Budget Allocation for Marketing

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Jeremiah and Ian sound off on Web marketing budget allocation. I guess I could add some value since I am currently going into a budget cycle and am the VP of Marketing for a ~$140M software company.

I always prefer to talk in % allocation and follow 3 basic principles of marketing budget allocation:

1. Don’t peanut-butter your budget. Marketing folks tend to do this in most cases. Spend 10% on SEO, 10% on PPC, 10% on Social media, etc. I dont like it because it assumes they are not willing to take a risk. I dont buy the argument that “you need to be everywhere since you dont know what’s going to work”.

2. Web Marketing is a part of our budget, but its a only a part. Marketing budgets should focus on the “preferred” outreach method of the customer / prospect. Since most of our customers still seem to prefer face to face interaction, we spend more on events and lunches than web marketing. We do offer online mechanisms, but overwhelmingly our customers prefer the “meet and greet”. This might change in the future and we are willing to change it, but right now they “prefer” the mechanism they are used to.

3. Experiment. I have a guideline with our spending. Spend 10% on “one risky new mechanism” so you can experiment – high risk, high reward scenario. 90% of the budget tends to focus on “proven” mechanisms.

So how does our marketing budget look (this does not include headcount):

1. Lead Generation: 45%

  1. Online & Web (includes PPC, Email marketing, list management): 23%
  2. Social Media (mostly blogging): 2%
  3. Promotional syndication: Whitepapers: 15%
  4. Web seminars, independent research sponsorship: 5%
  5. (Traditional) advertising – 0%

2. AR & PR: 25%

  1. Analyst Relations: 15%
  2. Press Relations: 9%
  3. Customer reference program: 1%

3. Marcom: 5%

  1. Content creation (whitepapers, datasheets, etc.

4. Events: 25%

  1. Industry events (trade shows, seminars, conferences): 20%
  2. Customer events (lunches, baseball games, etc.): 5%

Comments welcome. Do you think we are doing it right? What would you change?