Can you live without a marketing budget? You can live. But not for long if you are a small company, and a little longer if the company is large.

What is this budget for? To understand how much money you spend on attracting and retaining a client, how much it costs you to contact one client, how much profit this client brings, and what is the difference between costs and income.

Ideally, all this describes the marketing budget. Yes, not all marketing and advertising expenses are explained in terms of customer acquisition cost effectiveness. But the fact that everything that happens is subordinated to this goal is beyond the shadow of a doubt.

So, you are the person who makes the marketing budget.

It would be a mistake to think that in preparation you are responsible for it directly to the CEO of the company. Yes, sometimes it is. But if you dig deeper, then the board of directors, who hired this CEO, comes into play. Keep this in mind when budgeting.

In addition, the concepts of profitability of marketing tools are often blurred, even more often they are generally obscure to those who have not delved into the field of marketing. Remember, your CEO will have to defend the spending plan to the board of directors, so your budgeting logic should be as transparent as possible.

rule1 . About friendship with financiers

Be sure to make friends with the CFO. Senior Financial Manager. Leading financier. It doesn't matter what they call him in your team and what his nominal position is. The main thing is that it should be a person who knows the principles of budgeting in the company and is responsible for them.

I do not feel like explaining the fundamental things described in textbooks for "non-financial managers". Pseudo-scientific and theorizing when laying out the budget for me, for example. plunge into a state of mild shock: I myself try to simplify everything as much as possible. Experience has shown that simplicity of presentation and a clear logic in the formation of a budget document are very important.

Rule 2. About the logic of the budget

In one of the companies where I worked, there was simply no budget for the current year. It was coordinated in higher instances, and there was no deadline for approval. All payments were made according to the principle “let's have a project – let's see if there are funds for it”. I had to urgently establish interaction with the financial director and the budget controller. Since the financial director had the final understanding of the general state of the budget, and the knowledge of the availability of money was with the budget controller, it was possible to obtain information about the funds without unnecessary losses and launch marketing projects on time.

The budget logic should:

– And be extremely transparent

– Be understandable to a person far from marketing

Rule 3. About the true goals of the company

When budgeting, it is important to stick to the true goals of the company, even if they are not spelled out in the strategy. Moreover, the strategy itself may simply not exist. This happens very often.

Talk to everyone who was responsible for preparing the strategy. Specify what indicators the company plans to achieve in reality. This may take more than one month. Unfortunately, in large organizations, even new tops are not immediately allowed into the “inner kitchen”.

In general, if you are a beginner and you need to make up an annual budget, immediately drop the article and go get acquainted. Perhaps you'll get lucky.

This is rule number three: know the company's goals exactly (especially if they are not declared or are very different from those included in the strategy). And you need to get acquainted with a person who can clearly explain them.

Rule 4. About clients

And so, armed with real goals and enlisting the support of experts, you sit down to make up the budget. Where to begin?

Best of all - from the portrait of the client. Determine gender, age, specific behavior and habitat. Explore media relevant to your audience. Remember who your real customers are. Don't build a b2b story where a b2c story is needed. And don't forget who evaluates the quality of your spending.

This is rule number four. Study the client and identify their favorite media.

Rule 5. About media channels

Study the media themselves and the cost of contacting a potential client with each specific media. If you look at the country as a whole, regardless of the specific audience, then we have TV and digital in the top. According to RACA (comparison of the 1st quarter of 2014 and 2015), the non-banner component of the digital market has grown from all types of advertising. The rest of the media slowed down and went negative. This is partly due to the crisis and increased spending for the period of the Olympics last year. But the upward trend in online advertising is hard to ignore in any case.

At the same time, mobile advertising is actively growing in the digital market. The share of queries from mobile devices in 2015 grew by 10% in Q1 alone compared to the previous year.

Presentation of Naked Digital Truth by Andrey Chernyshov, Vice President for Strategy at Dentsu Aegis Networks (Change Consciousness conference)

Now let's go through the rest of the media. What remains? Radio, outdoor, BTL communications and offline press.

How does modern marketing view the use of these media? Looks normal. Depends on the objectives of your campaign, of course.

Outdoor advertising. Whether you need it or not - decide for yourself. It is believed that she has one of the cheapest contacts with a potential consumer, but it is difficult to say which of those who saw the advertisement actually responded to her.

Separate story - advertising signs and outdoor advertising near shopping and entertainment complexes. If the advertised product / service is located next to the information carrier, you can try this tool. But I increasingly consider the mass purchase of billboards and city formats in cities to be pointless.

Radio. Flexible tool for specific purposes. You can reach a business audience, especially if the station is popular in its segment. For b2c, try joint contests, interesting formats, but direct advertising is again a big question.

BTL-advertising. This includes events, conferences, promotions and other ways to connect with the audience. Many include souvenirs in this expense item. If ongoing events give you contacts and subsequent profits, work with them.

Printed press? - Wave your hand to her. Seriously. The print media market is rapidly declining, and in the next few years, I feel that only extremely specialized publications for paper lovers will remain. Well, TV guides. You can work with them.

If we talk about the division of media channels in the budget, then everything changes very quickly.

