The Marketing Budget Planning Process | Steps and Timeline for the Annual Budget
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Category: Campaign Management
Published:
Last Updated:
Category: Campaign Management
Authors: Shusaku Yosa
The most time-consuming part of budget planning is not producing the numbers. It is the requests to cut that arrive after submission, and dealing with them. This article covers the steps and timeline for building an annual budget, and then the preparation that makes a proposal harder to cut.
Taking a company with a March financial year-end, the work starts around October of the preceding year.
Budgets get cut in the negotiation and review stages from December onward. Whether they get cut, though, is largely determined by what happened before that.
The above is the official schedule, but preparation needs to begin earlier.
Start gathering the outgoing year's actuals in September. Begin hunting for data at the drafting stage and all you can produce are weakly justified numbers.
The lines that get cut first in negotiation share clear characteristics.
Lines that say only "improve brand awareness" or "enhance the customer experience" are the first candidates.
Even unmeasurable work can carry proxy metrics. Articles published, media placements secured, the trend in branded search volume. You cannot prove causation with revenue, but having a number that shows whether things moved makes the line easier to defend.
A line carrying the same figure as last year and nothing else hands over the grounds for cutting it. The same figure is fine, but you need to have written why that figure.
Written as "digital marketing, all in: 30 million yen," whoever is cutting will apply a flat compression without looking inside.
Break it down to campaign level and the person cutting is forced into a specific decision: are we dropping this campaign? A flat cut becomes much harder.
Justification comes in three levels. The higher you go, the easier the line is to defend.
Only some lines can reach level 3, but getting your main acquisition work there raises the defensive strength of the whole budget.
The classic way a proposal collapses in review is a mismatch with the sales team's numbers.
Lead-to-opportunity conversion, opportunity-to-close probability. If your assumptions differ from sales, the contradiction surfaces in the room and the credibility of the whole proposal drops. Reconcile the numbers with sales before submitting.
A request to cut is close to certain. The question is who decides where the cut lands.
Ordered to apply a flat cut, even the work that is performing gets weakened. The only way to avoid that is to assign priorities yourself and present them.
Presented this way, the person cutting starts with experiments. You can absorb the reduction while protecting the work that is producing.
Have the experiment tier zeroed out every year, though, and you run out of future options. Adding an example of a past experiment that grew into a current mainstay makes the case for keeping it easier to argue.
Where there is no room to negotiate and the reduction is final, two things need doing.
If the budget is cut by 20 percent, calculate how the acquisition forecast changes and submit it. Without this, the budget gets cut and the target stays where it was.
Establishing in that moment that budget and target only move together is the important part.
Note which lines were cut and which work you dropped as a result. When the numbers fall short mid-year, this becomes the material for requesting additional budget.
It also serves next year's planning. If the effect of the cut actually shows up, it becomes strong justification in the following year's negotiation.
A contingency is necessary, but placed badly it goes first.
Listed on its own as "contingency: 5 million yen," it looks like money with no purpose. Deciding the conditions for using it and who decides changes its character.
For instance: "used for additional investment in channels exceeding target at the quarterly review; the marketing director decides." A contingency with a defined use is more likely to survive.
Not recommended. Once padding is visible, the justification for every line comes into question. Conversely, being known for accurate figures earns you credibility in the negotiation. Over successive years, accuracy is the stronger position.
With no track record, you cannot beat existing work on the same terms. Start small and build the record. Requesting a small test budget rather than an annual line, then proposing to scale once results arrive, tends to get through.
Not a list of amounts by channel, but the connection to the revenue target. Showing the chain — target revenue X requires Y closed deals, which requires Z leads, which costs this much to acquire — on a single page speeds up the discussion considerably.
Rebuild the unexplained lines from zero once. You will sometimes find items that can be stopped without consequence. Reviewing everything from zero is heavy, so limiting it to the lines whose basis is unknown is the practical approach.
Whether you can build a proposal that survives depends on how much of the previous year's data is in place. When spend and results by campaign live in different places, just gathering them at planning time takes weeks.
Xtrategy manages campaign schedules alongside budget and KPIs on a single screen. With money spent linked to results produced, next year's justification comes straight out.
What helps most in budget planning is being able to pull last year's actuals out by campaign. Start in September by building a table that sets spend against results for each campaign.
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