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To manage your marketing budget, you need to know your goals and allocate your budget accordingly. It is important to set SMART goals because they will guide the breakdown of your budget. This will make you accountable to the spending decisions you make. This mindset will put you in a good position to negotiate with vendors.
Whether you are using a top-down approach or a bottom-up one, there are some things you should consider before choosing a marketing budget management strategy. One key factor is determining the role of the users. If you’re selling a service or a product that involves individual interaction, a top-down approach can be more effective than a bottom-up strategy.
Using a top-down approach to manage your marketing budget will give you more flexibility in modeling a variety of scenarios. You can vary the inputs to account for variations in sales, customer support, and marketing, and then adjust the forecast accordingly. The downside of a top-down approach is that it relies on industry standards for performance, such as a standard percent of revenue or sales. It is important to remember that in more mature markets, it is better to use data-based projections and historical data to develop marketing budgets.
Top-down budgeting tends to focus on the big picture, while a bottom-up approach begins with granular spend requests and builds to a higher overall goal. Sales pipeline metrics provide trending data and allow you to predict future growth and spend accordingly. Using scenario analysis, you can blend the two approaches.
Using historical data to inform spend decisions
Historical data can provide valuable insights for managing your marketing budget, including where and how much you spend on certain products or services. You can use this information to prioritize your vendors. By segmenting spend data by categories and geography, you can easily identify your preferred vendors. You can also create vendor reports to see how much you spend on specific vendors and categories. This information can be used to make data-driven decisions, such as consolidating vendors or cutting back on the number of suppliers.
A well-developed spend analysis can help you improve the accuracy and consistency of your data, which you can use to develop new initiatives. It also helps you make more confident spending decisions. Spend analysis can also help sourcing managers meet their cost reduction goals by providing insight into spending patterns and potential savings across multiple categories.
Data silos are common in marketing budgets, causing it to be difficult to compare and determine the most effective allocation of resources. Using historical data to make decisions about spend can help you identify areas for improvement and identify projects with a high return on investment.
While using corporate purchasing cards can improve transparency in spend data, it has its limitations. Corporate purchasing cards are often shared among employees and can take days to process. In addition, they limit visibility and create a potential for misuse. They also require you to pay them off with a corporate account.