Marketing budget = Advertising budget?

Adrian Abrudan
Senior partner & research director
@Loopaa

MANAGEMENT

Let’s look at it from a different angle…

Most small and medium sized companies do not use the marketing budget concept. Best case scenario is when they have an advertising budget.

But what about the other marketing investments?

Events for meeting customers
PR & Networking
Optimizing processes for a better service or a better product
Training the employees
Checking customers’ satisfaction
Studying the competition/market opportunities
Measuring the marketing costs efficiency

Aaah… those are handled by other departments. Processes? By management. Competition? No one knows the competition better than the sales team. Cost efficiency? There’s a Financial Department…. and management.

True, but marketing analyses are focused on different themes than financial analyses. If management doesn’t have any special professional marketing skills, then marketing should be directed to analyze all processes that are creating value for the customers and should have dedicated measurements in the marketing budget. Marketing realities will keep marketing budgets mixed with other departments’ budgets, but efforts should be made constantly by marketing responsibles to have an overview on the general value created by a company on different market sectors and on different responsibility levels within the company.

Managers have a difficult decision here. How much should they allow marketing to adjust other processes inside the company?

These kinds of analyses and measures should be considered in the end, in the overall budget of the company. Reality is that the most credible, competent of them all will have the budget accepted. But sometimes they don’t check out the business from this angle.

The General Manager and marketing responsibles are the only ones that can have angle views upon the business. In the end, having control on value proposal for customers is the objective.

So… how should we build the marketing budget?

The difficult mission of managers is also influenced by the complexity of value creating processes in the company. In the end Marketing is… everywhere. It isn’t necessary to have everything centralized in the marketing budget but make sure your management team:

Monitors the history of actions, expenses and performance
Monitors the competition and their communication plan
Keeps budgets flexible depending on revenues evolution
Tries to evaluate the return of investment for every money spent
Keeps the budget realistic (your financial specialist should monitor the expenses and revenues as those were planned and propose necessary adjustments periodically)
Makes sure your management team knows that they must spend their budgets smarter than competition
Makes sure you have in your management team long term partners and a clear vision of the future of the company, otherwise previous recommendation will have fewer chances to happen.

Also important! Encourage marketing to be creative, courageous in proposals and make the right decisions based on the real context of the company and its long term objectives!