Studies show the poor state of both marketing strategies and marketing budgets in the eyes of today’s business leaders, but for my money, the state of marketing budgets is worse than marketing strategies. The way marketing budgets are typically developed breeds the wrong focus, the wrong conversations, and, ultimately, the wrong results. The sole focus of a marketing budget should be to determine how much it will cost to achieve the current business objectives. That almost never happens. In fact, show me a budget that predates this article and clearly shows which activities will be employed for each objective and how much those activities will cost per objective, and I will eat my hat.

Because the effectiveness and quality of your budget should rely so heavily on your business objectives, make sure to check out the last article, “A Business Leaders’ Guide to Unusually Successful Marketing Strategies.” It goes into some detail on articulating your business objectives.

Most marketing plans and budgets are a tireless list of marketing “strategies” not updated, but reused yearly to show the same list. The whole process is not very helpful, especially given the frustrated state of marketers and business leaders. Is there a better way? There is and it’s easy to do. Take a look at the image below, and consider how much this simple format change shifts how your team considers spending money and their time.

This simple formatting change can go a long way toward eliminating many of the challenges business leaders consider most significant in marketing. It requires marketing teams to consider their activities more carefully, which makes it easier for them to see misalignment. It also gives an at-a-glance view of the expense required for marketing to help hit your organization’s objectives. Decisions become much more clear.

If you do not have any way to connect your marketing KPIs to your business KPIs, it should be mandatory that there is at least a summary explanation of the projected results using marketing KPIs and how those results will impact the business objectives. That should be done for every business objective. This is a minimal litmus test to ensure business leaders and marketers are focused on the same things. Seriously, this simple format change will be transformative.

We cannot discuss marketing budgets without discussing budget allocation. After all, this is the high-level key to the whole thing—where your money is going. I want to make sure the budget allocation topic is most helpful to you, the ship’s captain, without talking tactics. So, I will present this in three common elements the majority of marketers use to determine how their marketing budget is spent.

• Channel distribution – According to Marketing Week and other sources, a typical channel distribution split looks like this:
  1. Digital Channels: A substantial portion of marketing budgets is dedicated to digital channels. In 2024, 57.1% of paid media budgets are allocated to digital media, including search (13.6%), social media (12.2%), and digital display advertising (10.7%).
  2. Offline Channels: Despite the digital focus, offline channels like event marketing (17.1%), sponsorship (16.4%), and TV (16%) still receive considerable investment.

My primary concern for every company is that the reasons why this split is standard are not exactly clear. It’s one of those “this is the way it’s done” kind of things. The reality is that the mix might need to be different for every company, every business unit, and every objective. I would like to go on record to say that you should push your team to continually improve here because they are missing a lot of opportunities.

• The 70-20-10 theory – Because this theory, where 70% of the budgeted money goes to what seems to be working, 20% goes to new efforts, and 10% goes into experimenting, allows for experimenting and new approaches, I am a fan. Where companies who are smart enough to employ this method go wrong is not having a process in place to adjust as needed during the budget period. The reason this is important is because everything from marketing tactics to audience preference can change in all kinds of different ways during the year. I would hate to see you reviewing a report that showed the 10% experimental stuff was outperforming the 70% standard stuff, but nothing was adjusted for the whole year. Next year that may change again, and you will miss many opportunities.
• Flipping the script—Now that we are grouping business objectives and their respective marketing activities, we have another opportunity to flip the script. Do not apply the same channel mix formula across all of your marketing efforts. Instead, have your team determine the distribution more granularly per business objective. Then, apply the 70-20-10 approach to the marketing efforts for each business objective.

This, my friends, is how you build a highly tunable marketing machine.

• Request a re-format of your budget template to couple business objectives with the marketing activities proposed to impact them.
• Be clear on how those activities are projected to impact the business objectives.
• Ensure that the budget distribution and plan of attack for each objective are tended to with care.
• Allow room for trying new things, ensure your marketers can act on success, and dial in to optimize the system.