Until five years ago, when we launched the Disney Channel on cable, we were spending quite a bit of money on an outdoor campaign. And it turned out to be justified - the channel very quickly entered the top in terms of its audience. The campaign was rather targeted, but it worked perfectly. Last but not least, due to the fact that in all cities where such an opportunity was available, creatives included a visual reference to the symbol of the city. Not necessarily formal, the main thing is that it be known to the residents. By this, we immediately made it clear that the channel was our own, close and understandable. In the regions, such things are extremely positive. In addition to being creative, of course, we worked out the geography of media placement very well, placing them at key interchanges, intersections and at exits / entrances to large areas. Advertising in TV guides also worked well.

Naturally, if the launch took place now, then the share of outdoor advertising in the budget would be significantly reduced, and TV guides should have been seriously considered.

How much money to budget?

You can use the "from the task" method, defining exactly what the company wants to achieve. This will be helped by the company's goals (see Rule 3), as well as an assessment of the number and quality of potential customers that need to be attracted to achieve these goals.

The marketing budget in numbers is the flattened cost of acquiring one customer (the number of contacts that need to be bought for this) multiplied by the number of required customers acquired.

In fact and in experience, everything is very different. Somewhere marketing is formed spontaneously, somewhere a percentage of the turnover is given out, somewhere - according to the residual principle, and somewhere - according to the method of substantiating each expenditure.

In the companies where I worked, most often the budget was formed as a percentage of the company's turnover. Within this percentage, spending on key marketing campaigns for a certain period was sewn up. Usually media is the most expensive part of the budget. In video game companies, significant funds were spent on events and exhibitions, while relatively little was invested in traditional media tools. On TV channels, the largest part of the budget was allocated to traditional media (including online communications).

A lot can be said about budgeting. But not within the framework of a review article. Each market has its own specifics, not to mention the organization and structure. Budget wisely, ask questions, and try to learn the basics of Excel if you haven't already.

The sales forecast helps to determine the goals and objectives that the company is able to realistically achieve and achieve in the coming year. It is based on a concept developed for the company.

A go-to-market plan details the go-to-market activities that you need to develop in order to achieve your goals and objectives for your business. It is necessary to determine the costs and time frame for the promotion of each type of product or service.

An advertising plan is drawn up in such a way as to help you think through the goals of an advertising campaign, the most effective way to influence your clientele and calculate the amount of money you can allocate for this. Advertising and promotion plans should define the main directions in the activity of your company, with the aim of achieving sales plans and goals for the company for the next year.

Public relations and public opinion formation

The list of mass media is intended to explore the possibilities of establishing contacts with them. A detailed record of the potential customers targeted by the advertisement and the products to be advertised will make contacts with the media more effective.

The plan provides an opportunity to consider all possible ways to increase the popularity of the business (sponsorship, employee bonuses, specific business events).

Financial Forecast

According to the financial forecast, the effectiveness and expediency of implementing the developed marketing mix is ​​evaluated. A statement of income and expenses, profit and loss is drawn up (4).

Table 4. Income and expenses from the marketing mix (rub.)

Planning

Much of corporate planning is like a ritual rain dance. It doesn't affect the weather in any way.
J. B. Quinn

All the planning in the world cannot beat blind chance.
One of the Ford executives

Perhaps this is a normal quality of any marketing manager - the lack of craving for planning. Planning is perceived as unnecessary work, as a waste of time. And I largely agree with this, especially when it comes to a multi-page (or long-term) plan. I also agree with those who believe that planning should not replace action.

A plan, any plan should be clear, concise and short.

It must be flexible - if the marketing environment, the market changes in hours, then you should be able to change your plan in seconds (try answering the following question: "Can you change your marketing plan in one minute if necessary?").

During my career, I have created hundreds of plans, reviewed tens of hundreds of company and campaign plans: new product launches, strategic and business plans, etc. Among them were both plans on one page, and those that took at least one ream of typewritten paper.

There are plans that you read and carry out (“foreign” plans), you participate in drawing up others (joint), and there are those that you make yourself (individual).

Each of them requires its own approach.

"Alien" plans- plans that were made without your participation. Look at them diagonally, learn from them, analyze weaknesses and strengths, note "findings" that you can use in the future. As a performer, evaluate how you would approach the preparation and implementation of this document, what budgets, information, assistance would be required, find motivation for the employees involved in the implementation of the plan.

Joint plans- plans created in the process of joint work with colleagues. When working on them, take the most active position. Improve, criticize, suggest, improve, simplify. But keep it simple - I admit that as a marketing manager you will want to see in the plan, say, a SWOT analysis or a detailed review of competitors. But stop and consider whether this information is needed for this particular plan.

Marketing Manager, no doubt can contribute to planning of any kind - and should, but if you add "fog", "water" or dozens of unnecessary pages, you will more and more often be asked to plan, but not to develop.

Individual plans- plans that you make yourself (the most useful for you, and for marketing, and for the company).

Some tips on how to make a good plan are given below.

Firstly, it should be fixed on paper. Anything that is not written or printed is not a plan. It's a thought(s), it's an idea(s), but it's not a plan.

Secondly, the plan must fit on one page. When you try to fit everything on one page, you focus on the most important and necessary elements of the plan. This forces you to think clearly and clearly - to the delight of those who will read your plan and participate in its implementation (if your company is used to writing multi-page Talmuds, then try making a one-page plan for yourself - this will come in handy and pay off).

So many leaders believe that the ability to express thoughts on one page is a sign of clear thinking. Prove that it is within your power and capabilities.

Thirdly, the plan should use clear and precise goals, and preferably if they are expressed in numbers (not "better help the sales team", but "get at least 100 leads in September after workshops in cities A and B").

