Forecasting Helps Marketers Set Digital Budgets

Posted on by Stacie Levy

This is the third installment in a series on digital budgeting. Click here for the first part and here for the second article.

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 its success. We’ve already addressed how the 70/20/10 rule provides a good baseline for a marketing mix and how internal and external factors influence budgeting decisions. This final installment focuses on the importance of goal-setting and forecasting exercises.  

Goal Setting and Forecasting

Goal setting establishes the results a marketing team hopes to achieve with its dollars, making it the most important exercise for budget planning. Establishing unique goals each budgeting cycle helps prevent CMOs from falling into a trap of complacency (“We did X last year, so let’s just do X again”). Effective marketers continuously raise the bar of success and wisely use data to utilize and fine tune the budget to help tip the balance between a good or bad year.

As the steward of the budget, CMOs should plan toward the goals they feel most responsible for achieving. As a best practice, focus on a few core goals. CMOs should have a solid set of prioritized objectives and a clear understanding of how to measure their success.

With goals set, marketers need to begin forecasting what the expected marketing efforts will achieve. Predicting how various opportunities will help achieve goals helps ensure good decision making and enables marketers to explain their final course of action to their marketing team or the executive team. Many marketers do this informally, but structure and data can help.

Combine recent historical data and marketer expertise to define the data set to be used for forecasting. Year-over-year data usually works well, but sometimes what happened a year or two ago may be too outdated. First-hand experience becomes increasingly valuable here. If a team member has run any significant marketing against a specific opportunity, they should have insights into expected costs and returns; most good marketers can rattle off metrics related to the ROI and CPA of their most utilized channels.

The forecasting exercise should conclude with a set of data tables that clearly show how much return the marketing dollars allocated to each goal should be expected to generate. When marketers forecast accurately, making budget choices should be easy.

Marketers need a mix of art and science to forecast, especially when unfamiliar with how a particular marketing channel will perform, but technology can help. Predictive modeling helps marketers better forecast media performance by ingesting all of the relevant data (historical information and quantifiable considerations) that can affect future performance and calculating future results. Predictive modeling tools are much more sophisticated than just five years ago and now help analyze huge datasets to better understand where to invest budgets.

With or without predictive modeling technology to assist them, effective goal setting and forecasting can help CMOs establish fixed and fluid marketing budgets that balance the known and unknown and set the stage for success.

For more information, download The Kenshoo Guide to Budget Planning for Digital Marketers at:

Stacie Levy is senior director, marketing at Kenshoo


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