In August 2022, Deloitte released one of its holy grails - the 28th edition of The CMO Survey. From mid-2021 to mid-2022, marketing budgets had grown more than 10% and were back to pre-pandemic levels as a percentage of overall budgets (11.8%).
Things were looking up even more - as B2B CMOs said they expected their budgets to climb by nearly 12% in the coming year. Specifically, technology brands said they planned to increase digital marketing spend by ~12% and brand-building investments by ~10%.
Then, a few months after the report dropped, the global economy began to cool. Marketers clinched our teeth as we read headlines like this Digiday one, “Marketing budgets fall under heavy scrutiny as the risk of a prolonged slowdown in 2023 rises.”
So, as we enter January, here are three often-overlooked ways to advocate for more marketing dollars in the face of freezes and cuts.
#1 - Break Your Line Items Up
Less than 3% of board members are marketers. And I’ve yet to meet a CFO who has a marketing degree. So, CMOs must educate budget decision-makers on what their marketing departments require in order to meet the organizational goals these same budget decision-makers set.
One way to achieve this is by breaking up the line items in your budget. For example, let’s say your tech PR firm retainer is $35k per month, but the agency provides SEO and social media services in addition to media relations. In order to showcase the real value you receive (and need!) from this vendor, separate the costs into three line items, not just one labeled “public relations.”
#2 - Provide Options (and Explanations)
Another way to educate budget reviewers is by presenting a Plan A and B. For example, let’s pretend that you’re requesting approval for a content marketing writer and an email marketing specialist, but you fear that the new headcount won’t be approved. Provide an alternative option for what an inbound marketing agency retainer would cost to outsource the work along with an explanation as to why the brand’s prospects and existing customers need to be nurtured more in order to hit revenue goals.
This 1) shows prudence by giving two cost comparisons, and 2) demonstrates that the work is critical - regardless of in-house or agency.
#3 - Look Below The Line
For most high-growth IT companies, each year there are exceptional expense items that are not normally incurred in day-to-day operations, like expenses related to M&As. These fall below the line (e.g., adjusted EBITDA add-backs).
Using the M&A example - if you expect your software company will acquire a few brands in the New Year, ask for a below-the-line budget to cover the paid media, tech PR agency, branding, etc. that you will need to tap into. Otherwise, these investments will hit your operating budget, siphoning resources away from your critical go-to-market activities.
Onward Into The New Fiscal Year
I frequently tell my child - “The answer is always ‘no’ if you don’t ask.” So, once your budget is finalized, remember that you can always ask for more throughout the year. Additional requests will be well-received if they’re through the lens of revenue attribution.
For example, let’s say your product team develops a new feature that you weren’t aware of when you initially made your budget request, and you want to cross-sell it to the existing customer base. Make a case for more customer marketing dollars by showing a straight line to how you achieved revenue success with a past product rollout.
Of course, this will require you (and your agency partners) to use revenue-based metrics as marketing KPIs - something Deloitte Digital says only one-third of brands do. Moreover, traditional marketing agencies are half as likely as these clients to report total sales as a KPI.
So, if you’re implementing BI tools and customizing measurement processes this year - the quicker you can get started, the better. Likewise, if you’re conducting a tech marketing or PR agency search - be sure to examine the modernity & depth of each firm’s reporting capabilities. Your CEO, CFO and board will thank you.
At Alloy, we’re on a mission to debunk the myth that marketing measurement is a puzzle via our proprietary Impact & Influence reports. Contact us today and we’ll walk you through how we connect awareness, leads, and sales.