Planning next year's marketing budget: the honest version
Most marketing budgets are set the way a nervous diner orders wine: pick something in the middle, hope it is fine, and try not to think about it again. A percentage of turnover, a nudge up or down from last year, twelve equal instalments. The honest version starts somewhere else entirely — with what you are trying to buy.
EB Somewhere in the next few months, probably between the management accounts and something more urgent, you will set next year's marketing budget. If your business is like most established firms, the method will be one of three: last year's figure adjusted for mood; a percentage of turnover borrowed from an article; or whatever is left once the real costs are covered. All three produce a number. None of them produce a plan.
A tidy percentage is not the answer, however defensible it feels. The tidy percentages are how good businesses end up spending real money for years without ever being able to say what it bought.
How budgets actually get set
The percentage-of-turnover rule survives because it is defensible, not because it is right. Nobody was ever challenged at a board meeting for budgeting "what firms our size spend". But look at what the rule actually claims: that the right investment in growth is a fixed function of your current size — regardless of your margins, your ambition, how crowded your market is, or whether your marketing machinery is any good. Two distributors with identical turnover, one defending a mature territory and one launching into a new region, should plainly not spend the same. The percentage treats them identically.
The deeper problem is the framing. A percentage budget is a number to be spent. It creates a pot, and pots get emptied — on the plausible, the urgent and the well-pitched. The alternative framing is that a marketing budget is a price you are choosing to pay for a commercial outcome. If you cannot name the outcome, no formula can tell you the price.
One more thing about pot-shaped budgets: the industry can see them. Ask an agency "what can you do for £3,000 a month?" and they will find £3,000 a month of things to do. Sizing the work to the pot is how retainers get built; it is not how results are — the same arithmetic runs through marketing retainer vs in-house hire: the honest maths. Brief a task instead of a budget, and the conversation changes on both sides of the table.
Work back from the order book
The honest method starts at the other end. What does next year need to look like — in revenue, and therefore in orders? Of those orders, how many will the existing engine produce: repeat business, renewals, referrals, the founder's network? Be unsentimental here. That base is usually flatter than the forecast assumes, which is often why the budget conversation is happening at all.
The gap between the two is marketing's task: the new business that has to come from somewhere. From there the arithmetic is short. If you need a certain number of new orders, your quote-to-order rate tells you how many quotes that requires, and your enquiry-to-quote rate how many qualified enquiries. Put a realistic cost against acquiring each enquiry and you have a budget — one derived from your own order book, defensible line by line, and connected at every step to a number someone can check at year end.
The arithmetic comes with two caveats. If you do not know your conversion rates or your cost per enquiry, that is a finding, not a dead end. It means your first spending priority is measurement, and your first year's arithmetic will be estimate — refined as real numbers arrive (what to measure sets out the numbers to start collecting). And sometimes the arithmetic returns an answer you do not like: that the growth target implies more spend than the business will stomach. That is not the method failing. That is the method working. Better to renegotiate the target in January than explain the miss in December.
A budget is not a number to be spent. It is a price you have agreed to pay for a commercial outcome — and if nobody can name the outcome, the number is fiction.
Three pots, not one
A single marketing line invites a single argument, in which website work competes with advertising competes with a trade stand, and the loudest recent opinion wins. Split the budget into three pots with different jobs and different tests.
Foundations — the machinery everything else depends on: the website's ability to convince and convert, measurement and CRM plumbing, the evidence base of case studies and photography, core content. Foundation work is judged on whether it multiplies the rest — it is why the same enquiry budget buys more this year than last. It is usually front-loaded: heavier in year one, maintenance thereafter.
Fuel — the recurring spend that generates demand through channels you have proven, or are methodically proving: search, paid media, outreach, exhibitions. Fuel is judged on cost per qualified enquiry and, in time, cost per order. It is the only pot that should scale up with confidence — and the first to cut if its numbers stop working, because fuel into a broken engine is the most expensive mistake in marketing. If you are early in that journey, the sequencing in where to start matters more than the amounts.
Experiments — a deliberately small allowance, perhaps a tenth of the total, for the unproven: a new channel, a new sector, a new format. Experiments are judged on what you learn, budgeted as if the money were gone, and closed decisively. The discipline is not in starting them but in ending them.
The proportions shift with maturity. A firm starting from little should weight foundations heavily; a firm with a proven engine should be mostly fuel. What the three-pot structure prevents is the classic failure: spending fuel money on a foundations problem and concluding that marketing does not work.
The costs nobody budgets
Four costs sink more marketing plans than any agency fee, because they never appear on the budget line.
Your own time is the first. Marketing an established business needs the knowledge that lives in its senior people — for positioning, for case study sign-off, for the technical answer only you can give. Budget that time as deliberately as money. When it is not forthcoming, the work either stalls or gets invented without you, and both show.
Content is the second. Whatever the plan says — search, social, email — someone must actually produce the pages, the case studies, the photography. "We'll sort the content" is the sentence after which more marketing plans die than any other.
Patience is the third. Most channels worth having follow a J-curve: months of cost before compounding return, particularly in search and anything reputation-led. A budget that assumes month-three payback will be cancelled at precisely the moment it was about to work — the most common way good plans die. Decide at the start what you expect to see at three, six and twelve months, in leading indicators first and orders later, and hold your nerve against that schedule rather than against the monthly invoice.
The fourth is the cost of stopping and starting. Marketing bought in bursts — three months on, six months off — pays the expensive early part of the J-curve repeatedly and never reaches the cheap part. A smaller budget sustained for a year will nearly always beat a larger one deployed in spasms.
The shape of the year
Twelve equal instalments is an accounting convenience, not a plan. Let the budget breathe with the year: foundations weighted early, so the machinery exists before the fuel arrives; fuel weighted to your buying seasons, which you know better than any agency; room held back for the mid-year review, because by June the numbers will have opinions of their own.
Build the review points in deliberately — quarterly is enough — with each pot reviewed on its own test: foundations on what they multiplied, fuel on cost per enquiry and order, experiments on what was learned and what was killed. A budget reviewed against the order book quarterly cannot drift far. A budget reviewed annually, against sentiment, can drift anywhere.
A budget worth defending
Before the figure goes in the plan, put it through five questions:
- Can you state, in orders or revenue, what this budget is supposed to buy?
- Does the arithmetic connect — enquiries to quotes to orders — even roughly, from your own numbers?
- Is it split into foundations, fuel and experiments, each with its own test?
- Are your time, your content and your patience budgeted alongside the money?
- Could you sustain this figure for twelve months without flinching in month four?
Five yeses and the number — whatever it is — is a plan, and probably a better one than a larger unexamined figure. If the sticking point is the arithmetic itself — conversion rates unknown, cost per enquiry a guess — that is a solvable problem, and usually a quick one.
We are happy to sit down with your real numbers — order book, margins, targets — and work the honest version through with you. Thirty minutes, no pitch deck: hello@ninestones.co.uk.