In a world with diverse global personas, marketing innovations amid rising business demands, having a clear, well-defined structure is a no-brainer. It aligns the processes, technologies, and people in an enterprise is a no-brainer. Marketing operations are taking center stage as a means to address challenges.
Gartner’s State of Marketing Budgets report highlights the drop in marketing budget as a percentage of revenue from 11% in 2020 to 6.4% in 2021. This sharp downturn represents the lowest marketing allocation since Gartner started its Annual CMO Spend Survey.
Despite budget cuts and increased marketing complexity, how can you ascertain or allocate a budget to get the best value for your marketing operations? To get an answer for this, you can consider the following:
- How much visibility is enough to drive conversions for your brand?
- What marketing technologies do you need?
- Just how much should you spend to generate meaningful ROI?
- How can you leverage data and technology to optimize marketing budgets?
This article helps you shed light on setting up a budget for marketing operations to deliver the best value for your business.
What Is Marketing Operations?
Before delving into exactly how you can budget for marketing operations, let's have a look at what marketing operations entail.
Marketing operations is an umbrella term that encompasses the processes, technologies, people, and data to deliver the most efficient and effective marketing. Activities under marketing operations include skills for digital content creation and maintenance, demand generation, and performance measurement.
The role and responsibilities of marketing operations extend beyond traditional marketing skills. While marketing operations team members must possess traditional marketing skills such as creativity and strategic thinking, they should also demonstrate technical and analytical skills to manage the growing volume of data and technology marketing departments handle.
Marketing Ops aligns and optimizes the entire marketing process, from data management and reporting to strategy implementation, providing a solid platform from which marketing initiatives can be built and equipping marketers with the tools needed to succeed.
Marketing Ops leaders must optimize their B2B marketing automation platform to ensure efficiency, effectiveness, and consistency, especially since it is a critical piece of the operational Martech stack. The same applies to marketing campaigns or digital asset management platforms and something as fundamental as a sales enablement platform.
Why Do Enterprises Need to Budget for Marketing Operations
According to Gartner, “marketing ops leaders must rely on an effective B2B marketing automation platform to help ensure efficiency, effectiveness, and consistency.” On account of this, it’s crucial to structure a sufficient budget to help improve sales, brand awareness, and reach.
The following highlights some of the reasons why you need to budget for marketing operations:
Clear Picture of the Entire Marketing Process
A marketing budget has a big impact on the success of any business. But that’s not enough. A well-designed marketing budget will give you a complete overview of all marketing operations, tools, and processes. That’ll give you a better opportunity to identify and plug gaps within your Marketing Ops team.
Highlight Sales Funnel and Marketing Opportunities
Building a marketing operations budget will help you outline the sales funnel for your product or service. You'll learn about customer personas, how customers find you, what information they need before purchasing, and what factors influence their decision. All of this will play a crucial role in delivering an effective marketing campaign.
Identify Gaps and Weaknesses by Optimizing Operations
Marketing operations often involve a variety of Martech tools and platforms. These include automation platforms, CRMs, CDPs, CMSs, and more. In addition, a marketing operations budget will also cover web hosting costs, subscription fees, sales taxes, agency and consultants fees, content outsourcing fees, and more.
Since a marketing operations budget paints a clear picture of the entire marketing process, you can swiftly identify areas for improvement and devise new sales strategies and initiatives. As most Martech tools are cloud-based, the responsibilities for optimizing cloud costs and usage also falls under the purview of a FinOps team.
Get Better Value for Investment
Choosing the right tools, channels, and strategies to achieve the best value for a given budget is essential to business success. You can allocate your marketing funds more effectively with a marketing operations budget plan. It can help you determine how much to devote to each marketing strategy, which strategies fit your budget, or what digital agency packages are suitable for you.
Best Practices for Developing a Marketing Ops Budget
The following are best practices for creating an ideal marketing operations budget:
Establish Marketing Ops Goals
If you intend to set a marketing budget, your marketing plan must include both short-term and long-term marketing goals. The purpose of marketing is to either build a sales funnel or generate direct sales that increase gross revenue. But first, set clear goals and expectations.
