Marketing Operations - Planning & Budgeting

Planning & Budgeting

Months of work go into building a company’s annual plan. Ideally, it is fed by functional plans that include goals, objectives, strategies, measures, and tactics. All functions require input from senior management on the company’s goals and overarching strategies. In addition, a company’s Marketing team requires input from:

• Development – what products will need to be marketed in the coming year
• Sales – what revenue must be achieved and what coverage model that has to be enabled
• Finance – the budget constraints

Throughout this process, which typically lasts for several months, Marketing Operations interfaces with the other functions, manages a timeline for Marketing input and deliverables, and helps build the final document – the Marketing annual plan. The budgeting component of this exercise can happen from the top down, bottom-up, or some combination of both. Sometimes the executive team and/or Finance provide numbers within which each function must plan. Sometimes the executive team and/or Finance will ask each function what they believe they need for the coming year. And sometimes both happen creating a tug-of-war scenario that must be worked out before agreement can be reached on the budget for the coming year. According to subscription-based reports from IDC (IDC CMO Advisory Service) and SiriusDecisions (SiriusDecisions’ Executive Edge: CMO), how much a company spends on Marketing varies, depending upon their market, the company’s size, and the company’s stage of development. For instance, large, well established semi-conductor companies spend approximately 2% of revenue on Marketing. A similar Enterprise Software company would typically spend between 6 and 8% of revenue on Marketing. And a start-up that has a highly competitive product ready to launch may spend as much as 50% of revenue on Marketing. Companies such as IDC and SiriusDecisions can help companies understand their spending relative to other companies in their position and in their market.