analyse, structure and manage marketing results is explained in this article. Management may still want to convince you with resounding figures that don't just hit costs, but translate into results. "I was able to increase the number of leads through the website by 20% thanks to the increase of the marketing budget for online ads" or "Our investment in retargeting has led to a doubling of content downloads" sounds great professional in your evaluation interview, doesn't it.

Start with a simple ROI approach. For example, set your total marketing budget against the number of leads you brought in. Or within a project or campaign, start weighing the marketing investment against the actual number of deals the campaign has brought in.

A simple ROI approach: you set the investment in marketing against the return in the number of leads. This way, you quickly calculate the cost per lead.

Another simple ROI approach: you set the investment in a campaign against the yield. This is how you calculate the return per deal.

For those who want to go really far in ROI analyses: you can start working out the most exotic combinations between budget and results. But that takes time, of course. Don't overdo it, because marketing still remains largely elusive for data analysts. After all, not every marketing cost can be assigned to a specific result.


 

Would you like to optimise your marketing budget? Start a free trial of Husky Marketing Planner today. You can quickly start assigning budgets to projects and/or campaigns, allocate costs and assign each approved invoice to the right project. Finally, Husky includes a results or KPI dashboard, so the bridge to ROI is made immediately.

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