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  • Ruth Napier

Back to basics - How to trim your marketing budget

Updated: Feb 15

Green neon sign with wording "Yes to all"

As belts begin to tighten, expenses and budgets are coming under greater scrutiny. Your organisation may simply want to rein back on unnecessary expenditure or may have more pressing financial reasons meaning bigger cuts are needed to reduce its outgoings: in either case if you’re responsible for your firm’s Business Development & Marketing then you will want to make sure you can meet this challenge. It's no longer ok to say yes to everything.

You may feel it is a tall order, and particularly if you are newly promoted, have recently moved into a new sector or have been at your organisation for a long time.

The importance is in being prepared, knowing where you can cut back and what you need to protect. So let’s tackle the situation where you have been asked to reduce your external budget, using a step by step process and a robust framework to help you make the right decisions.


How to reduce your marketing budget

1. Depersonalise the situation.

This is likely to be a request and will come with an expected time horizon that is shorter than you would like. So firstly, remember It’s highly unlikely that just BD & Marketing are being asked to cut back in isolation. Understand the commercial imperative and the external and internal factors creating the pressure which means costs need to go down. Of course if it seems like BD&M is being treated unfairly, then you might want to go into battle.

2. Understand what’s being asked.

Is it external budget only, or does it include employee costs? Is it a % reduction or a fixed number? Is it a one-off or the first in a series of cuts?

3. Marshal your evidence.

If you haven’t got the right systems and processes in place to assess the effectiveness of your BD & Marketing activities then don’t resort to guesswork. Even a partial picture of ROI is better than none at all. However beware of the temptation to only hold on to activities you can track the impact of.

4. Review your marketing objective(s).

  • If your plan and budget had multiple objectives, verify if they are all of equal priority.

  • If an objective is the same as when you created your budget then move to step 5.

  • If an objective has changed then advance to step 7 as you will need to start from the beginning.

  • If you had no clear marketing objective(s) then you will need to agree it before progressing: without it’s impossible to decide which budgeted activities to cut back. If you are pressed for time, then you may choose to simplify by using 3 general objectives of enhancing/maintaining/defending either I) reputation, II) relationships, III) revenues.

5. Categorise your activities.

Run through and categorise your activities into one of three categories:

“Must have” “Important” and “Nice to have”.

Use a spreadsheet to assist with itemising your activities, the budget for each and the objective it relates to. If you have not already clearly aligned each activity to an objective, then this will help you determine where the activity sits.

6. Rationale.

Document the reasons for your categorisation. For any activity which you have in the “Must have” and “Important” categories, include the risks and costs of either reducing or ceasing that activity. Remember that costs may include missed opportunities. Some activities may not be effective if they are undertaken at a reduced cost: there may be relationship or reputational issues that negate the benefits.

This analysis may have provided you with everything you need to make your decision or recommendations. However, if you end up with too much budget in the “Must have” category then go back to reviewing and prioritising your objectives and then refining your rationale.

7. Tabla rasa.

This can be a useful complement to the process above, particularly if objectives are absent or where there are opportunities to take advantage of in reshaping or challenging your prior thinking. Accountants often refer to this as zero based budgeting.

Start with the revised notional budget figure as a guide and build up your activities one by one, focusing on any "Must have" ones first. If there is room, move to "Important".

Taking this bottom up approach can help you keep focused on what the most important activities are to ensure you can deliver the outcomes that are needed.

8. Measure and report.

Once you have agreed your revised activities and budget, be sure to include how you are going to measure and report on success. These will form your new key performance indicators (KPIs). Having clear ways to demonstrate value will help you improve your ability to plan and budget and will help you ensure the right level of investment into BD & marketing continues even when money is tight.

A bigger challenge? - time to get help

If the scope includes your internal resources too, then you face a bigger challenge and one that can be harder to remain objective over. The bottom up (tabla rasa) approach may be easier to identify the skills, expertise and experience needed within your firm, and also the costs of changing or outsourcing these. There will also undoubtedly be partners within your firm with very marked opinions about individuals they work closely with.

Navigating to the right outcome may be best achieved by bringing in an experienced marketing consultant to advise. They will bring clarity, will help you avoid inadvertently sabotaging your marketing efforts, mitigate any damage to reputation, relationships or revenues and will keep the future of your business firmly in their sights.

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