How To Justify Demand Generation Budget For 2019

Written by

Vikas Bhatt

demand generation budget

We are dangerously close to the budgeting season – this is the time when marketers are busy working on a new budget and finding ways to justify it.   Finding ways?   Yes. Every year, marketers across the industries, get push back on their budgets from the C suite because they analyze every component of the demand generation budget based on ROI and past results.   According to Hubspot, 27% of marketers say securing enough budget is their top marketing challenge.   Marketers have to justify every dollar that they plan to spend and that is DIFFICULT (because many marketing efforts take time to see results).   But, if it is the marketer’s job to present the budget in a manner which answers the concerns of the c-suite. In this post, we will talk about 5 ways in which you can just demand generation budget for 2019.   By the way, did you know that   In 2018, 70% of marketers say their demand gen budgets will increase and 34% say their spending will grow by more than 20% .

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1. Establish your Marketing Budget Ratio

Marketing Budget Ratio (MBR) is a good start to justify demand generation budget for 2019. It not only helps connect marketing investments to revenue but lets you benchmark budget levels to other companies.  According to emedia, to get the Marketing Budget Ratio to divide your total marketing spend by revenue. The resulting quotient is presented as a % of gross sales. When we say, it helps you benchmark your budget against companies, we look for similar companies in terms of stage of growth. The best picks are your competitors.   But, do not get swept away with the percentages as no two businesses are the same. Apple invested 7% of its revenue on marketing in 2014; while Salesforce put 53% of its revenue into marketing in the same year. You see at the difference?   So, analyze the average MBR (which gives you the idea of the market) and look into your business objectives, revenue, etc to make the decision on the percentage you want to invest back in.  

2. Know your objectives and how you will achieve it

You are not going anywhere if you draw a budget without knowing the objectives of the organization.   So, obtain all the required information (for example, new business goals, objectives and expectations from a new launch, product or campaign etc). Without knowing these details, you cannot show how marketing budget aligns with organizational goals.   And, if you did, you just lost your credibility as a marketer.   Once you have obtained the information and worked on a preliminary draft, get your sales partner for feedback – ask them whatever input they can provide on the budget plan. Sales team know a lot about your audience and how everything blends in – so their feedback is of utmost value.   Plus, sales agreement is a great thing when presenting the demand generation budget to the CMO.

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3. Show past results, ROI and talk about challenges

 It is mandatory to talk about the past results you have driven and the return on investment with demand generation strategies or efforts. So, assess everything and showcase what worked and what did not. 

You are looking at

  • Cost per acquisition
  • Customer lifetime value
  • Close rate per channel
  • Campaign specific reporting etc.

  Relevant reads – Talking about past results, ROI and challenges will reinforce the fact that you are result driven. For future analysis, define the key performance indicators (KPIs) that align with business goals.   Based on this information, you can justify changes in the budget (where there is an increase or cuts).  

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Marketers that calculate ROI are 1.6 times more likely to receive higher budgets. (HubSpot, 2016)

4. Remove unsuccessful means and tools from last year

Once you have given an overview of what works and what does not, it is important that you leave out any demand generation tool which did not give an impressive ROI.   If you keep everything from last year without justifying, it is easy to believe that you are just trying to land grab for more budget allocation. So, cut down items that were unsuccessful, highlight them and explain why. If you have a replacement strategy, mention it there.   It will help you justify demand generation budget and showcase yourself as a rationale marketer.

5. Talk about the forecasted results

So, you have made changes and put forth the idea of hiring new staff or investing in a new martech tool. Don’t leave it there – highlight what you plan to achieve with it. Let’s say, you forecast that your blog should create x amount of SALs. By investing in a new writer, you can generate x amount of content which will generate x new leads. Meaning, x% of revenue increment.   Always analyze the alternatives you have.  

  • Should I do this in-house or outsource?
  • Do I need to invest in this tool or can I do without it?
  • Should I just hire a freelancer to handle this? Etc.

Ask questions and include the most feasible options in your budget. Remember, your aim is to justify budget (not get as much as money as you can!). Focus on maximum returns, with minimum investment.   Last but not the least, don’t hard sell. Be ready to take feedback, suggestions and rework on the budget. You have a much better chance of getting the budget approved if you are open to change and hearing everyone, rather than being closed off to new ideas.   Over to you –   What are you planning to do for getting approval on the demand generation budget? We would love to hear about it.  

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