Marketers and their teams spend months planning and strategizing for the upcoming year, but they often overlook what happens once execution begins.
The trickiest time to manage marketing spend is after a quarter has begun — once programs are happening, budgets are changing, and those crystal-clear goals everyone agreed upon before the quarter began don’t quite seem so clear anymore.
So, how can marketers cope — or even thrive — in the midst of these challenges?
I recently teamed up with The Pedowitz Group’s Justin Yopp to discuss this topic on a webinar. Justin is a revenue marketing strategist and an expert on marketing planning and budgeting. I’ll recap our discussion in this post.
The state of “spendemonium”
“Spendemonium” is the name I’ve given to the state of general chaos that can set in at a marketing team mid-way through a quarter, as they try to manage their marketing spend.
Does any of the following ring true for you?
Before a quarter begins, marketers make a heavy investment of time in creating their plans and budgets. This is a season often characterized by long meetings, ever-changing processes, and the inevitable horse-trading that occurs, since budgets are finite and every marketer needs more resources.
When those budgets and plans are locked down and the new quarter begins, it’s time to set them into action. But as the saying goes, the best laid plans of mice and men often go awry.
As the quarter unfolds, your plans get quickly forgotten, goals change, and budgets inevitably get cut — or, less frequently — boosted.
This is when spendemonium hits! In a state of spendemonium, you have minimal visibility into the current state of your budgets, and therefore no control over your marketing spend. Your marketing budgets live in spreadsheets, and it’s a near-impossible task to try to get them to reflect the current state of affairs.
Here are some signs that you might be in a state of spendemonium:
An executive asks for a report on where Marketing has spent their dollars so far and the only way to get answers is through a weekend’s worth of Excel gymnastics
You’ve abandoned the annual marketing plans and are following gut feel instead of putting resources towards what data has shown are the top-performing activities
You’ve lost the ability to easily connect plans to actual spend and activities to the results and are flying blind when asked “what results have our marketing efforts produced”?
Spendemonium is a dangerous state, because Marketing loses its ability to act like a business; it can no longer be fully accountable for its spend and results. This results in a lack of control, a lack of accountability and ultimately a loss of confidence from the rest of the organization.
How Marketers Can More Effectively Manage Spend Once Execution Has Begun
Having identified the difficulties of in-quarter budget management, let’s see how we can go about avoiding them.
Here’s Justin Yopp’s framework for effective marketing budget management.
A single point of truth is the crucial underpinning of effective spend control. All marketers need to see the same numbers when they look at marketing investment data.
Now, let’s move into our recommendations. Here are mine and Justin’s top strategies for effectively managing marketing spend once the quarter has begun:
1. Don’t rely on a finance-centric view of marketing spend. Instead, categorize your budgets with a marketing-specific taxonomy.
We’ve written before about how Marketing and Finance speak different languages.
Accounting’s system of classifying spend just doesn’t work for marketers. For starters, it’s not granular enough. Additionally, Finance’s reporting structure tends to be backward-looking, while marketers need a clear, forward-looking view of the resources still on the table, so they can make informed allocation decisions.
Marketing needs its own taxonomy for its spend — set up not by general ledger codes, but according to the structure of the overall marketing organization.
2. Cultivate a culture of agility.
In marketing, there is always room to be opportunistic. That’s why every marketing organization should be purposeful about choosing the right trade-off between committed spend and agile spend.
Having too much of the marketing budget pre-committed, with nothing left aside, is a common and easily-avoided contributor to spendemonium.
If you’re not sure where to start, our recommendation is to set aside 10-20% of your budget for in-quarter opportunities. This agility will go a long way towards reducing the friction that budget cuts can create.
3. Create a roadmap for people, process, and technology around spend management.
Every marketing organization has a culture around the way it spends money. What’s yours? For every marketer looking to reduce the effects of spendemonum, it’s worth taking the time to map out the people, process and technology around spend management.
Here are some examples of things to consider. Do you see room for improvement in any of these areas?
People: Who’s in charge of the key aspects of managing the CMO’s investment portfolio (aka the budget)? Which leaders are accountable? Is there the right level of knowledge around marketing finance within the organization?
Process: How do you handle budget reallocations and changes mid-year? How does Marketing interface with the Finance team in relation to marketing spend? How are decisions made from the top to the bottom of the organization?
Technologies: Do you have a system for managing marketing spend? Do you have a method for connecting your marketing investment data to your results data from your CRM or marketing automation systems in order to measure marketing ROI?
I hope these tips and recommendations are helpful as you lead the fight against spendemonium in your organization.