In a competitive business landscape, managing the money you spend on marketing is more important than ever – and that’s exactly what marketing spend management is all about.
Marketing spend management is all about planning, monitoring and optimising how you allocate your marketing funds.
In this article, we’ll cover what marketing spend management is, why it’s important and the 5 key components of marketing spend management.
What is marketing spend?
Marketing spend refers to the total amount of money a company allocates to its marketing activities over a specific period.
Essentially, marketing spend is the money a company uses to promote itself and its products and services.
Traditionally, marketing spend largely went to the printing and production of physical collateral, advertising placements in print and on screen, employee salaries and travel expenses. Now, however, your marketing spend likely goes to a variety of digital advertising costs on top of your traditional marketing efforts.
Some of the most common activities covered by marketing spend include:
- Branding (visual identity, logo design and tone of voice)
- Advertising (online and offline)
- Content creation
- Business cards
- PR campaigns
- Event promotion and hosting
- Social media marketing
- Influer collaborations
- Marketing automation tools
- Agency and consultancy fees
And much more. A lot of effort goes into a strong marketing strategy, and that only emphasises the importance of funding it properly.
What is marketing spend management?
With so many activities, it probably comes as no surprise that the biggest challenge for marketing managers is to stay on top of all of these different costs – and that’s exactly what makes marketing spend management so important.
Marketing spend management is the process of effectively planning, tracking, analysing and optimising the funds allocated to these activities.
Put simply, marketing spend management helps you ensure your resources are used effectively and that you get the most out of every pound you put towards your marketing efforts – and what company doesn’t want that?
The benefits: Why marketing spend management is so important
Staying on top of marketing spend may be challenging, but it’s well worth the effort. Marketing spend management comes with a variety of benefits, including:
- Maximised return on investment (ROI): Marketing spend management helps you get the most value out of your marketing budget – put simply, you’ll achieve more with the same amount of resources.
- Less waste: When you know where your funds are going, it’s much easier to avoid wasting money on low-performing campaigns or channels.
- Better decision making: Marketing spend management gives you access to real-time data and historical performance data – and both help you make faster, more informed decisions about where to invest your money.
- Adaptability: With your finger on the pulse of your marketing spend, you can respond to changes in the market or customer behaviour more effectively and reallocate your resources where needed.
In short, there’s quite a lot to gain from investing in marketing spend management – and that’s why we want to help you ensure you’re on top of yours.
5 key components of marketing spend management
Managing marketing spend is all about monitoring how your funds are distributed across channels and campaigns, assessing how they’re performing and making adjustments to boost their effectiveness.
Marketing spend management can be broken down into a number key components. To make it easier for you, we’ve narrowed them down to the five most important ones:
1. Budget allocation
Budget allocation is one of the most crucial aspects of marketing spend management. Put simply, it’s the process of distributing your marketing budget across different channels, campaigns and initiatives to get the most out of your marketing efforts.
To effectively allocate your marketing budget, you need a clear understanding of your business goals, target audience and the performance history of your past marketing strategies – something marketing budget management can help you achieve.
Budget allocation also includes:
- Aligning marketing spend with strategic goals – e.g. customer acquisition and retention, brand awareness or market expansion
- Selecting marketing channels based on which channels will likely give you the most value for your money
- Prioritising which campaigns get the most funding based on factors such as importance, seasonality and potential impact
2. Tracking and monitoring
If you want to make sure your budget is used efficiently and aligns with your original plan, you need to continuously track and monitor your marketing spend.
This includes:
- Real-time tracking of marketing spend – typically done using tools such as marketing analytics platforms, dashboards and financial software
- Analysing metrics – e.g. cost-per-click (CPC) or cost-per-lead (CPL) metrics – to track cost efficiency and see if campaigns are delivering without breaking your budget
- Monitoring your budget to prevent overspending on channels that may not deliver the results you’re after
3. ROI analysis
Return on investment (ROI) analysis is all about calculating how much value you’re getting from each marketing initiative. Put simply, it helps you measure how much revenue or business value your marketing pounds are generating.
ROI analysis focuses on a variety of key performance indicators (KPIS), including:
- Customer acquisition cost
- Lifetime value
- Lead conversion rate
- Sales growth
The goal is to compare these outcomes against your marketing spend for each campaign or channel. Once you know which channels provide the highest ROI, you’ll be able to make data-driven decisions to invest more in high-performing channels and less in those that aren’t giving you what you’re looking for.
4. Optimisation
In the context of marketing spend management, optimisation refers to the process of adjusting your marketing spend and strategies to improve efficiency and performance based on the data-driven insights you’ve gained from your tracking, monitoring and analyses.
If certain channels or campaigns do better than others, you’ll want to shift more of your budget towards them. Conversely, if you notice a campaign or channel underperforming, you should reallocate your spend elsewhere to prevent waste.
We mentioned marketing automation tools earlier – this is exactly what they’re used for. Marketing automation tools can help you optimise your spend by automatically adjusting budget allocation and audience targeting based on real-time performance data. In short, automation tools are invaluable for optimising your marketing spend.
5. Forecasting and reporting
An essential part of marketing spend management is preparing for the future. This means planning future marketing budgets – and that’s what forecasting and reporting are all about.
Using historical data and performance metrics, you can forecast future spend needs and plan for seasonality, prepare for increased spend during key sales periods and predict the potential impact of new product launches.
Forecasting and reporting include:
- Planning for multiple budget scenarios to prepare for market fluctuations or changes in business goals
- Regularly reporting to stakeholders how your marketing budget is being used
- Analysing forecasts and reports to make better decisions about long-term strategies and spending priorities
Wrapping up
Marketing spend management is crucial to ensuring you get the most value out of every pound you invest in your marketing efforts.
By combining data-driven insights with careful planning and ongoing optimisation, marketing spend management helps you maximise the impact of your marketing investments and ensure that your money leads to tangible and valuable results.
