Learnings from Managing Marketing Budgets

In my 1st job in Marketing, I ‘managed’ a marketing budget of less than €5.000 a month (mainly paid acquisition spend), eventually growing it to about €20.000 a month. A few jobs later, my budget responsibility has grown significantly, while now responsible for a yearly eight-digit figure ($)💸. This creates a need for more accuracy, accountability, and diligence into what you’re spending resources on and the return on investments.

Operating Expenses versus Compensation versus Other

Often you’ll roll into a role or organization that already has a set strategy and aligned budget plan. The same applied to my role at RVshare, which I joined almost four years ago. It’s rarely the case that you get to build a budget out from $0/scratch. Instead, I joined on a budget plan that already had some essential buckets (that we remain to invest in). This often also predetermines the organization’s path and how a budget will be divided in the short term.

• Operating Expenses/OpEx: All expenses tied to regular marketing activities, campaigns, and the operations of the business. I can’t describe it better than Investopedia does here.
• Capital Expenses/CapEx: For most businesses or functions, there is a more strong capital element for investments that they’re making. As we’re a very asset-light business, we don’t own any inventory and don’t have any actual physical marketing assets (at least not to make a dent in a budget plan). This is not a thing for us. And probably with us many other marketing organizations.
• Compensation: Salary, Bonuses, etc. Basically what you get paid every two weeks.

Direct Return versus Non-Direct versus Supporting

There is no one right way to set up a budget plan, as it can be divided in many ways. Our Marketing one contains three big buckets:

• Direct Return: Channels that directly can drive a return on investment and can be measured on this basis. Examples of that are Paid Acquisition, SEO, and Marketing Partnerships. It doesn’t have to be a scientific method, but you can predict your spend > revenue pretty well often.
• Non-Direct Return: Other channels, for example, more focused on driving awareness or reach like PR, Social Media (Organic) and Brand Marketing.
• Supporting: Marketing Analytics, Technology, Education, Consultants, etc.

Categories like travel, meals/entertainment, and education are not directly coming out of our marketing budget. But it is realistically also a tiny allocation of a total multi-million dollar budget (considering we have a relatively small team, we do invest in them, don’t worry). Which doesn’t mean that it’s low in itself as you always want to make business travel possible, as well as training & education.

Internal versus External

On ‘who’ do you spend your resources, and how is the decision made. In most cases, this is not a finance/budget-driven decision, in my opinion. As it’s mainly tied to what functional/strategic expertise you need to make an impact in a specific area. Before a year’s start (financial years exist for a reason), we plan out our expected spend on internal versus external resources. At that point, we often already have an idea of what we’d like to add headcount for and what might be better to hire external support for.

→ Also read, Deciding between who to hire: an Agency versus a Contractor versus Hiring?

Misconceptions

Unlimited Resources

The narrative around this is often that you always need to scale. It applies to most startups, and overall I’m a fan of it. But it’s not realistic later on. A business with 90% of its marketing expenses is not healthy at scale. Scaling an unlimited budget might work well for you, but at some point, Finance will start knocking on your door as you’re ruining their cash flow positions.

Unplanned Costs

“A good leader can plan for any type of cost well ahead” – Nobody said ever. New ideas and costs always come up; I’m a firm believer in making sure that you keep a flexible mind and can adjust plans. For example, when we hit the pandemic in 2020, all our (preplanned budget) plans were useless as it would have ruined RVshare if we had continued on that spending level. Two months later, it turned out that we needed to spend way more aggressively than we ever expected and we ended up ‘overspending’ according to budget plans by many millions.

Brand versus Performance

“You should always invest in the long-term by building a brand” versus “Performance Marketing is key, Advertising can’t be measured”. If you’ve heard both, welcome to the club! If you lean one way, you might be able to learn a bit more about the other side. It’s a misconception that you can’t measure a brand. The comparison that I keep bringing up to people is the one of Booking.com versus Airbnb, one very well known for its performance marketing and the other one for its amazing brand building. However, that doesn’t mean that Airbnb spends over $400+ million on efforts that I would mainly categorize as performance marketing. Initiatives don’t always belong in a bucket, although I just described as they do. Both sides are just as important and not your budget but your overall marketing strategy should guide you on what to spend money on. Ours has guided us in multiple ways but we’ll remain to invest heavily in both buckets, in the future.

Working with Finance

Understanding Finance & Their Concerns

As part of the misconceptions, I touched on unlimited resources, and money isn’t unlimited for a company. If you’d spent all of your marketing budgets in the first month of the year, you likely would go bankrupt because your Finance team wasn’t aware of you doing this and ran out of cash flow. They also have a lot of their worries around financing and accounting, which makes it so that you need to be aware of what they care about and help.

Actually Understanding Finance & Accounting

Pick up a couple of books that can give you a high level of what finance and accounting terms mean so that you know how to speak the language of your finance team/CFO.

→ The HBR Guide to Finance Basics for Managers is a good start. After that, you’ll easily figure out what other books you might find interesting and how deep you’d like to go into the topic.

