If you own a marketing budget, you know they’re under constant scrutiny. Business leaders want to see every dollar spent contributing to tangible business growth. Yet, many organizations are guilty of making common allocation mistakes that can stunt growth, waste precious resources and obscure the actual performance of marketing.
Let’s examine five critical errors in marketing budget allocation and offer more innovative, strategic ways to spend.
1. ‘Set it and forget it’ allocations
This is a common mistake. Marketing allocates budgets based purely on historical spend or arbitrary percentages without re-evaluating effectiveness, market shifts or strategic priorities. It often means continuing to fund underperforming channels or neglecting emerging or experimental opportunities.
A smarter way to spend
If you’re operating with a fixed, annual budget, shift to a more dynamic model where the budget is regularly re-evaluated and re-allocated based on real-time performance data and evolving business goals.
Instead of conducting only an annual budget, establish quarterly budget reviews. This allows you to more frequently analyze campaign and channel performance like ROI, MQLs generated and pipeline contribution. A quarterly review prepares you to shift funds from underperforming areas to those showing strong results.
You should also consider dedicating a portion of the budget (e.g., 10–15%) to experimentation with new channels, tactics or technologies. Those that prove effective receive more significant investment in subsequent quarters, while those that don’t are re-evaluated or cut.
Finally, develop multiple budget scenarios tied to different business outcomes and market conditions, allowing for quicker adaptation. You can go with your conservative model if you’re not getting as much funding as expected. If you’re going big to bring a new product to market, you have a growth model.
2. Overspending on unproven channels
Marketing teams are criticized for being attracted to shiny toys (who isn’t?). Part of that reputation stems from pouring significant budget into new, unproven or trendy marketing channels without sufficient testing, a clear understanding of the target audience’s presence or a defined measurement strategy. The predictable result? Sunk costs and little to no return.
A smarter way to spend
Take a phased approach to new channel investment. Start small, proving value and scale only when performance metrics justify it. And pair it with robust attribution models.
Start with a minimal viable test budget for any new channel or tactic. Define clear KPIs for the pilot phase (e.g., specific engagement rates, lead quality, cost per acquisition, etc.).
Invest in or leverage tools that provide multi-touch attribution to understand how different channels contribute across the customer journey before scaling.
Before you begin a pilot program, conduct thorough research to confirm that your target audience is genuinely active and receptive to that channel.
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3. Under-investing in martech infrastructure
This is another “shiny toy” problem. Some marketing teams neglect their foundational martech tools, like CRM, marketing automation, analytics platforms or data integration tools, in favor of flashier campaign spending. When that happens, you get flashier campaigns on the front end, but manual processes, data silos, poor measurement and an inability to scale efficiently on the backend.
A smarter way to spend
Prioritize investments in martech that streamline operations, improve data quality, enable personalization at scale and provide deeper insights into performance.
Regularly audit your martech stack to identify redundancies and underutilized tools and identify critical gaps hindering efficiency or data integrity. Then develop a multi-year martech roadmap, with each proposed investment justified by its projected ROI (e.g., time saved, increased personalization, better attribution, reduced manual errors).
As you plan for new martech investments, don’t just buy the tools. Allocate budget for training and user adoption programs, not to mention ongoing support to ensure your team maximizes the technology’s value.
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4. Ignoring sales enablement and alignment
Whether sales enablement falls under marketing depends mainly on the size of your organization. Even if sales enablement stands alone and has its dedicated budget, marketing still needs to be aligned with the story sales is telling.
This goes astray when budgets are allocated almost exclusively to lead generation or brand awareness. In contrast, resources that directly support the sales team in converting leads into customers are under-funded. You need to make room for sales collateral, sales training on new campaigns, CRM integration, content that supports sales and more.
A smarter way to spend
Re-imagine your budget in a way that views marketing’s role as supporting the entire revenue funnel, ensuring sales has the tools and information needed to close deals. Include sales leadership in the initial budget planning discussions to identify their most significant needs and pain points related to marketing support.
Ensure you create a specific line item for sales enablement within the marketing budget. This could include funds for:
- Targeted sales playbooks and battlecards.
- Training sales reps on new product launches or campaigns.
- CRM integrations for seamless lead handoff and feedback loops.
- Compelling mid-to-late funnel content like case studies, ROI calculators and more.
Finally, align marketing and sales KPIs, such as marketing-sourced pipeline, win rates on MQLs, and sales cycle length to demonstrate the impact of enablement efforts.
5. Brand building is a luxury
Over the past 15–20 years, businesses got in the habit of cutting (sometimes drastically cutting) or neglecting brand building and awareness budgets in favor of what they saw as immediate, performance-driven initiatives. This was especially true during economic downturns. But this often sacrifices long-term market position, customer loyalty, and ultimately, sustainable growth for what you hope are short-term gains.
A smarter way to spend
You should maintain a strategic balance between “long-term” brand building and “short-term” performance marketing. Everyone in the organization should recognize that a strong brand lowers customer acquisition costs and increases customer lifetime value over time.
Consider allocating a significant portion (remember the 60-40 rule?) of the budget to long-term brand building like content marketing, PR, thought leadership, organic social and high-quality creative assets. The remainder (40% if you’re playing by the rule) goes to short-term activation/performance marketing, such as paid ads with direct CTAs. Remember to adjust based on your industry and specific goals.
You’ll want to develop metrics for brand health (e.g., brand awareness, brand recall, sentiment analysis and share of voice) and track them regularly alongside performance metrics.
It’s also wise to ensure that even your performance campaigns contribute to brand building through consistent messaging, visual identity, and tone of voice. Remember: high-quality creative is itself a long-term asset.
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