Don’t Do Marketing Budgets – Part II

Lot of questions about my posting advocating no marketing budgets –  the reality is that yes, I, the CMO have financial guidelines I have to hit with the company.  I know my salary and benefits numbers, and my all other marketing spend numbers.  And yes, at the beginning of the year, I make some approximations on what will get spent in each of the categories.

When you look at a typical marketing budget, you have “fixed costs”

  • systems software
  • fixed vendor contracts for analysts, PR

These costs are “budgeted” since they are generally committed.

Then there is the rest of the variable marketing spend…

This is the money that I don’t allocate out in “budgets”.  This is the most powerful money that marketers have. It can be moved, switched, turned up, down.  Keeping this money close gives the CMO the ability to throw fuel on things that work, and pull back on items that don’t.

Not dividing this money up also ensures:

  • no one can say they can’t do something since they “don’t have budget” since there is always money around – just ask the CMO
  • no one spends money to burn through their budget due to “use it or lose it”
  • people sign up for results before being allocated money for a specific program

Now you are thinking, this is great Bryan, but at some point you have to release money for people to spend.  That is correct.  We “lock” our spending monthly for the following 90 days.  So each month, the team puts in their requested spends for the next 90 days.  We lock that amount.  There are always longer term placeholders like customer events, major trade shows where we have already signed contracts etc.  But much of our spending can be easily moved and shifted with short notice.

The process works in part because of our use of Allocadia to push financial controls down to the front line managers who handle the money they spend, and hence are responsible for results.

More on this later.

Happy Budgeting!

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