5 Elements Required to Secure Your 2023 Marketing Budget
During times of uncertainty, it’s important your marketing strategies and spend are aligned with business outcomes.
During recessionary times, marketing is often one of the first disciplines needing to evolve and adjust spending. As you enter 2023 planning, you should be prepared to have to make a case for the budget you will need to drive key business outcomes.
For savvy marketers, this doesn’t mean shutting off in-flight brand and marketing strategies in service of demand generation. Instead, it means strategically aligning marketing activity to business outcomes and articulating the value in terms that resonate with non-marketing leaders—including the board of directors.
To help you get started, we’re sharing our five critical elements needed to make a case for your 2023 marketing budget.
Know Your Baseline
Performance dashboards are often a wise first point of entry for data-minded marketing leaders looking to show real-time insights and build transparency across business verticals and disciplines. At their most robust, such dashboards can bring value across the business by providing a single view of the customer across sales, product and marketing.
As a starting place, you should have a consolidated understanding of topline metrics that can empower and facilitate discussion around performance and the next best action, which should connect the marketing activity with business outcomes. A data baseline builds accountability and can relieve concerns regarding marketing efficacy. While it may seem obvious in theory, this level of reporting is rarer than one might think.
When you align marketing activity with business performance, you empower your partners and teams by efficiently attributing c-suite level metrics. Holding companies and traditional media agencies may not be equipped to discuss the possibility of recessionary budget cuts – primarily because many agencies do not align brand spend with business outcomes. At Prophet, we do things a bit differently. As a growth-minded consultancy, we help our clients connect the dots between business objectives and marketing planning, customer metrics and in-flight marketing results.
Make the Business Case
From our recent global research, “Brand and Demand Marketing: A Love Story,” we learned that marketers in the most successful businesses are more likely to cite “customer lifetime value” as a key marketing objective. Whereas, within lower-performing businesses, marketers are more likely to focus on tactic-level measurements, such as “enhancing digital marketing support” and “coordination with channel partners.” While the latter are critical operational goals, they are less growth-oriented and trickier to connect to customer relevancy and business outcomes.
When making a case for your 2023 marketing budget, ensuring your objectives and the funding needed to execute quantifies the impact on the business will lead to a more successful outcome.
Developing a marketing budget that delivers a measurable ROI requires a holistic understanding of the business and your customers. Once you have accomplished this, you can map your spending to in-market marketing tactics.
As you develop a proactive business case for your customer-centric marketing budget, there are three primary areas you should focus on:
- Budget Benchmarking: Your c-suite will not always understand the importance of investing in brand and demand marketing, especially during a recession. To help you justify your budget, you should leverage competitor research to build your budget benchmarks.
- Agile Strategic Planning: Building a marketing budget requires investment in off-cycle marketing strategy and planning. Marketers will benefit from correlating their strategies with revised strategic business goals, especially as operating climates and customer needs evolve.
- Aligning Marketing and Business Goals: You should ensure your KPIs roll up to topline corporate metrics. We believe this means aligning budgets toward a closer marriage of brand and marketing spend, or what we lovely call at Prophet “performance branding.”
Benchmarks for Everyone
You must translate marketing performance into a simple language centered on business outcomes so your C-suite colleagues can understand the impact you can make with the right budget. Benchmarks provide the necessary context on what key metrics mean regarding marketing efficiency and effectiveness and opportunity.
Finance leaders will want to know how the return on marketing spend compares against peers through the campaign, channel and partner analysis. Sales leaders are concerned with how marketing-owned activities have contributed to revenue generation and how those efforts stack up against industry competitors. Colleagues of all functional areas are interested in marketing insights that identify competency and performance and product gaps and how marketing addresses those opportunity areas.
A thoughtful spectrum of benchmarks focused on industry and out-of-category leaders and laggards can highlight specific improvement areas where business contributions may be trailing average and high performers.
Optimize for Agility
As businesses pivot to accommodate changing economic trajectories, so should marketing function. Marketing teams that are organized to perform against an agile strategic plan are best poised to keep up with evolving customer needs. To build an agile strategic plan, you need to map marketing activities to growth objectives. We recommend leveraging a simple taxonomy to ensure marketing teams are in sync with other departments such as finance, sales and leadership.
For organizations experiencing more fundamental market shifts or disruption, optimization might require a more robust re-evaluation of investment priorities across operating and execution budgets to support the opportunities that will likely make the most business impact. As customer expectations evolve and go-to-market strategies are upended, marketing planning and overarching program spending must adapt accordingly.
Embrace a Performance Branding Mentality
Last is the need to marry the art of marketing with the science of topline fiscal reporting. There is a relatively clear correlation between CFO-level metrics and marketing conversion KPIs for late funnel metrics. However, top-of-funnel, traditional marketing-centric tactics and measurement approaches are rarely understood by non-practitioners.
What do we mean by that? CFOs are unlikely to understand metrics such as impressions or clicks, especially in a constrained or contracting revenue environment. Downturns are not the time to attempt a profound education on the value of these metrics. Instead, we believe it is critical to put marketing success in terms that the CFO (and other C-suites) can understand.
Taking a performance branding mentality to your budget can collapse the funnel between brand and performance – and maximize efficacy. Traditional approaches to brand marketing allocate limited rigor in managing upper-funnel digital tactics and media.
In an inflationary environment where every dollar is being counted, you must deploy a clear understanding of your customer behaviors and preferences earlier in the funnel to apply greater precision to brand spend.
But it’s important to not over-index on metrics like ROI. Instead, you should evaluate leading indicators for revenue that demonstrate marketing’s influence on growth, such as nurture or account-based progression.
Prophet has an established baseline framework for evaluating marketing spend. This framework helps translate marketing KPIs to business performance metrics, seeking to integrate brand and demand and create clarity of impact across the organization.
While this can vary slightly by industry, rethinking traditional marketing insights to business-level measurements is the first step in substantiating future marketing budgets. The more you can show a linear impact on business growth, the easier it should be to substantiate marketing spend in support of customer outcomes.
During times of uncertainty, marketers need to align their budgets to business outcomes and effectively communicate the value in terms that resonate with executive leadership teams. To do so, ensure your budget is customer-centric and includes the performance dashboards, benchmarks and agile plans to make the business case.
Connect with Prophet today to learn how to build a customer-centric 2023 marketing budget that is aligned with your business objectives.