Being able to prove ROAS accurately

Invest in (marketing) analytics so that you can more accurately predict the return on your investments. We have spent the past two years getting good at this to ensure that we can ensure that our investments are returning value for the business. This is not just important for budgeting, but also a direct way to give Marketing a seat at the table as we can provide good answers to questions about how much money every additional 1M of (direct) marketing spend could be.

Supporting Marketing: The Role of Marketing Operations

This blog post was written in partnership with Ian Hoyt, who’s RVshare’s Marketing Project Manager.

While you pass through the growth stages of departments, things start breaking. Teams become less efficient. There is more work and often less accountability. In a small startup, everyone shares the responsibility because there is no one else to blame or lead initiatives. While you grow to a marketing team of 5+, it becomes clear that there are owners for channels (social, SEO, creative, email, to name a few). At 10+, you’ll undoubtedly have the first manager, and you can see how things evolve from there (multiple managers, managers managing team leaders).

At RVshare, I hired a Marketing Project Manager to help manage scale. We had too many ongoing initiatives and team members late last year. Unfortunately, it became too much for one person to manage (welcome to me partially failing as a leader). In many startups/scale-ups, I’ve noticed similar roles, and people show up to help manage the growth and support leaders (often in the form of a Chief of Staff, which we’ll talk about later).

What this role is (for us).

There are plenty of different titles and nuances to the role of a Marketing Project Manager in a marketing operations structure. And it comes down to the lifecycle of your company. The role can wear many different hats, and often, they do. At RVshare, we had a choice to make when we hired for this role. We could either hire a project manager FOR marketing (think SCRUM master, JIRA wizard) or a well-rounded marketer who knows how to manage projects. We chose the latter.

The difference is subtle, but context is key.

As a department going through a growth phase, it isn’t always the prettiest, most neatly tied bow of an existence. You try your best to stay organized, but there is no perfect “hey, we have a campaign idea,” let’s set all the requirements and execute the project at perfect timing (or hand it off to an agency), always. Instead, growth can be messy because better (or bigger) opportunities come up, priorities shift, and then you’re left with a team that needs someone to help fill those gaps and navigate the tides of the unknowns in the project all at the same time. 

Kind of like someone sitting in the haul of a sinking boat with a rag and some wax ready to fill punctured holes as they traverse rough waters, all while screaming up to the captain what the heck their plan is. Except, our marketing project manager has never been in a haul of a boat, and no marketing campaign is ever that life or death. 

What this role is not.

It’s not an executive assistant (EA), period. This person shouldn’t manage the team’s calendar, transport, or travel expenses. You can manage these activities way more efficiently by hiring an EA or putting enough processes/tools in place to manage them.

You’re lazy. You should have just {fill in the blanks}…

• Hired more interns or more Virtual Assistants
• Build more technology to avoid overhead
• Created less bureaucracy and processes, to begin with
• Hire more agencies or contractors

Your thought process is likely correct, and there is a place and time to think about all these areas, especially before starting the hiring process and figuring out how to avoid needing more headcount. But a VA or intern isn’t usually the right pick to lead strategic initiatives as they lack experience and seniority in an organization. Technology supports initiatives but doesn’t lead them.

Also read: Deciding between who to hire: an Agency versus a Contractor versus Hiring?

Chief of Staff roles?

They have things in common. They’ll often lead strategic initiatives and have the autonomy to operate parallel with the rest of an organization. But this role is usually the right hand of a C-level executive and more often than not focused on cross-organizational initiatives. The role that we’re talking about is more supportive of a team, and its primary goal is to keep the team operating as best as possible.

The role of (Business) Operations in the High Growth Handbook

If you want to read more about the role of business operations, I recommend reading the specific chapters on that in the High Growth Handbook by Elad Gil. It gave me the first glance a few years ago into what a team like that can do and how they can support the overall organization by being a ‘gap-filler’. To a large extent, the role of Marketing Operations fits into that as well.

The background of Operational roles in for example Design & Business

• Design: In bigger design teams (>15 people), you’ll often find people focused on design ops. They’re helping the overall team design more and be better at their job by creating tools, workflows, and processes that eventually will help the team create more output.
• Business: Filling gaps, exploring projects, and chasing ideas that could help make an impact on a company. Meanwhile, helping out to operate the business better by leading the way on cross-functional projects. That’s often what the role of business operations is all about.

Working through inefficiencies & why you need this role

As described earlier, nothing is perfect, and things will be inefficient. In a growth marketing organization, you’ll miss certain skill sets once you go through certain levels. With a marketing team of 5 people, you will not have channel specialists or functional leaders for everything. At 20 marketers, you might need more bandwidth temporarily somewhere based on seasonality. With this role, we’re providing a way to work through those inefficiencies, and it’s a reason this role could be helpful.

Want to read more on this topic?

• Casey Winters blogged about the role of the operations department.
• Reid Hoffman’s Chief of Staff, Ben Casnocha, wrote this amazing long read on 10,000 hours with Reid.
• A good introduction into the role of Business Operations: Strategy & Ops role at tech companies