Fourth, several people can draw up a plan, but one person should be responsible for each individual planned event, otherwise you'd better have two columns: “responsible” and “participants”.

Foreign companies often use the abbreviations TBD (“to be defined”). In this case, the completion date and responsible persons are not indicated. When I see such an abbreviation, I know that it is equivalent to NWC ("nobody will do anything" - nobody will care). Always try to clearly identify the responsible and deadlines.

Fifth, each event must have a completion date. Better a month than a quarter (due to be completed in September); a week is better than a month (the end date is the 22nd week); and best of all - a specific date (completion date - March 26).

At sixth the plan must be achievable. Don't plan for what you can't do. Don't even try.

Try the approach I take from time to time. You can prepare and submit three options for the plan: minimum, optimum, and maximum. But bet on one plan - the optimum. The minimum plan will help you hedge, and the maximum plan will help "rock" you and others to higher end results.

And the last. Don't make long term plans. None of us can foresee the future. Why try? How can we plan for the long term if we don’t know what our competitors will do, what decisions the government will make, how suppliers will behave, and what your customers will think (see Porter’s model). The long term plan is useless. This is just a waste of time and effort - yours and all your colleagues, whom you will have to "strain" to obtain the necessary data.

A plan designed for more than three months is not working.

A plan longer than one page is not working.

I, just like you, know how to make a strategic marketing plan. But most marketing managers don't get paid for writing multi-page strategic plans.

Read a couple of good planning books. Know the theory of planning. Learn from examples of big plans.

Actively participate in planning if you have to.

Your plans should be bright, short and working.

Budget: how to do, how to present and how to report

You announce a problem in a group.
Financiers say that this is a problem of optimizing financial flows.
HR says it's the human factor.
The research department says it's an information problem.
And only marketing says: no problem, just double your marketing budget.
Harry Beckwith "Selling the Unseen"

At the institute you will be taught a lot: accounting, financial analysis and planning; but not how to prepare the budget that you need to work. They also don't talk about how to present it, how to approve it, and how to report back later.

I think the advice based on practice will be useful to you.

How to prepare a budget?

There are several methods for determining the marketing budget. All of them have certain advantages and disadvantages.

The simplest method is percentage.

To prepare a marketing budget using a percentage method, you need to ask the sales manager: "What sales do you want to achieve?" After that, from the amount you hear, you take a certain percentage and call the resulting value the marketing budget.

However, several more problems arise.

It is not clear what percentage to take: one? two? three? five? Books advise to be equal to competitors (method of "parity" of budgets).

Another difficulty. How do you know how much your competitors are spending on marketing? You will not be limited to simple market monitoring (a lot of information about what competitors are doing is either not known at all or comes late).

One more moment. Imagine: both you and your competitors invest in marketing 1% of the planned sales volume. The question arises: do you have the same sales volume? What is the investment time frame? You can evenly distribute the budget over the months, and your competitor will hit the entire budget in the first two months.

But if you still use the percentage method, then you may need this idea. Assume that competitors are known to invest 1% of their target sales in marketing. Now imagine that with approximately equal sales volumes you start investing 3% in marketing, three times more; 5%, five times more. How much more active and visible in the market can you become after this? (Before suggesting that company management invest three or five times as much in marketing, be prepared to prove that the results will be significantly better than with investments that match the costs of competitors. Can you prove it? Ignore my advice.)

The widespread belief that the percentage of investment in marketing is about the same for companies operating in the same field, and varies depending on the industry, I can safely call it a myth.

One day, I came across a document that compared the volume of investment in marketing by the main companies in the telecommunications market. The companies were ranked in descending order by sales volume. The leading company invested the least in marketing (about 1.5% of its annual sales), the spread of investments in marketing by other companies ranged from 2 to 8.5%.

Summarizing the advantages and disadvantages of the percentage method of budgeting, it is appropriate to cite the following story. One day, the boss called one of his subordinates to him and said to him: “You know, John, things are still bad with us, we need to temporarily tighten our belts.” John was earning $2000, and the manager offered to cut his salary by 50% for three months, and then promised to raise it again by the same 50%. John agreed. The boss kept his word and three months later again increased his salary by 50%. And how much do you think John began to receive? (If you think it's $2,000 again, then you're wrong: count better.)

The problem is that percentages are relative and can often be played with (this is often done in advertising). For example, the promise of cosmetic companies that the cream "smoothes wrinkles by 17%". I want to believe, because the number is not round. But where and how did these 17% come from?

You also need to be careful with the use of the word "average". You can't say it better than this joke: "I knew a guy who drowned in a stream that averaged 20 cm deep." Avoid saying “average client”, be careful when using average numbers.

Probably the most reliable way to plan a budget is to it is a method of goals and objectives. You must understand what goals the company is facing, then break them down into tasks of a smaller level until it is clear how much it costs to achieve one or another sub-goal. Then, using the reverse counting method, you add up the amounts received, put 5–10% into the reserve - the budget is ready. By the way, it is much easier to imagine and protect such a budget. And those who have a desire to cut the budget will have to "cut to the quick." You can easily demonstrate to management how marketing activities are reduced with a decrease in budget.

How do you submit a budget for approval?

Much depends on who and how you present it. I had to defend my budgets in person and over the phone. I did it one-on-one and presented it to the decision-making group of leaders. Whatever it is, I recommend brushing up on your presentation skills. Prepare well. The more vividly and convincingly you present the draft budget, the higher your chances of approval.

