CMOs Struggle with Budgeting Amid Economic Downturn, Survey Reveals
19 September, 2023
In these uncertain economic times, a recent Gartner survey reveals that approximately 75% of Chief Marketing Officers (CMOs) are grappling with the challenge of delivering more with less. The task of setting an effective marketing budget that optimizes resources and continues to generate leads is becoming increasingly complex, particularly in the management of social media and other marketing channels. It is essential to develop a strategic plan that addresses key budget concerns, providing transparency and control over each dollar spent. This can help prioritize critical areas, prevent overspending, and adapt to unexpected challenges.
Understanding how to budget for your marketing needs
In order to establish a comprehensive marketing budget, it is crucial to review past performance, conduct in-depth market research, and analyze your team’s needs.
Reflecting on past performance
The adage “Yesterday’s lessons, tomorrow’s innovations” is particularly relevant when setting marketing budgets during an economic downturn. The focus should be on identifying what has been effective and concentrating on activities and core channels that have delivered results. Review the impact of your spend in the previous year—identify the campaigns that yielded the highest return on ad spend (ROAS), conversion rates or lead sources. For instance, if a specific number of leads were generated from Gym Marketing or Facebook Ads in the previous year, a budget increase of 10% for these activities in the current year could be proposed.
Understanding the market conditions
To allocate an appropriate marketing budget, it is important to be cognizant of the prevailing market conditions. Research how the market dynamics have evolved since the previous year: Have new competitors emerged? Has there been a change in brand perception? How has AI influenced the market?
Evaluating team needs
When formulating your marketing budget, it is important to evaluate the needs, skills and resources required by your team to achieve your marketing objectives. A Gartner survey reveals that many CMOs believe their teams lack the necessary capabilities to implement their marketing strategy effectively. This skill gap can be addressed by either providing additional training and resources for your team or by hiring additional personnel, consultants or agencies to fulfill specific roles.
Once you have a clear understanding of the bigger picture, it’s time to set priorities. Your company goals should guide your marketing budget. Consider both immediate and long-term goals—the former to generate leads quickly and the latter as a growth strategy for the future.
The next step is to estimate the costs associated with different marketing activities. This includes the cost of tools, resources, employees and contractors.
Once a draft of the marketing budget is prepared, it needs to be submitted to stakeholders for approval.
Auditing current marketing budget
In order to navigate the current economic climate, some brands are investing in more resources. According to The State of Social Media 2023 report, 79% of marketers expect an increase in their overall marketing budgets in the next three years.
Creating synergies between teams
To optimize your marketing budget, it is vital to create synergies between different teams. For instance, collaboration between teams focusing on paid campaigns and SEO can lead to significant savings.
Aligning marketing and sales
Ensuring alignment between marketing and sales allows for better utilization of your budget. Sales need to follow up on leads and marketing should provide quality leads.
Focusing on revenue-driven activities
In the current economic situation, it’s always best to base your budgeting decisions on the actual revenue that your activities are driving. For example, an advertiser may think that a 1:3 ROAS ratio is fantastic. But if the company’s cost of goods sold is not considered, the company could still lose money despite the good ROAS.
In conclusion, setting an effective marketing budget requires a strategic approach that involves reviewing past performance, understanding market conditions, evaluating team needs, setting priorities, estimating costs, seeking approval, auditing the current budget, creating synergies between teams, aligning marketing and sales, and focusing on revenue-driven activities. By doing so, CMOs can overcome the challenge of doing more with less and ensure their marketing efforts continue to generate leads and drive growth.