As a CMO, you understand the importance of marketing in the highly competitive digital landscape. You know brands are increasing their marketing budgets and so are your competitors. And, it's time you did too. Believe it or not, the average marketing spend across all industries went from 6.4% of company revenue in 2021 to 9.1% in 2023.
With the digital marketing industry predicted to reach $807 billion by 2026, you don’t want to be left behind in the fierce online marketing game. But, convincing your company leadership of a budget that promises growth is a challenging task. With a well-structured approach and compelling arguments, you can increase your chances of success. Read on to learn how to convince your CEO to approve a bigger marketing budget and how to allocate it effectively.
Strategizing the marketing budget
Before convincing higher management, you need to know your budget and how you plan to allocate it to different strategies, with the KPIs and expected outcomes.
Traditionally, the marketing budget is decided per the company revenue, which goes by the industry.
+ Define the marketing budget as a percentage of revenue.
In the B2C sector, the budget is often higher, around 15% of the total revenue, while in the B2B sector, it is generally lower, around 7-8% of the revenue. (Source: Hubspot) However, your industry is also a large factor in defining the marketing budget. As per CMO Survey done in 2020, the estimated percentage of revenue industries should spend on marketing is as follows.
(% of Company Revenue)
Insurance, and Real Estate
Consumer packaged goods
Mining and Construction
As you can see, these numbers are quite variable between industries. The marketing budget should not be fixed from year to year but should fluctuate with the company revenue each year.
+ Define your marketing goals:
It is crucial to have a good understanding of your company's short-term and long-term goals and how you plan on achieving them with your marketing strategies. Align your budget with these goals and lay out the KPIs. Some of the company goals are enhancing brand awareness, driving traffic to the website, improving customer engagement, generating leads, driving sales, expanding into new markets, launching new products/services, and driving sustainable growth.
+ Analyze your competitors:
With thorough research, analyze your competitors, their marketing strategies, and the different ways they are promoting their products or services. This will give you a good idea of which marketing channels you might need to be more aggressive at. Some of the channels you can track their activities are social media, SEO, ads, remarketing, or influencer marketing.
+ Define your channel strategies:
The next thing you need to do is to research and gather all the data on the different channels you need to spend on, to get a higher ROI. From content marketing, email marketing, and social media marketing to ads, PR, and influencer marketing, what channels of marketing worked for you in the past, and what can give you a good ROI looking at historical data.
+ Outline the buyer journey:
From awareness to purchase to advocacy, outline the various stages of the buyer journey. This will give you an idea of the following points.
The marketing channels to invest in.
Platforms to reach your target audience.
Messages that resonate with the target audience.
The solutions to convert them.
Through this analysis, identify the touchpoints where marketing can have the greatest impact in guiding and influencing their decisions. Allocate your resources strategically, focusing on areas that drive customer acquisition and conversion.
+ Keep your marketing budget adaptable
If you plan on changing your strategies mid-way, your budget should be flexible enough to accommodate adjustments to the changing market conditions as you gather insights and learn what resonates best with your target audience.
These are some steps that could help you find a marketing budget that aligns with your company goals.
Advocate for your marketing budget
After you have analyzed the marketing budget along with the strategies you plan on implementing, it’s time to put things into action. Here are some steps you can take to advocate for this budget and get a ‘Yes’ from your boss.
When making the case for your marketing budget, always refer back to your company goals to showcase what a perfectly strategized marketing plan with a good budget can bring to the table.
Give a clear understanding of how you plan on using the marketing budget. Outline a marketing plan with the strategies and campaigns you plan on performing. Give a detailed breakdown of the channels you plan on allocating the increased budget. Again, make sure these strategies align well with the company goals to bring quantifiable results.
With thorough research, collect all the data that explains how your marketing strategies and the budget will have an impact on brand awareness, lead generation, sales, and overall revenue. You can also highlight the prior marketing strategies that had an impact and the expected outcomes if the budget was increased. Go for something like this. Vervoe, a tech company with an AI-powered recruitment platform, was struggling to get some traction. They engaged in SEO, content marketing, social media, and email marketing techniques that gave them an 1100% increase in website traffic along with a 60% increase in conversions, and a 400% increase in revenue. Add information like this in a way that is appealing and easy to understand. (Case Study Source: LinkedIn)
Using data and case studies, analyze the ROI your strategies and the increased budget can bring. Elaborate on the findings and talk about the long-term impact it will have on the company's growth. Track your KPIs to measure the performance of your strategies throughout the sales funnel or the buyer journey. Remember, understanding your customer journey is key to unlocking the highest ROI.
Research and showcase what strategies your competitors are doing and the marketing budget it takes to outdo your competitors. After all, management knows what staying above the competition means for a company.
Talk about how a good marketing budget aids in consistent marketing strategies. Consistent marketing not only helps with keeping your brand in front of the target audience but also helps in keeping up with evolving marketing trends and technological advancements in the highly competitive digital landscape.
Use the above steps to prepare a thorough presentation for your CEO and leadership team. You can also use infographics, visuals, or customer success stories to make compelling arguments. Keep yourself ready for any counter-questioning, or objections, and always be open to feedback. When you stay confident with the company goals and the strategies you devised to attain them, you can always persuade company management and get yourself a solid marketing budget.