Setting 2021/22 Marketing Budgets

I recently spoke to Mark Stolten, the inventor of a flexible brick that is compatible with Lego. He reminded me how businesses are cash intensive when your intent is to prioritise for growth.

With small companies, it's all about cashflow. When can I put this extra resource in which I desperately would like to have?" Mark Stolten - Flexo.

🧠 Which made me think...

How does prioritising cashflow impact marketing investment? 

Maximising for strong cashflow might be what your accountant desires... but it can reduce customer acquisition opportunities, especially in a growing market.

Marketing budgets dropped in 2021 significantly according to Gartner's CMO Spend & Strategy Survey.

In 2020, New Zealand had a moment with shop local yet it was also a cautious time when it came to spending as the outlook in March 2020 was uncertain? I decided to treble our marketing spend and optimise for acquisition not short-term cashflow... once it was clear that this was a moment for growth.

Did you slow your marketing spend or increase it during 2020?

Calculating what you might spend on marketing can be answered with two broad questions and one direct questions:

What percentage of your marketing budget should make your a direct return? ie: $1000 in, you can track exactly $2,800 out.
What percentage of your marketing budget should be for brand building? (with no return expected) ie: $1,000 in, no trackable return.

3. How much of your marketing budget will be spent outside of Facebook / Google? ie: 10%...20%... 30%?

​Marketing Budget Setting Resources​

I did some digging on styles of marketing budget setting and found these three resources you might find helpful...

Why Marketing Flywheels Work by Rand Fishkin
Marketing Budgeting amid Uncertainty by Google (especially point #2 show that marketing is an investment not an expense)
Gartner for Marketers - the state of marketing budgets

...and three practical steps you can take from these articles.

How To Set Marketing Budget. Three Ideas.

1. Evaluate which marketing flywheel is the best fit for the marketing skills in your business. Is it a 'content+seo' flywheel... 'boulder-pushing marketing' ...'social+influencer+ad' flywheel...'press+word of mouth' ....or 'freemium' flywheel? (read this article by Rand)

2. Do a costing exercise of the resources needed to run the flywheel you've chosen for the next 12 months.

3. Decide what % of your marketing budget is brand driven without direct revenue goals and how much is performance driven with conversion revenue. (read this article by Wes Kao)


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