Use the following maneuvers and techniques:

• don't round the $48,000 budget to $50,000. In the first case, the figure looks more realistic;
• look at what the company’s goals are now, what programs the decision-makers are passionate about, coordinate your proposals with them (for example, if the management’s goal is to increase the company’s partner network, then, of course, all activities aimed at this will be approved).

In addition to the hobbies of leaders, always keep in mind the goals of your leadership. I think that I will not be mistaken and will list almost everything.

1. achievement of quarterly and annual sales plans (sometimes monthly indicators are also important);
2. market share;
3. profit, rate of return;
4. countering certain competitors and/or their decisions;
5. promotion of certain solutions, implementation of the sales plan for them;
6. cost minimization (in some cases);

• do not detail the budget more than necessary, combine small positions into larger ones;
• be well versed in all budget figures and be prepared to clarify any of the positions;
• back up your marketing investment articles with expected results. No one will raise their hand to “cut” an event that will bring an increase in sales or new customers;
• use the time factor, indicate when it is planned to carry out this or that event: this may give room for maneuver with decision-making (an event, for example, can be financed from the budget of the next financial year);
• lobby, do it in advance, rely on the needs of key managers and departments (“We are doing this for the sales department, they are in dire need of this event”);
• refer to the changing market and the active actions of your competitors (“In this way we adequately respond to the marketing actions of our competitors to promote solution Z in a dynamically developing region X”).

If you deliver your presentation clearly and correctly, your budget will most likely get approved. One of my bosses once said: "If your presentation is perfect, then we are sure that your plan is also perfect, and the budget is carefully calculated and thought out."

Some managers like to "cut" the requested budgets - be prepared for this (it's better to know about this tendency of the leader in advance). In this case, you should slightly increase budget items that will definitely be cut (for example, it could be advertising).

Forget about the rule "Ask twice as much to get what you want." It doesn't work anymore. Modern approach - accuracy, accuracy, transparency.

If your manager is not in the habit of cutting budgets, then try to ask for exactly as much as you need.

If necessary, sign under the amount you are asking for and the results you plan to receive. I have used this approach several times. There is no more efficient way to get the necessary budget.

After a certain period or event for which the budget was allocated, be sure to demonstrate that your plan is working as it should.

Make a short report.

Winston Churchill famously said about this: "The unprecedented thickness of this report reliably protected him from the danger of being read."
You better not say.

Thank you for your help (and, if necessary, for your trust).

Do not put off the report and gratitude for later. This will help you gain some future goodwill from budget approvers.

Take the preparation and approval of the marketing budget seriously.

When there is no budget, there is usually no marketing.

Planning chain

Making plans is a waste of time if it is not entrusted to those who will execute them.
Henry Kissinger

This chapter focuses on the planning "chain" that has proven itself to be the best work (for more than four years, my employees and I have used it).

It starts with yearly goals (I don't look any further; objectively speaking, none of us know exactly what will happen tomorrow). Goals should be clear, achievable and motivating. It would be nice if they were broken down into quantitative and qualitative ones. Here is an example of company goals Lucent Technologies in fiscal year 2000, which were delivered by me to the Moscow marketing group.

quality(activity and professionalism):
Become the No. 1 marketing team in the telecommunications industry in the CIS.
Become Lucent's #1 Marketing Team in the EMEA region (Europe, Middle East and Africa).
quantitative:
Support the achievement of Lucent's sales target in the CIS ($XXX million).
Based on the results of the annual survey, get an average rating of marketing activities of at least 4.8 points for the sales team and 4.5 for partners (out of 5 possible).

I divide planning into formal (requested plans, business plans) and informal (plans you make for yourself).

For work, informal plans seem more effective and important to me. I almost never went back to the official plans. We compiled them, “protected them”, and that was the end of it.

With every significant change in the market, with the emergence of a new competitor strategy, with the emergence of new partners, customers and solutions, any "official" plan became obsolete.

Informal planning is more flexible.

It includes (in addition to the annual goals described above) an individual weekly plan, a Top 5 department plan, a 90 day plan, and plans for each type of activity / event, if necessary (sample 90 day plans) and "Top 5" are in the section "Apps with comments").

A few comments on each of the elements of the "chain" of planning.

Plan "90 days"- this is a program of actions that need to be done by a group or marketing manager within three months (usually corresponding to the quarters in accordance with which sales planning is carried out).

It includes the most important events grouped into several blocks. It does not include all activities. It does not include what can be done in one working day.

As a rule, the "90 days" plan consists of complex tasks, programs, activities that are expected by management, the sales department, and other departments, the solution of which changes or improves something. We called such activities wave making events (wave-raising events, tsunami events). These are key activities that bring quick and/or big benefits, or save other departments headaches.

At the end of the 90-day period and at the beginning of a new quarter, my staff and I reviewed all the points of the plan, and we estimated the percentage of the plan completed (the higher the percentage, the better). We also analyzed the reasons why the planned activity was not implemented, and decided what to include in the plan for the next 90 days.

Group or employee plan "Top 5". This plan was drawn up every Monday, one copy remained with me, and another (preferably on colored paper) was hung out in the room where sales managers work. The Top 5 plan helps the marketing manager solve two problems at once.

