Marketing Budgets
Marketing Budgets - Balancing Spending and Strategy
Marketing is an investment ~ not a cost. But like any investment, it must be made wisely, not wildly.
“Doing everything means doing nothing well.”
~ On Focused Marketing Spend
Why marketing needs balance
Spend more on marketing, and more people will know and trust your brand -- that much is obvious.
But companies don’t live on marketing alone.
They also have to fund:
- Production
- Administration
- Customer service
- Finance
- Sales
- Management
So even the best marketing ideas must fit within a larger economic reality.
The key question isn’t “How much can we spend?” -- it’s “How much should we spend to grow efficiently?”
Two main approaches to budgeting
Companies generally use two complementary approaches to determine marketing budgets:
Bottom-Up and Top-Down.
🧩 Bottom-Up: Grounded in real activity
In the bottom-up approach, the budget starts with the people closest to the market —
the marketing teams managing specific products or divisions.
Each team estimates:
- How much they need to spend
- What campaigns or channels they’ll use
- The expected return in sales or leads
Once these estimates are submitted, management aggregates them across departments.
The sum becomes the company-wide marketing forecast.
Bottom-up budgeting is like building a house from the foundation up --
each brick (team) contributes to the total structure.
This method ensures realism, but it can also lead to overestimation if every team inflates its needs.
That’s why it often pairs with the next method.
🏗️ Top-Down: Guided by strategic limits
In the top-down approach, the process starts from the top -- with executives setting
a company-wide marketing budget as a percentage of projected revenue.
For example:
“We’ll allocate 8% of next year’s sales to marketing.”
Division heads then distribute that pool among teams, deciding who gets what portion.
This keeps spending in line with company goals and profitability targets.
The risk? It can feel detached from on-the-ground marketing realities.
Sometimes teams receive too little (or too much) for what they actually need to perform well.
The art of balance
In practice, smart companies use a hybrid approach:
- Top management defines boundaries and long-term direction.
- Marketing teams fill in the tactical details and justify spending.
This way, strategic vision meets operational reality.
Spending smarter, not wider
Once the budget is finalized, the real test begins: how the money is spent.
A common trap is dilution ~ running too many campaigns at once, spreading resources too thin.
It’s better to run fewer campaigns, but execute them powerfully and consistently.
One strong, focused campaign can achieve what ten weak ones never will.
Effective marketers understand that attention is finite ~ both for customers and for teams.
Focus is the ultimate multiplier.
Summary
| Approach | Who Starts It | Strength | Risk |
|---|---|---|---|
| Bottom-Up | Marketing teams | Realistic, data-driven | Can inflate estimates |
| Top-Down | Executives | Aligned with strategy | Can miss local realities |
| Hybrid | Both | Balanced and adaptive | Requires coordination |
Budgeting is not about spending more ~ it’s about spending better.
The best marketing budgets are neither guessed nor imposed ~ they’re built from insight and aligned with purpose.
What’s next
In the next lesson, we’ll explore Measuring Marketing Success — The Power of KPIs -- How marketing success is measured through meaningful, data-driven KPIs..