Why are we looking at this?
As we approach H2 in 2023, we’ve seen some volatility in client budgets as conservatism and caution reappear in anticipation of a potential recession. What we’ve seen over the last two years in the technology sector is this constant push/pull of budgets, on a quarterly basis, which in itself creates instability and inconsistency – both of which can be precursors of poor marketing performance. Which in turn then exacerbates budget allocation in subsequent periods.
What’s the context?
According to Gartner, budgets are 0.4% lower than last year, but still almost 3% above 2021. For context, in 2016 they were 3% higher than they are now (12.1% compared to the current 9.1% of total revenue).
What are the possible impacts?
I believe that we’ll see some restructuring of Martech spend, as companies are over saturated so it makes sense to trim. There are also constant challenges around reporting across multiple applications, and if delivery channel budgets have to be used more economically, this could also force a rationalisation of applications.
There will of course be the inevitable pressure of where that marketing spend will be allocated, so channel performance will be under scrutiny.
If you’re allocating budgets, what should you focus on?
- Be clear on what KPI per channel you should be focusing on, limit to one or two, and assess if that channel is meeting expectations. i.e. email clicks should be about awareness, social form fills lead gen into nurture etc. Set expectations clearly so that budget justification is straightforward.
- Beware of cutting out channels that are difficult to measure, it’s like baking and asking how much flavour each egg added. Connect this thinking to how you gauge success for each channel.
- Ensure you’re clear about the buyer journey through your funnel and the experience they have per channel so that you can demonstrate how activities drive towards engagement.
- Simplify what you report to the business from a marketing standpoint, sticking to marketing generated pipeline, account engagement and marketing qualified accounts.
- Use the CRO function to champion and be clear about the role of marketing in the buyer funnel (made up of the marketing and sales funnel) in order to effectively tie marketing to revenue.
For more help and advice on strategic budget allocation, contact us to speak to one of our experts.