How to Manage a $MM+ Marketing Budget... 💰

Hey 👋🏼 Chris here…

Happy Monday to the thousands of motivated marketing professionals, startup founders, and business owners who are a part of this community.

There are a few principles I’ve used in my career as a marketing leader to help dial in focus for the marketing strategy. One of them helped to guide me on how to manage a multi-million dollar annual budget.

Today’s issue takes around 3 minutes to read. As always, if you have any feedback or questions I would love to hear. Feel free to send me a text or a DM on TikTok.

Enjoy!

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Steal this framework to impress your boss.

Marketing leaders use first principles to help establish our go-to-market plan.

These first principles help us define the following:

• Which marketing channels to prioritize
• How to establish goals for the organization
• How to distribute marketing budget
• How to position the brand
• Who to hire

So what are these principles?

Let’s talk about one of them:

The success of any given marketing channel is some function of velocity, efficiency, and scalability.

🚀 VELOCITY

Velocity in this context is defined as the “Time from taking the first action to achieve the desired business outcome.”

I would argue that the ultimate desired “business outcome” for any marketing function is likely sourced revenue. This may not be the case if your company is pre-launch or you have a freemium SaaS model. In those cases it may be lead generation.

If we can identify how long it will take to execute a program and achieve a given result we can rank each marketing channel by shortest to longest.

It does take experience to understand how these program dynamics work. If you don’t have that experience don’t worry! That’s what communities like MarketerCrew are here for! 🙂

💰 EFFICIENCY

Efficiency is defined as “The total program cost divided by the total number of customers acquired.” Or simply put — Customer Acquisition Cost (CAC).

I recommend calculating CAC by channel and also globally. Here is an example of what I would include in the cost calculation of an SEO program:

Costs:

• Content Contractors/Employees
• Technical SEO Contractors/Employees
• Backlink Building Contractors/Employees
• Technology Costs
  

Divide that total by the number of customers acquired through organic search in a given time period. That’s your SEO channel CAC.

When crafting your marketing strategy be sure to think about program efficiency and what you can expect the program costs to be. Rank the channels by most to least expensive in a 6-12 month period.

📈 SCALABILITY

Scalability is defined as “The amount of potential contribution the channel can provide to the business outcome.”

The best way to approach this analysis is to ask the question - “Does this channel have limited or capped demand potential?”

For example — There is only a certain amount of search volume for a particular keyword in a given month. We can measure that by using a tool like SEMRush or Ubersuggest.

A channel like a partner program, for example, has incredible scalability since it leverages network effect distribution and fuels word of mouth demand.

SO WHAT?
Once we understand how each of these variables interact with our marketing goals and constraints we can make intelligent decisions about where to prioritize.

Here’s an example:

Below is a hypothetical example of how I would plot these variables into a graph and use the data to inform strategic decisions.

This is not a universal representation of these channels… Just an example. Your situation will be different.

*Size of the bubble represents the total contribution the channel has to acquisition in a given time period.

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