Four Things to Avoid in 2016 Marketing Budgets

Zach Brooke
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Key Takeaways
​​What? There are many common mistakes that can be made when setting annual marketing budgets

So what? Mistakes made while setting budgets can cause organizations to fall short of their projected goals.

Now what? Marketers should set annual budgets with awareness of common mistakes in order to avoid making them.  

Jan. 11, 2016​

Budgets can make or break organizational goals. Good budgets give marketers the flexibility they need to achieve their initiatives in a dynamic environment while retuning value to an organization. But many budget decisions can loom large as mistakes in hindsight, even though they appeared rational at the time they were made. Here are some of the biggest pitfalls to avoid when setting your organization’s marketing budget:

1. Neglecting Historical Data 

Past performance is arguably the biggest determiner of where you should be spending your marketing dollars.

“Be clear on what platforms have generated good results and reward them with a bigger share of the budget,” Rocco Baldassarre, search engine marketing consultant, and founder and CEO of Zebra Advertisement, says in an e-mail. “Keep in mind where the development of the platform is headed. If the platform is moving toward CPA bidding or pushing video [as seen in Facebook and AdWords], you can see that coming.”

2. Encouraging Static Budgets

Static budgets can create situations where companies are slow to react to new developments on ad platforms.

“The trouble with having to set budgets at the beginning of the year is that they need to get approved more often than not, and any changes have to be defended. Additionally, if the company spent more or less it impacts the budget approval for the following year,” Baldassarre says. “There might be some platforms releasing new advertising features that perform well and require reallocation. Being flexible with budget allocation helps companies jump on new opportunities faster and allocate the ad budgets more effectively.”

Baldassarre also stresses that all decision makers need to understand what key performance indicators should trigger a change in budgeting, and to consider devoting more resources to buffer new and native advertising, which can require a high degree of customization. 

3. Overcorrecting Budgets

At the other end of the spectrum, it’s possible to be too sensitive to external conditions, particularly when market fluctuations cause skittish executives to rethink marketing investments.  

“The number one pitfall with brands is freaking out with their budget,” says Laurel Mintz, founder and CEO of digital branding and marketing strategy firm Elevate My Brand.

Mintz says that she has seen many companies try to walk-back previous commitments based on the overall economy, which she strongly cautions against.   

“They say, ‘let’s have a little bit less dollar spend.’ Everyone else is having the same conversation.”

Mintz notes that staying the course when everyone else is pulling out only makes a marketing investment worth more.

4. Forgetting About Seasonality

The 30,000-foot view of spending taken when setting up a budget can create problems later in real time. For that reason, Baldassarre recommends taking seasonality into account.

“Different times of the year have different conversion rates and search volumes. This is often overlooked. Allocate your budget for the time periods that are most profitable. Getting less sales with great margins may be better than getting more sales with lower margins. Keep the customer lifetime value in mind here.”

What about nonprofits?

Budgeting for nonprofits marketing comes with its own hazards. Chief among them, according to independent nonprofit marketing consultant Nancy Schwartz​, is accepting the budget before deciding on initiatives.

“Lots of the times in the nonprofit sector, marketing leaders simply, rather than presenting what they need to accomplish their goals, accept what is allocated as part of organizational budgeting. That is what not to do,” Schwartz says. 

“One thing I want to recommend is using a budget as a tool to build understanding and buy-in among leaders in an organization,” she says. “Being able to clearly convey how much it will cost to meet these marketing goals is a very powerful in the nonprofit sector.” 

Author Bio:

Zach Brooke
Zach Brooke is a staff writer at the American Marketing Association. He can be reached at
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