Remember that marketing, in general, doesn’t typically generate sales right away, so you need to be as flexible as possible in defining and modifying your goals as you go along.
Establish Clear Goals and Benchmarks
Budgeting is crucial in preventing future problems. An established budget helps in setting realistic goals that help the business succeed. You can lay out clear expectations of your marketing team based on the budget for marketing operations and how much revenue you need to generate to justify their efforts.
In a similar fashion, you should identify the number of sales you need to meet your revenue target.
Identify Sales Funnel and Buyers' Journey
One of the first steps in creating a marketing Ops budget is to establish your consumer journey. This will enable you to understand how potential customers will engage and respond to your marketing. The key questions to ask here is:
- How and where can customers discover your products or services?
- What information do they need before making a purchase?
- What is your lead generation rate
- What is your conversion rate?
- How much does it cost to generate new leads and convert them to customers?
- What is the average number of monthly site visits?
- How much revenue does each lead typically generate?
By analyzing your business's sales funnel, you can identify where your digital marketing efforts can contribute to preventing more people from leaving the funnel. Let's say your company has a high number of potential customers at the consideration stage, but fewer reach the decision phase. Even though some decline is natural, the decline should not be greater than expected.
Identify Marketing Channels and Technologies
The Marketing Operations team oversees multiple marketing automation platforms, such as the website, e-commerce platform, content management system, customer relationship management platform, and integration with other related technologies.
Also, they are responsible for product and content analytics, SEO, brand awareness campaigns ads, A/B testing, social media operations, and ABM marketing.
That is without factoring in the growth of the Martech landscape from 150 solutions and products to 7019 in 2019. If you’re a Marketing Ops leader, it’s crucial to identify and optimize the best and most effective marketing technologies for your operations.
Get Clear Overview of the Existing Marketing Spend By Tracking Marketing KPIs
Before preparing a marketing budget, it’s critical to get an overview of the current marketing expenses. With all companies—no matter the size or industry—facing steep marketing budget cuts, gathering data on all processes, technologies, and spending reports will be essential in analyzing areas for optimization and improvement.
In addition to these, you want to leverage marketing analytics tools to measure, manage, and analyze marketing performance against existing budget spend. With marketing analytics, marketing Ops leaders can reduce waste in online marketing and increase efficiency. Beyond this, marketing analytics helps to provide deep insight into customer buying habits and trends.
Calculating Marketing Operations Budgets
Companies use a variety of methods to develop marketing budgets. In the past, setting a marketing budget by a percentage of revenue was the norm. However, companies are now embracing alternative approaches such as goal-driven budgeting. Below are some methods for calculating your brand's marketing budget:
- Top-down approach: If you use a top-down budget plan, you don't have a figure for how much you should spend each quarter or year. In this case, the management gives the Marketing Ops team a number and instructs them to stick to it.
- Revenue-based model: Reviewing your annual revenue records and setting aside a percentage of that is one approach to determining the entire marketing budget. For instance, some businesses may spend 6.5% to 8.5% on marketing. Newer businesses might allocate even more for marketing.
- Competition matching: You can structure your budget to match those of your competitors based on previous research.
- Goal-driven: With goal-driven marketing, the marketing and management teams set goals (for example, a certain number of marketing qualified leads) and a budget to help them achieve them.
Marketing Ops Costs: Invest Wisely, Invest Effectively
A marketing operations budget has a direct impact on the strategies and success of a marketing campaign. That is because it encompasses several essential steps and processes. These steps include identifying your enterprise needs, setting marketing goals, building a sales funnel, selecting marketing technology, and optimizing marketing performance.
When starting your marketing operations journey, it’s essential to enable agile marketing. By embracing flexibility while tracking and optimizing marketing performance metrics, you can better select the best-of-breed platforms that suit your budget and needs.