According to Deloitte, marketing spend is expected to grow by 14 percent in 2021. For budget setters, this poses new challenges. Not only do you need to find data-driven ways to set marketing budgets, you also need to accurately track this increased activity, and you need to do so in the new normal or remote work.
Given that 45 percent of organizations operate without a clearly defined marketing strategy, proving the ROI of this increased spend is going to be tricky. The crucial question, then, is how can you accurately track marketing spend as accurately as possible?
In this blog, we’ll explain how you can accurately track your department’s spend.
Before we begin: a note on organization
One common reason marketers often can’t track marketing spend is because there’s no budget organization in place. All organizational spending – marketing or otherwise – should start with a clear and well-informed budget. If you have historical data available to you, use this to your advance and put some spending benchmarks in place.
Without a defined marketing budget, your ability to tame rogue spending and account for all variable costs will snowball and create further mayhem. This is especially true if your business has a number of individual marketing budgets for different products, services, and initiatives.
With this said, the key to organization is transparency, and to get transparent on your budgets, it’s critical you bring them under one singular roof. To do this, you need to first settle on a firm budget structure. There are many ways to do this. For example, you can organize your budgets by:
- Campaign framework (based on customer needs and market segments)
- Target audience
How you organize your budget depends on both your operations and your organization’s goals and objectives. An enterprise technology company, for example, would likely organize their budget in accordance to their various software product lines, while a B2B manufacturer might find it more natural to organize by vendor.
With organization in mind, here are a few things to consider when tracking your marketing spend.
1. Align your marketing budget to your organization’s spend culture
To help you determine what budget structure is right for your marketing team, you need a deeper understanding of your organization’s spend culture as a whole. This means you need to understand how your organization approaches budget setting from a process perspective, as well as understand the specific tools used, and the people responsible for them. Armed with this knowledge, you can begin understanding the limits, controls, and visibility of your marketing budget.
To offer more context, a company with an administrative spend culture will have clear procedures to follow for various approval stages. What’s more, an an organization like this will make it clear to all team members of the exact processes and tools for making purchase requests. On the contrary, a democratic spend culture has each department set their own expectations and procedures, forgoing any overarching process.
Regardless of your organization’s spend culture, it’s valuable to develop a budget hierarchy that mimics the hierarchy of your team. In other words, if there are different divisions within your team, structure your marketing budget so that each group understands their allocation of funds. This will help everyone keep better tabs on what they’re spending, when, and why.
2. Democratize team spending, but centralize control
Slow and cumbersome purchasing workflows will increase the time it takes for your marketing team to get work done. An efficient spending process, however, will reduce what we call the ‘time to valuable resources’ ratio.
Without a doubt, a centralized, efficient, and democratized purchasing process means team members can get their hands on the resources they need to create growth sooner rather than later.
But speed isn’t the only factor to consider when it comes to understanding your marketing budget. Marketing teams typically have a variety of spend categories to take into account, most of which are variable rather than fixed. Some examples include:
- Creating your visual identity and tone of voice
- Website setup and maintenance costs
- PR campaigns and crisis management
- Marketing automation tools
- Travel expenses
- Video conferencing and webinars
- Design and development costs
- Digital advertising (social and search ads)
- Video production
- Sales collateral
- Agency and consultancy fees
- Attendance at trade shows and events
- Promoting and hosting your own events
- Search engine optimization and blogger outreach services
To help you manage the budgets for each of these categories, and the spending itself, many marketing leaders issue spending cards to team members to give the them the autonomy to purchase what they need, when they need it. No blockers, no six-step process that doesn’t make sense.
3. Create a comprehensive attribution model and measure key metrics
Email, social media, SEO, PPC, referral marketing, video marketing… In today’s digital landscape, there are more touch points than ever before. Unless you’re accounting for every interaction across all channels in which customers connect with your brand, you will never adequately track marketing spend.
The way to get ahead of this problem is to create a multi-touch attribution model that accounts for every sale across every channel. Creating an attribution model means you can track the precise success of your various marketing initiatives, but it’s going to allow you to compare all of them side by side in order to glean which ones are bearing the ripest fruit.
Much like finding a solution that brings your marketing budget and spending under one roof, consider finding a tool that lets you compare the effectiveness of your marketing channels from under one roof, too. Metrics to track include:
- Sales opportunities created by ads (separated by display, paid social, referral, retargeting, print etc).
- Accumulative advertising spend.
- Sales opportunities made from organic social media initiatives.
- Opportunities from content marketing campaigns.
- Sales opportunities created from email marketing.
You get the idea. Ultimately, the more comprehensive your multi-touch attribution model is, the easier it becomes to analyze spending against each channel and reallocate resources to channels that are driving growth.
4. Embrace budget rules but leave room for flexibility
This may seem like an oxymoron, but it is indeed possible to set firm budget rules while allowing freedom to be flexible, experiment, and innovate. You just need to account for this flexibility in your marketing budget.
To do this effectively, adhere to a proportional budget rule where the majority of your allocated funds go towards concrete marketing initiatives. As for the rest of your budget, guard it until such a time that unforeseen circumstances arise that require additional funds.
Many business leaders rely on the 70:30 budget rule (it goes without saying that the 30 percent goes towards ad-hoc and unforeseen expenses!). Of course, this is a rule of thumb. Depending on your spend culture and your marketing’s budget size, you’ll need to decide which ratio is right for your marketing team. What matters most is to determine a budget ratio rule, set it, and adhere to it.
5. Invest in a budget template
There are few tools that will help you adhere to the above tips more effectively than a solid budget template. A good template is going to better help you align your budget with your marketing goals. An effective tool is going to account for cost allocation, expense tracking, invoice matching, approval structure, and more.
By organizing everything in a template you can ensure you only spend money on initiatives that will further your marketing goals.
Set your marketing budgets proactively, not reactively
When it comes to marketing budgets, you want to be as proactive as possible. Don’t throw money at any and every problem that arises. Instead, use historical data to inform spend decisions and implement a budget hierarchy that reflects your organizational objectives. This gives marketers the roadmap they need to do their jobs effectively and boost ROI in the process.
Editor's note Original author: Scott Miraglia Original publish date: 6 Feb 2019 We've since updated and republished this blog post to provide more value to you, the reader!