December 29, 2008

Special Report: How To Defend Your Marketing Budget, Part II: Meeting Tips + Challenging Scenarios

SUMMARY: You need to defend your 2009 marketing budget with chief executives who expect you to justify every expense. How do you cope with these budget meetings -- often tinged with challenging scenarios and office politics?

Part II of our Special Report on defending your budget offers plenty of common-sense practical tactics and tips for these face-to-face budget sessions. They include:
-Present your budget as if you were telling a story
-Bring plenty of properly labeled and numbered handouts
-Bring a calculator to be able to recalculate on the spot
-Know what’s negotiable and what’s not
During Budget Meetings

Tip #1. Don’t assume decision makers know what you know

It’s critical to educate everyone on your marketing strategies and tactics. Don’t assume they know what you’re talking about or can recall something you said months ago.

Tip #2. Tell a story

Present your budget like you would tell a story.

Perusing budgets is dry and tedious work, says Bryan Stapp, marketing consultant and former CMO for an online mortgage lender. But marketing is exciting. Maybe you’re doing something innovative that’s going to take the business in a new direction or improve some measure.

“Get people excited about it,” he says. “Tell them a story about how you plan to achieve your goal and what the desired outcome will be.” You could get more buy-in and more engagement, says Stapp.

Franke James, editor and founder of, suggests using language that makes the CEO “taste victory.” Be a little dramatic. Use a carefully crafted visual presentation to help you tell your story.

Tip #3. Reveal potential risks

Bring up the risks associated with your tactics. It demonstrates that you’ve thought things through, says Stapp. It shows that you, as a marketing manager, have determined the worth of moving forward with your spending plan based on the rationale you’ve developed.

“If I’m sitting in the CEO’s position, I want to know that you’ve thought that through because you’re asking me for money,” he says. “I have a hundred different places I could spend that money.”

You must prove that you can:
A. Spend your budget well
B. Provide a defensible ROI
C. Anticipate setbacks

Tip #4. Don’t guess if you don’t have an answer

Don’t guess a cost and never lie to the CEO about anything. Chances are you will get found out, and that could mean you will be shown the door, says Stapp.

Tip #5. Always bring a calculator

You might be a creative type who doesn’t use a calculator much. But a budget meeting is all about numbers, so be prepared to recalculate things on the spot, especially if your CEO wants to cut the budget.

Tip #6. Have plenty of handouts

Bring extra handouts of your budget, your proposal, and any creative you’re presenting. There’s always a chance that more people will attend at the meeting than the number you expected.

Tip #7. Label and number every handout

People tend to look ahead. “They will invariably derail your meeting by saying what’s this over here?” says Stapp. “You’ve got to figure out what they’re looking at.”

If a page or document is not labeled or numbered, it makes you look unprepared and not in control.

Tip #8. Enter the meeting with the outcome in mind

Go into the meeting with a positive attitude. Show leadership, says Stapp. Let people know what you’re going to talk about, what your desired outcome is and how you’re going to get them to agree with the desired outcome.

Leading the way involves:
-Stating your objectives
-Outlining what you plan to accomplish

Remember that your meeting could be the twelfth one that day. People are tired. They’re hungry. They are looking at the door. “You need to take control of the room,” says Stapp. “Set the stage for what you’re going to talk about.”

Tip #9. Be prepared to answer questions

Know everything that goes into the total expenditures for a line item. With regards to direct mail, for example, you need to know that the amount you have allocated includes a certain number of mailings, an estimate of the cost of each mailing, and the number of customers each will go to.

If a line item is a new proposal, bring examples of what it looks like and a cost benefit analysis. Make sure you go over those details a few times before going into the meeting, so you’re prepared to answer questions, says Lisa Daichendt, a marketing consultant and founder of Daimer Enterprises Inc.

Tip #10. Know what’s negotiable and what’s not

Know what you need in your budget to do your job and what you might be able to do without.

“Know what it is that you truly believe you absolutely must walk out with, so that you know what you’re prepared to negotiate away,” Daichendt says.

Let’s say an exec wants to cut an element you find critical to a marketing campaign’s success or overall impact. Tell them you would rather cut the entire campaign instead because it won’t be successful without that element. Only try this tactic if that element’s absence would, in fact, critically impair the plan’s success.

Advice on handling challenging scenarios

Scenario #1. Company leaders view marketing as an expense, not as an investment

CMOs face a considerable challenge if marketing is viewed as an expense rather than as an investment -- especially at budget time.

Tony Barr, a marketing consultant who has spent the past 13 years in B2B marketing leadership positions, says he’s faced that challenge.

“You really have to frame marketing as an investment, and the way to do that is to develop a set of metrics that help you demonstrate that marketing is delivering a return,” he says.