The first is a focus on short-term results. Admit it to yourself, do you start each work week by planning it? At best, most of you have a work plan for the day. Planning for the week ahead helps you get clear on what should be your priority for the next five days. A weekly plan can include from two to ten tasks (initially, we identified five key tasks, hence the name “Top 5”).

The second is visibility for other employees of what marketing is doing and what to expect this week. One of the biggest problems of marketing managers - the lack of visibility of the results of painstaking daily work - is solved simply and beautifully. No one has the question: “What does the marketing department do?” Employees know this up to a week.

And one more advantage of the Top 5 plan. He is a kind of bridge between daily activities and the 90-day plan. As soon as it was possible to do something from the “90 days” plan this week, it was crossed out with a bold felt-tip pen in the weekly and quarterly plans. All these plans hang before your eyes, and you cross out completed activities. Sheer pleasure! This is probably one of the most enjoyable moments in my work - crossing off a completed task, project or event from the "90 days" and "Top 5" lists.

In addition to the "Top-5" plan, each employee has his own personal plan for the week. He leads it individually in any form.

As I said, if necessary, we make plans for each important type of activity / event (program, seminar, exhibition). Such a plan allows you to work clearly, on schedule, and, if necessary, quickly connect additional employees (“Here, look at the plan, if you have questions, ask, help, please, do this and that”). In addition, there is no need to “reinvent the wheel”, if necessary, you can use the “old” plans for new events.

Your planning chain may be shorter, but don't work without a plan.

And don't keep your plans a secret. Let others see what you are doing for them. Let your plans motivate you to your future result.

The bolder the plan, the higher the result. The higher the result, the more successful you and your company.

Zero budget marketing is not zero marketing

We didn't have money, so we had to think.
Ernest Resenford

This can happen in the life of any marketing manager. Your manager will tell you, "The marketing budget is frozen." Or: "The period is now difficult, we are reducing the marketing budget."

This is a bad signal. It is no secret that in most companies, when it is necessary to cut costs, they first of all begin to “cut” advertising budgets. Whatever marketing theorists and advertising agencies say, a company (unless it's a Fortune 100 company) can go without advertising for a while quite easily (let's face it). That's what she can not do without - it's without marketing.

I hope that the leaders of your company understand the difference between advertising and marketing and that you took care of this in due time (see the chapter “Explain what marketing is to everyone around”). If they know this, then they understand that the value of marketing is not in advertising (not only in it alone).

And here the question arises: “Is it possible to do full-fledged marketing with a limited or even zero budget?”

The answer is simple: if the budget is limited, then marketing support will be limited.

If the budget is cut to zero, then the value of the marketing manager will not be zero. Even without a budget, a good marketing manager can add value to their company.

However, managers should be clearly aware that in this case, the work will soon become uninteresting for a good marketing manager.

Small budgets - small tasks (albeit with high results). Small tasks - small motivation. Further, I think, it is not necessary to continue reasoning. Worse is the situation in which the creation of the position of "marketing manager" was caused by fashion, passion: there is an employee, but there is no marketing budget.

So let's get back to the limited budget situation. Consider the softest option. For some reason, you spent the allocated budget ahead of time (which is also not good). There are two months left before the start of the new fiscal year and the allocation of a new marketing budget, but for now you are out of money.

What can a marketing manager do in such a situation?

Firstly you can get additional funding. If you can prove that the marketing activity you're offering will generate new leads or help increase sales, the same executives who slashed your budget will allocate additional funds to you.

At the same time, it is important to remember that the effectiveness of the investments of funds allocated in such situations is controlled much more carefully and more strictly.

Secondly, you can concentrate on activities that do not require investment.

Tidy up the database.

Switch from mailing lists to email.

Focus on PR - press releases, articles, success stories, stories about the use of your solutions, interviews with your managers and specialists.

You can set up a competitor monitoring system, do analytics - this also does not require investment.

Thirdly, you can do mental work - planning, self-education and the education of others, the search for new ideas, master new types of marketing. You can put all your papers, records in order, clean up your computer.

If you are faced with a situation where your marketing budget is temporarily zero, remember that this is not a reason to completely stop marketing. This is an experience that is better to have. And the more you can do in such a situation, the better.

Mary!

Marketing remains largely an imprecise science.
L. Hampton

The attitude of some executives to the question of measuring the effectiveness of marketing can be expressed in the well-known words: "I know that half of my money spent on advertising is wasted, but I don't know how much." In companies that practice this approach, they do not monitor the effectiveness of marketing at all and admit that nothing can be done about it.

The other extreme (most often inherent in large companies) is total control. In order to get a budget, you must first explain what results it is needed to achieve. Then you should report on the results.

For them, the golden words of Wharton University marketing professor John Chang: "You shouldn't measure something just to show that it's possible."

Is there a middle ground? I think yes.

And although it seems to me that it is better to spend time on marketing itself, and not on predicting and monitoring results, measuring its effectiveness and subsequent reporting, this does not mean at all that you should not measure the effectiveness of your work in marketing.

You just need to know that the effectiveness of marketing can be accurately and simply measured only (and only!) In the following cases:

• Internet advertising;
• direct advertising (postal advertising, telemarketing, fax and email advertising);
• advertising in directories;
• coupon ad.

One must accept the fact that complex, costly models are needed to measure the effectiveness of other interventions. Theoretically, this can be done, but in practice it is better not to resort to this.

