Handle Budget Changes

How to make major adjustments to the marketing budget as a CMO? Managing reorgs, rebudgeting, and retargeting during the year.

Most companies check their performance and spending every 6 months or every 3 months. These reviews often lead to budget changes and reorganizations (reorgs), especially when sales targets are missed or when business conditions get tough.

When Revisions Happen

Budget revisions and reorgs typically occur when:

  • Most common: Company misses H1 revenue or growth targets, triggering immediate spending review
  • Company needs to extend runway due to changing market conditions or fundraising delays
  • New leadership joins with different priorities, often leading to strategic shifts and spending realignment
  • Investors push for strategic direction change, typically demanding focus on profitability over growth or requesting shift to new market segments

The Revision Process

The process starts when the finance team or your CEO shares clear spending limits. They'll tell you how much to cut from your remaining budget (like cutting $2M from H2), set new growth targets, and specify how quickly changes need to happen.

Before making cuts, first review if you can get back on track:

Review AreaAction Items
Channel PerformanceReview conversion targets and identify underperforming channels for potential optimization
Example: CPA in market A is 2x lower than target CPA, move PPC budgets to market A
Initiative PlanningEvaluate planned initiatives and identify opportunities for quick wins
Example: Launch an email re-engagement campaign to inactive users
Spending EfficiencyAnalyze current spend to find areas where better results are possible without additional budget
Example: Consolidate marketing tools with overlapping features

If optimization alone won't close the gap, start building a marketing budget reduction plan. Focus on:

  • Paid channels with highest CPA
  • Non-critical tools and subscriptions
  • Planned initiatives not yet started
  • Contractor agreements that can be adjusted

Using budget versions might be useful to show the difference between the original budget and the new reduced version.

Use the budget insights charts to indicate the reduction breakdown by category, cost center or type of initiative (new/existing). You'll need this high-level data to explain any performance changes.

Working With Less Budget

After cuts, focus your remaining budget on channels that bring the most return, essential programs that bring in customers, tools your team can't work without, and keeping your core team members. Make these choices based on data from your tracking systems.

Budget cuts are business as usual for most companies. Keep good notes for the next year about what you cut and how it affected performance. These notes will help you make better decisions next time you face budget pressure or start the budget planning process for the upcoming year.