How to Build Better Marketing Budgets in Partnership with Finance

How to Build Better Marketing Budgets in Partnership with Finance

Demand marketing is an ever-evolving, squishy, and fluctuating forecasting nightmare most of the time, but with the right strategic partnership with Finance to build a flow-based model you can have a smart discussion around you budgetary needs. So you can ultimately celebrate with donuts and trophies.

Donuts, Trophies, and Budgets, Oh My!

Take a walk with me to a far-off, magical land where marketing and finance work together in perfect harmony. We approach a boardroom setting with happy, smiling, jovial finance and marketing professionals discussing budgetary needs:

  • Marketing says, “We think we need X number of leads to make our number next quarter.”
  • Finance says, “Okay, how much money will that cost?”
  • Marketing says, “Well, if we manage to an average cost-per-lead (CPL) of Y, we need Z amount of money, and we should be in good shape.”
  • Finance says, “Okay great! Here’s your budget.”

Marketing runs off and buys a bunch of media and puts together programs and advertising with the intention of generating the previously defined X number of leads. Because this is a fairytale, that’s all that needs to happen, and the number is magically met. In this mystical land, the ensuing conversation goes something like this:

  • Finance says, “Wow marketing, you know your stuff and came in right on target just by managing a bunch of lead gen programs exactly to the CPL you defined at the beginning of the quarter!”
  • Marketing says, “Yeah finance, this is child’s play. We met our number exactly just based on the top of the funnel lead number and that well-defined budget that never changed at all during the quarter you gave us to run with! We also spent all our money right on the nose down to the penny! It was so easy!”
  • Finance says, “Marketing, you rock. You can do whatever you want next quarter. Let us know if you want more money!”

Moreover, then there’s a big party, and usually, there are donuts and trophies. Raise your hand if you’ve ever had an experience as a marketer (or a finance person working with marketing) that even sort of resembles this. No? Didn’t think so.

The reality of marketing budgets and forecasting

The truth is demand marketing is an ever-evolving, squishy, and fluctuating forecasting nightmare most of the time. Even for the most data-driven marketers, forecasting against a budget and making budgetary decisions in real-time is difficult if not impossible if you don’t have the right tools in your toolbox. And honestly, as marketers, we often deprioritize the things that are difficult and frankly, not that fun. It’s much easier for us to rely on finance to define the budget for us and then try to mash our programs into that budget with CPLs that give us the theoretical volume we need to make our number.

But it is strategic? I’d argue no, it’s not. It usually works out okay, but there’s a better, less squishy way.

Partner with finance and be strategic in marketing

The more strategic approach is to, in partnership with finance, build a flow-based model based on the result, i.e., the net new ARR number or net new customer number for the year. It’s important to ask yourself questions like:

  • How long does it take for my leads to turn into opportunities? How long is my sales cycle once a lead becomes an opportunity?
  • What percentage of leads turn into sales-ready conversations? How many of those does my sales team get ahold of?
  • What’s my average CPL by channel historically? What are my goal CPLs by channel?
  • What’s our close rate? What’s our win rate?
  • How much pipeline do I currently have? How much pipeline does marketing typically generate that will close in the same quarter? Next quarter? Future quarters?
  • How much budget do I need that doesn’t fall into a CPL-type campaign (awareness)? How will it impact my bottom line?

The list isn’t exhaustive, but you get the idea. Once you’ve built a model with all of these considerations in mind, you now have the educated baseline to go to finance and your leadership team and have a real conversation about your budgetary needs. And then, you can build a forecast based on all of these considerations based on a budget that’s actually been defined based on need.

The beauty of building and managing this process in partnership with finance and in an interface like Planful MyPlan, is finance retains control of the actual purse strings and has full visibility into what marketing is doing with the purse. No more back and forth with finance asking about our budget status, and no more surprises for finance at the end of the quarter when marketing comes to the table and announces we were “close” on the budget. It’s all updated in real time – when the forecast changes, finance knows. If the budget changes, marketing knows. Everyone makes decisions and adjustments in real time.

If you ask me, managing the marketing budget process this way warrants donuts and trophies. Learn more about MyPlan and how it helps marketing and finance work together at


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