I believe that a good marketer does not do bad marketing, can work to the maximum in the most difficult situation, and is also able to evaluate the effectiveness of his work “by eye”.
Let's say I'm speaking at a conference. How was my performance?
I can wait for the results of the poll that the organizers are conducting (maybe).
And I can immediately get an informal assessment of my performance by the audience. Stakeholders, questions and comments from the audience, the host's comments, applause, the number of questions after my presentation, the number of listeners who gathered around me afterwards ... all this gives an idea of ​​​​how the presentation went, faster and better than a formal assessment.

Whether you like it or not, the company's management is looking more and more closely at marketing, expecting concrete results from it. It is guided by the principle “You can manage what you can measure”. And they are right.

How to prove the effectiveness of the results of your work? What needs to be assessed? How?

Here are some of the available criteria that a marketing manager can use in their work in order to prove the effectiveness of their work and the need for investment in marketing.

Quantitative criteria:

• the number of new leads (potential customers), for example: “As a result of direct mail, 105 new leads were received”;
• sales volume (“Help the sales team increase sales this quarter by 10% by implementing a customer loyalty program”);
• market share (“Increase market share by 5% due to the planned advertising campaign and other marketing activities”). If you use this criterion, you need to be sure that you will be able to measure the change in the market share owned by your company; as a rule, this is a complex, lengthy and expensive study;
• publications (“As a result of working with journalists, three positive articles about the company's decisions were published”);
• won tender (“Reviews of our clients, prepared by the marketing department, helped win tender A”);
• fulfillment of the plan (“the sales plan was overfulfilled by 5% due to the program we prepared to stimulate purchases by large corporate clients”);
• Satisfaction (“The level of satisfaction of our partners with marketing support from the marketing department has increased over the past year by 10%”).

Quality criteria:

• strengthening, increasing brand awareness. This may be a quantitative criterion, but studies of this kind must be large-scale and they are quite expensive (“Increase brand awareness among potential customers through a planned advertising campaign”);
• creation/strengthening of relations with clients, partners (“Hold a partner conference to strengthen relations with regional partners”);
• expansion of the client base, partner network. This indicator can also be quantitative. And even better if it is quantitative (“As a result of a complex of marketing activities, the client base was significantly increased” sounds worse than “Thanks to marketing, the client base was replenished by 20 new and 80 potential customers”);
• support. This is a word that can help you out in situations where another quantitative or qualitative criterion cannot be used (“Provided sales support in the regions” or “Provided support during last year's tenders”).

Remember that you should not go to the extremes that are described at the beginning of the chapter: you should not measure everything and everything with the highest accuracy (total control) and at the same time you should not treat marketing investments as funds going into a “black hole” .

Measure only what really matters. No need for unnecessary, expensive and time-consuming measurements. Rather than spending time and resources measuring market share to the nearest percentage, invest those resources in increasing market share.

Ask yourself questions from time to time. If I stop measuring something, will anyone care? Will it have a negative impact on the company's operations?

And vice versa, if you start measuring something additionally: will it positively affect the company's activities?

Evaluate only the main indicators.

What is the best way to measure? In production, they first try to count in units of the product, then in money, and only then in percentages. In marketing, just like in sales, money must come first.

When to measure? If measurements can be taken quickly and do not require much effort, then take them regularly. I believe that if you spend more than 10 minutes measuring something, this is an unacceptable waste of time.

Do not forget to inform your colleagues and superiors about the results. Measurements without feedback are ineffective. Actively use the results obtained - correct your actions, draw conclusions.

Measurements without change - useless work and useless marketing.

Cost manager, stay within budget

I gave him an unlimited budget and he missed it.
Edward Bennet Williams

When I was marketing director at the Moscow office of Lucent Technologies, I earned the joking nickname "cost director" from our CFO. Still - no one brought as many invoices for payment as our department!

Unfortunately, many companies view marketing expenses not as an investment, but as a cost. How can this situation be changed?

Firstly, it is necessary to form the opinion that "marketing is an investment". This is a complex and long process. You yourself no longer have the right to say: "Spend on marketing", you must say: "Invest in marketing." You should also correct others when they speak differently. And this is the simplest.

The difficulty lies in proving that investments in marketing are such, i.e. that it is possible to measure their effectiveness and get a return (see the chapter “Measure!”).

Secondly, you should never go beyond your budget. Good tone when you invest exactly as much as you have been allocated. Overrun is not allowed.

If you “underinvest”, then next time it will be very difficult for you to get the required budget - this, unfortunately, is the practice of many companies. Although in fact this is the wrong approach. If you managed to save a budget and do the same (or even more) for less money, then your company should reward you for it.

Thirdly, establish and maintain a good relationship with the finance/accounting department. Many managers believe that the marketer spends money, and the financier only counts them. In fact, both marketing and finance service sales, and this unites them (although the marketing manager is closer to sales). In addition, in the financial service, they still think very well, and the movement of money depends on them, which means, for example, your relationship with suppliers.

Fourth, learn the basics of financial management (if you do not have such knowledge). This will allow you to speak the same language with financial professionals, and in addition, you will be able to plan and manage your budget more professionally.

Many top managers of companies are guided by the principle "A ruble saved - a ruble earned".

Others believe that one ruble spent on marketing is actually two rubles spent, as it could have been spent elsewhere in the company.

Understand this: plan your budget carefully, invest with maximum return and do not spend more than you have been allocated.

