A B2B CMO's Guide to Marketing Budget Planning

Learn how to align business expectations with marketing investment and get budget approval.

The Struggle Is Real

It's budget planning season; the time of year when marketing leaders simultaneously scramble to squeeze maximum results out of their remaining budget and begin strategic planning for next year. You probably love this time of year! It’s exhilarating to rally the team to sprint to the finish line and crush your OKRs. It’s exciting to get those big ideas for next year organized and down on paper (or into an amazing deck for the annual strategic planning session).

But there is a dark cloud that looms over this process. After carefully refining the strategic marketing plan and calculating the required budget to execute it using benchmarks, past actuals, and revenue modeling, you must get – budget approval. 😱

Why do marketers struggle with budget approval? Marketing budgets as a percentage of total revenue (2020-2024) have fallen significantly from 11.0% to 7.7%* according to Gartner – a decrease of 15% year over year.

Yes, that's right – 15% less budget every year. Do you think expectations went down? At all? This trend has commonly been spun positively by business leaders with the “do more with less” call to greater efficiency. Perhaps that song has been played out by now. We’ll see. .

Under-resourcing marketing has taken a toll. For marketing leaders, the “budget ask” means confidently presenting your immaculate marketing strategy to the CEO, CFO and board members complete with appendices of data, only to leave dejected by being told yes, the plan looks great, and we’ll need you to hit those bold stretch goals; but not with the resources you so carefully calculated. Without any contrasting data to justify the counter-budget, this decision is handed down from on high. And so, the CMO plods forward into the new year to do the best they can knowing the business’s expectations do not align with the investment.

The CEO-CMO disconnect has stunted growth. This situation has played out most painfully in B2B organizations, most notably private equity backed SaaS businesses. According to research from Spencer Stuart, fewer than 3% of publicly-traded Fortune 1000 boards include an active marketing leader. And Michelle Swan says “The percentage is probably even lower for Series A companies whose boards tend to be composed of founders and investors, most of whom come from a finance, product or operational background and have little marketing experience.” Such businesses have relegated the marketing strategy function to simply marketing communications.

More Data, More Problems

Why did marketing attribution fail to connect with the C-suite? To answer the demand for justification of marketing budget, tech-savvy CMOs answered with marketing attribution analytics. The logical slogan of the day was “make data-driven decisions” 🤓 so certainly armed with marketing attribution data, the CMO would win the budget approval battle. Not so fast!

Marketing attribution analytics, in our world of ever-increasing data privacy regulations and many digital devices per individual, meant the data reports came with many asterisks. First-touch, last-touch and multi-touch models; complex buyer journey diagrams that look like spaghetti 🍝; and still debatable decisions of which touchpoint had the most impact on a buyer’s decision. With all that said, perhaps most problematic, for marketing attribution analytics to be useful in the executive strategy and board-level budget discussion, it would require CEOs and CFOs to understand marketing-speak.

Don’t expect anyone besides you to be interested in the difference between a website visit, website visitor, unique website visit, or unique organic website visitor; let alone have the patients to hear the nuanced definitions of MQAs, MQLs, SALs, and SQLs.

Don’t get me wrong! Marketing attribution analytics has its place. This information, however, is best kept within the confines of the marketing team, the experts willing to pour over such minutia and forgive gaps in data, for the aim of making data-driven decisions as to how to optimize specific marketing channels and campaigns. The CMO must certainly swivel to the marketing team and nerd out over these analytics and make those data-driven decisions. But if all goes well, you won’t have to air these details in the boardroom.

2025 Prediction: Has our CEO-CMO disconnect bottomed out? Are people realizing the “do more with less” mantra has finally squeezed the life out of their marketing team? I believe so. More CEOs, CFOs and boards are seeing the myopic focus on near-term revenue, the “gumball machine mentality” has burned out marketing, frustrated sales, and annoyed customers. They’ve taken their lumps from the “churn and burn” fill the funnel lead gen model and are open to what marketing leaders have said – that you need a balanced approach to Brand, Demand and Experience.

Run Marketing Like a Business

We forgot Marketing 101! The problem with bringing marketing attribution analytics to justify your marketing budget is that you’re not speaking your audience’s language. Isn’t that Marketing 101 – know your audience and deliver the message that will resonate with them? Now, it’s understandable that marketing leaders made this mistake. Afterall, the executive team demanded data, and we dutifully complied and gave them tons of it. We essentially brought a grenade to a knife fight and nobody in the room was a winner.

So, that's a long way to say we not only need to market to our customers, partners, and employees – we need to market to our bosses. Easier said than done.

Speak the CEO’s language.What will resonate with the CEO, as well as the CFO, the private equity partners and board members? Dollars. Revenue. ROI. Many marketing leaders do this today, but only as it pertains directly to near-term pipeline or closed-won deals. Not only does this lead to marketing attribution friction of which team or which channel gets credit, but it also only tells half the story of marketing’s value. If you only report ROI on near-term pipeline and closed-won deals, you’ll either:

1. Imply only those activities directly tied to a “Lead Source” are worth anything and have the rest of your budget cut rather quickly, or
2. Put too much budget into only what can be easily measured, as opposed to what is strategically best; and so, suffer from poor performance at the end of the day.