Start with these metrics to assess marketing:

Metric #1. Return on marketing investment

Return on marketing investment = net marketing contribution / total marketing investment

Net marketing contribution = gross margin – marketing expense

Metric #2. Marketing return on sales (i.e., net marketing contribution as a percentage of sales)

Marketing return on sales = net marketing contribution / total revenue

The return on marketing investment typically will be greater than the marketing return on sales. Return on marketing investment might be in the range of 150%; marketing return on sales might be 33% to 40%, says Barr.

“That’s okay,” he says. “Figure that out and then determine where you need to be.”

After calculating those numbers, try drilling down further to calculate the return on marketing investment for a particular brand or vertical. How does that return map out against growth opportunities for a particular brand or vertical?

During the budget meeting:

1. Link each marketing initiative to a financial outcome, if you can

Financial outcomes include increased sales or a greater number of leads in the sales cycle. Linking marketing initiatives to financial outcomes will build executives’ confidence in your strategy.

If you can’t link marketing initiatives to financial outcomes, try linking marketing initiatives to the return on marketing investment and marketing return on sales calculated earlier.

The goal is to leverage those statistics to help shift the mindset from marketing as an expense to marketing as an investment.

2. Talk about monitoring and measuring marketing performance

This also will help sell marketing as an investment. Speaking in terms, such as ROI, and using that language to frame a conversation about marketing expenditures demonstrates your awareness of the need for accountability.

Scenario #2. Defending points that aren’t directly measurable

Defending non-measurable aspects of a budget -- branding initiatives, new staff positions, or creative assets -- is difficult. But here are ways to defend two non-measurable aspects of a budget:

Non-measurable #1: Branding initiatives

o Use third-party data to prove, for example, that most experts agree you should increase spending on branding during a recession because it positions the company ahead of competitors when the economy recovers.

But don’t assume the CEO has read those articles or even cares, says Stapp. When using evidence from third-party sources, prepare to be challenged. Make sure you know who made the statement and what the source of the data is.

Find out which third-party sources your CEO values before choosing one to help defend your initiative.

o Make pre-launch and post-launch attitudinal surveys part of the budget

This shows that you’re building in a way to measure success of the branding campaign. You could also include pre-launch and post-launch purchase intent surveys.

o Point out the ancillary benefits of branding:

-boosting internal morale
-retention of customers
-reducing buyer’s remorse

Non-measurable #2. Creative assets

Let’s say the creative asset is custom photography. Instead of buying stock photography that other companies might use as well, argue that custom photography differentiates your brand from other brands.

“If you’ve ever been in a situation where the CEO wants to know why the same image that’s on your homepage is on someone else’s homepage, then you know exactly why you want to make that argument,” Stapp says. “They get crabby over things like that.”

Useful tools for defending non-measurable line items:

You may not have access to sophisticated data. There are free tools, such as Google Trends and Compete, that can provide insights to consumer behavior, Stapp says. This could help when building a case for non-measurable line items.

These tools can provide:
-impact of offline messaging to online behavior
-competitive standing
-charts and graphs easily digestible by a non-marketing audience

Useful links related to this article

Rethink Your Search Marketing Budget for ‘09: 5 Tactics to Defend Requests, Add Flexibility, Boost ROI:

SherpaBlog: Top Marketing Challenge for 2008 - Office Politics:

How Branded Cookies and Gas Card Giveaway Beat Budget Cuts: 6 Steps to 10% Lead Gen:

Overcoming Office Politics - 7 Strategies to Generate & Close More Leads:

Sales & Finance vs Marketing: 227 B-to-B Lead Generation Marketers on Office Politics (9 New Data Charts):

Six Scientifically Proven Ways to Succeed in Office Politics:

How to Get a Bigger Marketing Budget Approved: 5 Steps in 6 Months (Includes B-to-B Search Ad Tips):

How to get Your eBusiness and eMarketing Budget Approved By the CEO:

New Chart: Spending in Recessionary Economy: Travel, Contracts, Staff to Take Hits:

New Chart: Marketers Cutting Offline Tactics in Recessionary Economy:

New Chart: Two Shifts Speed Up in Bad Economy – From Offline and Brand to Online and Direct Tactics:

New Research from Sherpa: 1,763 Marketers Reveal Top Strategies for Email in Economic Downturn:

New Chart: Now is the Time to Invest in Email - Not Put It on the Chopping Block:

Google Trends:


Loud Amplifier Marketing – Bryan Stapp’s consulting firm:

Linda Daichendt’s LinkedIn profile:

Tony Barr’s LinkedIn profile (You must sign in to see it):

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