Your marketing budget. The allocated funds for marketing allow you to regularly and promptly pay current bills. But without marketing planning based on specific business goals, it is difficult or impossible to achieve the desired result. Success cannot be measured without goals. It's like throwing a basketball into the basket, not knowing how many points will bring victory.

Start by setting targets

Make sure you understand what your goals are. Without goals, you cannot appreciate what you are trying to do. The result is the foundation of any budget.

• What do you want to achieve in terms of money spent?
• Will the projected revenue be enough to cover the company's current expenses?
• What level of return on investment on marketing do you plan to achieve in a year?

As a simple example, you can use the common ones for most companies:

1. Website traffic increase as measured by unique visitors per month
2. Increase targeted traffic from the geographic service area
3. Business growth as measured by total revenue or sales revenue

Define your clients

It will be difficult for you to sell your services if you do not know who your customers will be. - this is the basis for choosing communication channels in order to convey your advertising message to the buyer.

• Who are you selling your services to?
• What are the real expectations of customers from the deal?
• Does your service meet these expectations?

The term "customer profile" used by many marketers means that you have to understand the type of person your market is attracting. The nightclub will attract young people with money to spend. Skin care products will appeal mainly to women of a certain age who want to keep their skin smooth and soft. There are many more examples; you should consider as many as you can.

Calculate your marginal cost to acquire new customers

Now you know your goals and your target audience. So what's next? An important criterion for the budget is the cost of each customer, which is related to the projected revenue from each customer.

• How much will each client cost?
• What is the budget for acquiring new customers to achieve the volume of planned sales?

If it's hard to estimate the potential profit in terms of how many customers you can acquire, set limits on your marketing spend. For these purposes, ADR (share of advertising costs) is suitable, with which you set the upper bar for the marketing budget, depending on the projected revenue.

We enter the marketing budget into corporate planning

The first step in understanding how to effectively plan your budget is to understand where the marketing plan should lead to. Simply put, marketing should drive sales.

Formation of the marketing budget begins with the annual corporate planning. This process is based on an existing business plan, which allows you to distribute funds by month. It is important to take a close look at the company's costs and compare them with the forecast of future sales. The financial performance of the business plan ultimately determines the size of the marketing budget.

Marketing budgets typically range from 2 to 25 percent of a company's revenue, depending on the company's size, stage of growth, and the importance of marketing in sales. The growth stage of your company is the most important factor for marketing:

• companies seeking to maintain their position in the market may be sufficient 2-10% of the amount of sales;
• For companies at the stage of rapid growth (revenue growth of more than 50% per year), the budget can be calculated at 15-25% of projected sales.

Naturally, the cost of marketing for accounting will be considered overhead. Indeed, if a marketer forms a marketing budget for a fairly stable annual business plan for a company, any employee will consider marketing as an expense. However, effective marketers understand that this is an investment!

Marketing should have a direct impact on the product line and contribute to the growth of the company's revenue. Therefore, the marketing budget should be considered as an investment process, and its effectiveness should be assessed by the rate of return of funds for each invested ruble.

The Classic Formula for Calculating ROI for Advertising

We distribute marketing budget items by communication channels

Having determined the amount of available funds for the implementation of the marketing plan, it is advisable to allocate them taking into account the effectiveness of the sales channels for the company's services. There is an unshakable rule: you must first support those channels that can provide the maximum return on investment.

It is acceptable to use different ways to allocate the marketing budget, for example, by taking into account different geographical points of sale, taking into account customer demographics, or by time of day, exactly when customers are looking for the services they need.

Determine funding for each communication channel

Setting up a marketing budget for different communication channels is always a big challenge for any marketer. A dynamic market and an increasing number of competitors make it difficult to choose the most effective ways to reach customers.

The transformation of classic marketing into the age of digital communications allows you to focus on the “customer journey” and on the specific “touch points” that a visitor goes through on the journey to becoming a buyer. Touchpoints are essentially the communication channels through which a company communicates with its customers.

Solve the problem of monitoring the journey of customers will help. By setting goals for the stages of the sales funnel and tracking the conversion of the site, it is enough to simply determine which of the communication channels bring the most leads and customers.

This approach allows you to control a significant part of marketing costs. In recent years, SEO and contextual advertising have become almost the only channels for attracting buyers. But we must not forget about other points of contact with the target audience. Diversifying your marketing spend is an important part of any strategy. You can not "sleep through" the emergence of new marketing communications with the client! The most effective marketing plans use up to 14 communication channels.

In order to quickly and visually distribute budget items for marketing, from the marketer's library. It is configured in such a way that you can control planned expenses not only by budget items, but also by months, comparing them with the sales forecast.

Budget optimization taking into account the effectiveness of communication channels

The marketing budget is not a dogma. As the marketing plan is implemented, it is necessary to optimize costs. It is important to closely monitor the effectiveness of your marketing tools:

• How do users find you?
• How do they interact with your communication channels?
• How do visitors turn into customers?

Statistical data of analytics systems allow you to evaluate the dynamics of the number of sales and the quality of marketing. Regular monitoring and analysis gives you the opportunity to focus on what works best for your business. The intermediate results achieved will make it possible to abandon those instruments that do not provide a proper return on the funds spent. The same marketing programs that are the “sales growth driver” require refinement and redistribution in their favor of inefficient budget items for marketing.

Conclusion

The development of a marketing budget is a creative process based on an understanding of effective communication channels with a service consumer. Internet marketing provides an excellent objective basis for corporate decisions, including marketing budgets.

