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Business Management

Putting Together a Marketing Budget That Sticks: 4 Tips to Get You Started

Column: MarketingWorks

From the October 2010 Issue

Accountants love numbers, but they also love to slash the numbers in a budget
as much as they enjoy adding them. Unfortunately, two of the areas usually cut
are marketing and public relations because they are often perceived as overhead
expenses in which the return on investment (ROI) is hard to prove.

Before this happens to you — or if you are a witness to a budget-cutting
bloodbath — here is my advice on how to construct a better budget and
how to hold on to your money.

1. SET YOUR BUDGET AS A PERCENTAGE OF REVENUE
One of the questions I am most often asked is what percentage of any organization’s
budget should be devoted to marketing and public relations. The numbers vary
widely between firms. Although most firms will want to consider their annual
goals, the size of the firm (number of professionals), geographic location and
other factors, I think it all comes down to estimating a budget based on annual
revenue.

Certainly, you have to consider what to fund, but you also need to realize
the amount of money with which you have to work. I found this chart on ImageWorksStudio.com,
and I agree with its numbers:

It’s not an exact science by any means, but you can use this as a guideline.
Years ago, marketing gurus would lead you to believe your budget should be as
high as 15 percent of revenue, but I really don’t know any firm or organization
in the professional services sector that has that kind of structure. In retail
or manufacturing, 15 percent may be about right, or even a little low. Still,
in accounting, I like the percentages listed in the chart.

As well, your budget figures should not include salaries for marketing, PR
and support positions. This would heavily skew the budget, and you would be
hard pressed to even try to measure ROI based on your activities. Either the
firm makes the commitment to create and retain the positions, or it needs to
look at an outsourced model.

2. BLUE-SKY YOUR IDEAS AND THEN COME DOWN TO EARTH
If you’ve ever dreamed of winning the lottery, imagine what it would be
like to have an unlimited amount of money to market and promote your firm. Think
of the things you could do, and let your imagination carry you away.

One of the best ways to figure out your marketing budget is to blue-sky your
ideas. Start with an empty whiteboard and think of all the activities you would
like to accomplish. Want to buy time on a local television channel? How about
running an ad in each issue of Fortune magazine?

Sure, these are cost-prohibitive items — and pretty outrageous to even
consider for most firms — but you get the idea. Once you have your blue-sky
list, you can begin to get more realistic. For example, let’s go back
to buying time on a local television channel. Instead of purchasing a 30-minute
slot, how about budgeting enough money to underwrite a local talk show that
discusses responsible finance? You’ll find that if you go for the stars,
you’ll end up with some great ideas that just need some grounding before
they materialize.

A key piece of advice: Don’t do this activity in a vacuum; treat it
as a group activity involving decision makers in the firm or organization …
all the way up to the managing partner and shareholders. The more buy-in you
get up front, the more likely you are to walk away with what you want.

3. RATIONALIZE YOUR BUDGET
This leads to the most crucial part of the entire process — finding a
way to hold on to what you want to accomplish. Everyone is vying for the same
precious dollars so you must think in terms of how you’re going to prove
you need the money. Instead of taking a defensive approach, try these tips:
Build on previous programs. This is the simplest and easiest way to keep your
money intact because you can explain that the dollars are needed to continue
something already begun.

Do your homework and show ROI. Again, accountants love numbers, so the more
ROI you can show, the better off you’ll be. Remember, however, that ROI
isn’t always about the numbers, especially if you have adequate research
or feedback. For example, you don’t know whether your social media efforts
brought in any new business unless a new client tells you it did or you ask
the question. Yet, did social media make the firm more visible? You’ll
want to benchmark a survey before and after with your clients, prospects and
friends of the firm in order to know the answer to this … or you can go
on qualitative feedback. Still, the bottom line is to be prepared.

Develop Several Shoestring Programs. Your management will appreciate it when
you create a few shoestring marketing and PR programs that do not cost very
much money other than staff time. This shows you really considered the economy
and the marketplace in your thinking. Be careful, though, not to dwell too much
on shoestring low- or no-cost items. You don’t want to get a reputation
for spending little to no money because it will be very hard to ask for money
when you really do want it.

Revenue
Marketing
Budget
Less than $5 million
7–8%
$5–10 million
6–7%
$10–50 million
5–6%
$50–100 million
4–5%
More than $100 million
1–3%

Get creative. I always encourage my clients to get creative when it comes to
developing their marketing and PR budgets. You don’t want to sacrifice
reality for creativity, but the more unique programs and activities you devise,
the more likely you’ll stand apart from the competition.

Find the one whopper and take a risk. There’s probably a few “amazing”
items you want to tackle, but they may also be very risky. Here’s where
an accountant can really climb out of his or her comfortable space. Explain
why you want to fund the activity and be honest with your assumption that this
is risky. How will you know if it works unless you try it? Ask the question.
You may have to give up a sacred cow here and there, but the long-term benefits
may be worth it.

4. DON’T BACK DOWN & STAY IN THE GAME
Although we’re still in a tough economy, now is not the time for firms
and organizations to reduce their marketing budgets. Experts contend that it’s
far more beneficial to market your company in a recession because many other
firms take a back seat and don’t want to spend the money.

I hope these tips were helpful. I’d also be very interested to hear
your thoughts on how you handle budgets within your firm or company. You are
welcome to comment on this article, or send an email to my attention at scottcytron@cpata.com,
and I’ll run your responses in an upcoming blog entry on CPATechViews.com.

For more than 23 years, Scott H. Cytron, ABC, has worked with CPAs and accountants,
providing public relations, marketing and communications services, and teaches
firms how to use social media more effectively. Author of The CPA Technology
Advisor’s
“MarketingWorks” column, he tweets, and is
on Facebook and LinkedIn. Contact him at scottcytron@cpata.com.

 

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