Marketing budgets are a business critical tool, as they help you determine what the costs will be for the various campaigns, programs and activities that the Marketing Department runs throughout the year. Unfortunately, most marketers don’t know how or where to begin creating a budget. While business courses in college may have touched on the subject, the reality is that most marketers learn how to develop a budget on the job, often through trial-and-error. This blog will provide an overview and outline of the basic steps needed to develop a marketing budget from scratch.

1. The Complete Guide to Developing
a Marketing Budget
OVERVIEW
Marketing budgets are a business critical tool, as they help you determine what the
costs will be for the various campaigns, programs and activities that the Marketing
Department runs throughout the year. Unfortunately, most marketers don’t know how or
where to begin creating a budget. While business courses in college may have touched
on the subject, the reality is that most marketers learn how to develop a budget on the
job, often through trial-and-error.
This blog will provide an overview and outline of the basic steps needed to develop a
marketing budget from scratch.
MARKETING BUDGETS AND PURPOSE
Each company has its own budgeting process. Depending on the company, marketing
budgets may be developed at the beginning of each new year, at the beginning of a

2. new fiscal year, or even on an as-required basis. The process for allocating the budget
dollars may also be different and may include being developed based on determining all
the associated costs, allocating a specific percentage of revenue, increasing the amount
by a predetermined percentage over the previous year’s budget, or even by matching
the competition’s marketing spend.
The basic reason why a Marketing budget is created is to help provide guidelines for
planned expenses. But what is the purpose of the Marketing budget?
Marketing departments are involved in numerous different types of activities designed to
inform and engage customers, as well as help move them through a sales funnel.
Depending on the industry, these activities can range from more traditional types of
marketing, such as email, print and events, to more digitally-focused activities such as
blogs, videos and social media.
All of these activities, whether inbound or outbound, share one common trait – they are
all very complex and have numerous moving parts.
The Marketing budget is designed to provide not only guidelines for future expenditures,
but also to ensure that you have taken into consideration all the costs involved in
developing and executing the various planned marketing activities throughout the year.
THE BUDGETING PROCESS
All Marketing budgets are developed following the same basic steps:
1) Know the business goals
2) Determine what marketing activities will be used to support those goals
3) Include recurring marketing activities, such as conferences, blogs, etc.
4) Research
5) Determining the costs
6) Develop the budget
Let’s briefly review each step to help you understand.
STEP 1 – KNOW THE BUSINESS GOALS
Marketing activities are critical to the success of a business. Whether focused on driving
revenue, increasing the number of accounts, or acquiring new leads, the Marketing
organization plays a key role in accomplishing every one.
However, in order for marketing activities to be successful, the Marketing organization
needs to know what the business goals are. These goals must be communicated by the
business leaders to the Marketing leadership in order for the Marketing team to
determine which activity or activities will be used to support and meet the business
goals.

3. STEP 2 – DETERMINE MARKETING ACTIVITIES
Marketing is one of the most flexible functions within a business, because, depending
on the business goal, it has a broad pallet of activities from which to choose to help
accomplish the goal. Once the business goals are known, the determination of which
specific marketing activities will be used to support the business goals is typically made
as part of the GTM strategy development process.
The various marketing actions and activities are the tactical component that enables the
business goals to be met.
STEP 3 – INCLUDE RECURRING ACTIVITIES
In addition to tactical marketing activities, Marketing organizations often participate in
annually recurring events, such as conferences and trade shows. There may also be
other types of recurring activities that Marketing uses, such as webinars, publications, or
blogs. These events and activities are included as part of the overall GTM strategy and
may be used to accomplish more than one business goal.
Due to the recurring nature of these events and activities, they must be included and
budgeted for in the annual Marketing budget.
STEP 4 – RESEARCH
Once you know the business goals and which type of marketing activity will be utilized,
the next step in the budget development process is to do some research. This research
provides you with a deeper view into your market and customers, your sales funnel and
conversion rates, as well as time frames for completion of activities.
The categories below outline the type of information you need to know to develop the
Marketing budget.
1) Market information
 Who is the target audience or customer
 Who is the competition
 What is their product
 How is their product priced and positioned
 How is your product priced and positioned relative to the competition
 What is your competitive advantage
 Which marketing channels do your customers use or are active on
 Which events are important to your customers
2) Sales funnel information
 How many leads are generated per month via the various lead generation
activities
 What are the customer touch points throughout the funnel

4.  What type of information is needed at each stage of the funnel
 In what format is that information
 How much lead nurturing is required
 What is the conversion rate to SQLs (sales qualified leads)
 What is the sales close rate
3) Deadlines and time frames for
 Business goals
 Conferences, events, trade shows
 Recurring activities
 Tactical marketing activities
STEP 5 – DETERMINING THE COSTS
Once you’ve completed the research, you need to determine the costs that will need to
be factored into the budget. This includes the costs of the various activities and events,
recurring costs, vendor costs, as well as related business costs. This information
provides the foundation for developing the actual budget.
Depending on your company’s accounting practices, items such as head count, travel
and expenses may also need to be included in the budget, so be certain that you
understand your corporate accounting requirements.
Costs may include:
 What is your business’ average cost per new lead
 What is the average total customer acquisition cost
 What is the cost of the marketing activities being considered
 What are the associated labor costs
 What are the associated material costs
 What are the associated vendor costs
 What are the other costs (travel, lodging, food, etc.)
STEP 6 – DEVELOP THE BUDGET
Once you have completed the necessary research and gathered the required financial
information, it’s time to develop the budget.
The easiest way to calculate the total annual budget request is to add all of the various
costs together to determine the overall budget number. This reflects the amount of
money that Marketing needs to have budgeted on an annual basis to accomplish all of
the business goal(s) and recurring events as outlined in the GTM strategy. If you require
a more detailed breakout, use the cost estimates you have gathered to develop budgets
for specific events or activities.

5. In addition to the total cost, you may want to include an overage factor in the budget.
Although this is often not considered part of the “formal” budgeting process, it does
reflect reality. Note that if you do include this, you need to identify it as such; do not try
to hide it in other categories. This overage factor is used to account for unplanned
expenses that may develop throughout the year. Depending on your industry and the
planned GTM activities, this amount may be from just a few percent on up into double
digits.
SUMMARY
The Marketing budget is intended to be used as a tool to provide a general guideline for
the expenses related to marketing activities throughout the year. That’s why when you
develop a budget, it is important to include as many components and factors as
possible to accurately reflect the cost.
Bear in mind that in many companies though, Marketing expenditures are not
considered an investment, but instead are viewed as an expense. This means that the
total requested budget amount may or may not be approved, may be reduced or
modified, or may even be given to another department.
However, by following these guidelines, developing a Marketing budget will be much
easier.
© 2020 – Richard Hatheway, Catalyst Strategic Marketing
All rights reserved
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