With the increasing automation of online marketing processes, the efficiency of planning and budgeting should increase. However, this positive process will be countered by the ever-increasing complexity associated with the emergence of new channels of communication and.

marketing budget control distribution

Marketing budget - a section of the marketing plan of the enterprise, reflecting the projected values ​​of income, costs and profits. The basis for the development of a marketing plan is an operational plan and developed action programs.

Marketing budgeting helps to correctly prioritize the goals and strategies of marketing activities, make decisions in the field of resource allocation, and exercise effective control.

Both the management of the firm and the managers of the main functions, which are to some extent affected by the marketing plan, take part in the preparation of the budget.

The approved marketing budget is the basis for procurement of raw materials, production planning, labor resources and marketing activities.

Adjustment of the marketing budget is carried out during the revision of the marketing plan according to the control plan or in the course of the enterprise's activities as necessary.

When developing a marketing budget, two schemes are used. The first is planning based on target profit indicators. The second is planning based on profit optimization.

Consider the first scheme in stages:

• 1. Estimation of the total market volume for the next year. It is formed by comparing growth rates and market volumes in the current year.
• 2. Forecasting market share in the coming year. For example, maintaining market share, expanding the market, entering a new market.
• 3. Forecast of sales volume in the next year, that is, if the market share is n% -, and the predicted total market volume in physical units is m units, then the estimated volume will be X units.
• 4. Determination of the price at which the goods will be sold to intermediaries (price per unit).
• 5. Calculation of the amount of income of the planned year. It is determined by multiplying the sales volume by the unit price.
• 6. Calculation of the cost of goods: the sum of fixed and variable costs.
• 7. Forecast of gross profit: the difference between gross proceeds (income) and gross cost of goods sold.
• 8. Calculation of the benchmark target profit from sales, in accordance with the planned profitability ratio.
• 9. Marketing expenses. They are defined as the difference between the sum of gross profit and the target profit according to the plan. The result obtained shows how much you can spend on marketing, taking into account the cost of taxation.
• 10. Distribution of the marketing budget for the following components of the marketing mix: advertising, sales promotion, marketing research.

The second planning scheme is based on profit optimization. Profit optimization requires firm management to clearly understand the relationship between sales and the various components of the marketing mix. The term Sales Response Function can be used to provide a relationship between sales volume and one or more stages of the marketing mix. The sales response function is a forecast of the likely volume of sales over a certain period of time under different cost conditions for one or more elements of the marketing mix.

A preliminary assessment of the sales response function in relation to the activities of the company can be done in three ways: statistical, experimental, expert.

In accordance with the principles of budgeting at all levels, the following items of income and types of costs are mandatory for rationing, planning and control.

Income - planned sales (in natural and value terms).

Costs - planned costs. Main types of expenses:

• a) Variable selling expenses:
  • 1) commissions to sales intermediaries;
  • 2) delivery by own transport;
  • 3) bonuses;
  • 4) other variable business expenses;
  • 5) variable costs for implementation in general.
• b) Semi-fixed selling expenses:
  • 1) advertising;
  • 2) sales promotion;
  • 3) market research;
  • 4) wages of sales personnel with accruals;
  • 5) travel expenses;
  • 6) other semi-fixed selling expenses;
  • 7) semi-fixed costs for the implementation as a whole.

Table 1. Marketing budget of Chelyabinskaya Poultry Farm JSC.

Budget item		Interest, %
Total forecast sales volume
Most likely production costs
intermediate profit
Sale organization
Other product promotion costs
Bringing the product to consumers and their service
Package
Maintenance
Remuneration of managers and employees of marketing services
Consumer loans
Cost of Information
Total Marketing Costs

Marketing budgeting helps to correctly prioritize the goals and strategies of marketing activities, make decisions in the field of resource allocation, and exercise effective control. The costs of implementing the individual elements of marketing presented in the budget are derived from the detailed marketing plan.

We will draw up a quarterly marketing budget for various product groups and customers. The table below shows the budget for sales-oriented marketing to small and large processors, taking into account the planned income.

Table 2. Quarterly marketing budget.

Quarter 1	Quarter 2	Quarter 3	Quarter 4
Item of expenses	Expenses, rub	Expenses, rub	Expenses, rub	Expenses, rub
Printing (catalog of goods and services "PRICE")
Exhibitions:
Stand design
Presentation
Administrative expenses:
Control
Communications
Business trips
office equipment
Training:
Trainings
Seminars
Stimulation:
Motivation programs
Salaries
Total expenses by quarters:
Yearly expenses

Table 3. Planned income.

As a result of the compiled tables, it can be seen that the costs of marketing activities are quite high. But with the help of marketing research and advertising, the promotion and sale of products will be most effective, which will cover the costs. Of course, there is an opportunity to reduce these costs by choosing the most optimal and cheapest types of product promotion. Or carry out advertising campaigns during the periods most favorable for sales (since agricultural products are seasonal in particular). During periods of decline in demand, you can only remind yourself, it will be enough here: mailing lists by e-mail, telephone conversations with consumers. The highest costs are advertising on television (placing banners, commercials, etc.) if you limit quarterly releases, and let's say such advertising is done once every 6 months, then you can save about 30,000 rubles. But there should be advertising, because "Advertising is the engine of trade!".

The marketing budget is compiled every year. At the same time, the budget should be adhered to throughout the year. This will help to avoid any unforeseen situations when executing the marketing plan.