Cherish every dollar of your budget.The CMO must first gain trust of the CEO and CFO by proving financial acumen. This starts with simply being a strong steward of the budget already given. Show just how important the business’s scarce resources are to you – track every dollar yourself so you can readily make spending decisions without being bottlenecked by accounting.

Measure marketing financial performance.Next, the CMO must level-up the “marketing ROI” conversation from delving into every channel (email, SEM, display ads), every campaign (product launch, promo) and every message (whitepaper, webinar, article); and instead focus the conversation on Marketing Financial Performance Measurement. I’ll explain.

2025 Prediction: Will a rebound of marketing budgets translate to marketing taking a seat at the strategy table? Not necessarily. That will happen for marketing leaders that stop bringing attribution gobbledygook to the board meeting, prove their financial acumen by proactively managing the budget, and clearly tell the whole story in financial terminology.

Let’s Get Down to Brass Tacks

How do you determine the right marketing budget?If it were simple, everyone would be doing it. Winning this budget battle so you and your marketing plan can reach full potential will always require great communication skills and empathy – an ability to read the room and pivot. But you’re a Marketer – that’s what you do! Let’s talk about the step-by-step approach of telling the whole marketing value story in financial terms.

And see below for some great free tools to help you out.

Step 1: Define Business Goals and Marketing Objectives & Key Results

Many organizations think they are taking this step already, but the magic is in A) are they agreed upon, and B) do you live by them, and C) do you review them regularly? Insist upon having defined company goals from your leadership before defining, let alone committing, to marketing objectives. Using the OKR framework, associate one or more Key Result that is clearly measurable; and that leadership agrees is representative of completing the Objective.

Step 2: Assign Value to Outcomes

We need to go a step further than documenting OKRs as a simple “yep/nope” achieved or not. If you stop at Step 1, you might knock them all out and the CEO and CFO will still shrug their shoulders and say “yeah, but what financial impact did that have on the business?”. These Key Results, or Outcomes, are worth something to the business. You need to pull that out of them one way or another. Some outcomes (new customers, pipeline) have clear financial value. Others will require more thought and discussion to find out “what is this worth” to the business. Here are some examples of figuring the Equivalent Financial Value (EFV) of marketing outcomes.

Step 3: Create Your Marketing Strategy

You likely have some groundwork laid here. Naturally, you’re thinking about this all year long as you pivot this year’s marketing strategy and execution. But now that you’ve defined business goals, aligned marketing OKRs, and have a consensus on their financial impact, now define your strategy. I won’t belabor this point – your professionals! 😊 How to define a marketing strategy is a different topic.

Step 4: Calculate and Reconcile Your Marketing Budget

However, you should have a strategy pretty well nailed down to base your budget logic off of. First, gather some relevant benchmarks from research reports as a gut check. Next, calculate your budget using a “top-down” outcomes approach. This approach is a logical “if this, then that” model of what your budget should be to support the expectations. Third, calculate your budget using a “bottom-up” expense approach. You know what you need to buy and how much it costs based on previous years. Accounting for the changes in your strategy, build up this inventory of costs.

Lastly, reconcile these three models. Where’s the delta? Why are they different? Now reading the room (know your executive audience), smooth these differences out into your proposed budget.

Step 5: Present The Plan in C-Suite Terms

You’re ready. Business goals? Articulated. Marketing objectives? Aligned. Key results? Assigned financial value. Marketing strategy? Slick. Budget? Defined top-down, bottom-up and backed by benchmarks.

So, you got budget approval. Don’t blow it! Here’s how you manage every dollar to maximum results.

You’ve just got the budget you asked for. Pick your jaw off the floor and get to work. It’s time for your marketing team to shine. Marketing budget approval cannot (read that again… cannot) be left up to accounting. Sorry, they’re great but they have no idea what all your expenses are about. Insist on managing your budget and reconciling their reports with yours.

You need to manage your expenses so that you A) always know exactly what you have left, B) can have strategic decisions with the C-suite when the business wants to add fuel to the fire or claw back cash, and C) accurately map expenses (investment) to results (return) and confidently report ROI.

Always be ready to know how much budget is spent, how much is tied up in contract commitments, how much is pinned for use, and what’s totally fluid. This alone will build your street cred with the CEO, CFO and board and you’ll find next year’s budget discussion much easier.

Telling the whole marketing story in ROI terms will be icing on the cake. 🎂

You're Going to Need Some Tools

Download our free Marketing Goal and Budget Workshop toolkit. This will help you systematically:

1. State business goals.
2. Align them to marketing objectives and key results.
3. Seek agreement on business variables and outcome financial value.
4. Calculate budget in both top-down and bottom-up models.
5. Negotiate budget and expectation alignment.

Download the Marketing Goal and Budget Workshop Toolkit

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