How to Allocate and Manage a Digital Marketing Budget

Posted on by Stacie Levy

At the core of any CMO’s role is resource administration. It’s a critical aspect of generating the best results from people, time, expertise, technology and money. The most successful CMOs determine how best to allocate their resources, a task that can seem overwhelming when examining complex marketing budgets. 

How CMOs go about planning their digital marketing budget goes a long way toward determining their success. In this first of three articles, CMOs will learn to strike a balance between existing and emerging opportunities using the 70/20/10 rule to plan their marketing budgets.

Digital marketing budget allocation: a long-term exercise and an ongoing task

Fiscally responsible CMOs ensure balance. If the plan budgets for too much awareness media, the funnel gets filled, but there may not be enough budget to close sales as consumers reach the bottom. Spend too much on the bottom of the funnel, and there may not be enough to drive substantial volume to meet the goals.

Budget planning requires making tradeoffs. Marketers may want to pursue exciting new opportunities, but that means taking away from tried and true channels. Yet with an increasing number of digital channels and formats to consider, if marketers don’t try new things they may end up overfishing reliable channels and scrambling to their goals. Even if your digital marketing team focuses on a single channel like paid search, several internal (new offerings, promotions, assets, resources) and external (seasonality, interest, consumer trends) factors influence where and how to best allocate budget.

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Marketers commonly set top-line budgets annually, but digital marketing usually requires more maintenance, with quarterly or monthly allocation adjustments. High volume, automated buying in channels like paid search or paid social should be analyzed for performance and landscape fluctuations, with budget allocations being adjusted accordingly.

Start with the 70/20/10 rule and adjust

Of course, there’s no secret recipe for marketing budget planning, but new predictive modeling technologies have emerged to help CMOs forecast media performance to better allocate budgets. For those who have yet to invest in these technologies, consider the 70/20/10 rule as a good starting point.

This rule dictates that 70 percent of the budget be allocated to “tried and true” channels, 20% allocated to “safe bets” (newer channels that seem promising, even if they haven’t proven themselves just yet), and 10% allocated to “experimental” (cutting edge, unique opportunities which might provide a big payoff). The final plan may end up being 80/15/5, 90/5/5, etc., but it’s good to have a mix of tactics to keep marketing programs fresh and evolving.

Stacie Levy is senior director, marketing at Kenshoo. For more information, download The Kenshoo Guide to Budget Planning for Digital Marketers at: www.kenshoo.com/budget-guide

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