Complete Marketing Budget Planning Guide

Why marketing needs its own budget framework

Finance budgets track cost centers and cash flow. That's useful for accounting, but it won't help you manage campaigns, optimize channel spend, or justify growth investments to your CEO.

A marketing budget needs to be organized around how you actually make decisions — by business goals, channel types, and initiative status, not by GL codes. It should separate maintenance spending (keeping existing programs running) from growth investments (new bets with timelines and success metrics). And it needs to reflect real-time spend data from ad platforms, not monthly reconciliation reports that arrive too late to act on.

The mindset shift matters too. Finance sees your budget as a cost center to control. You need to frame it as a growth lever — one where you have freedom to move money between channels throughout the year as long as total spend stays within approved limits. The original plan is a starting point, not a contract. Your CFO and board care about hitting targets within the envelope, not whether you spent exactly what you projected on paid social in Q3.

That flexibility is your advantage, but it comes with a trade-off: you need to speak finance's language well enough to be treated as a business partner. Know how they calculate ARR, understand the difference between fixed and variable costs (and why they scrutinize headcount harder than media spend), and always come to approval conversations with your analysis already done. The CMOs who skip pre-approval analysis — variance trends, quarter-over-quarter growth, budget-to-conversion ratios — end up in multiple revision cycles. Do the work upfront.

Before you start planning, understand where your company sits relative to industry benchmarks. The CMO Survey Firm and Industry Breakout Report (2025) shows the average marketing budget is 11.4% of total company budget, based on data from 170 companies across B2B and B2C sectors.

Before you start planning, understand what is expected from you. This includes both your company's appetite for growth and risk, and your level of freedom in budget decisions. Have an early conversation with your CEO or direct manager to understand these boundaries clearly.

Know your company's growth & risk approach

Companies typically align with one of these approaches - identify yours through these signals:

• Exploratory Approach: Companies need to learn things, experiment, and want to invest in many bets, less risk-averse, but also more hungry for growth. (e.g. YoY growth at 50%, budgets growth at 100%)
• Balanced Approach: The company is well-established and adopts a cautious yet strategic stance. It focuses on moderate risks while safeguarding stability. Company well established, more risk-averse. (e.g. YoY growth at 25%, budgets growth at 30%)
• Conservative Approach: The company avoids risk, planning only initiatives that guarantee linear returns at a defined cost-to-revenue ratio (e.g. YoY growth at 10%, budget growth at <10%)

Pay special attention to how your CEO reacts to questions about failed experiments and timeline expectations. You will learn from it what is the proportion of new marketing bets and experiments that you can plan.

Question number 3 (how do we define 'targets') is the most crucial one. There's often a mismatch between how marketing and company leadership view targets. If you treat 100% as an ambitious goal while your CEO sees it as a minimum requirement, you won't succeed in the company.

Know your budgeting freedom

Before planning, clarify your role: are you the strategy owner or just executing the CEO's vision? Avoid wasting hours on plans that won't align with what's expected. Knowing how much autonomy you really have, helps focus your efforts where they matter most.

Four Levels of CMO Autonomy over Budget:

Match your planning depth to your autonomy level. Don't spend time on multiple scenarios if you know you'll get strict targets.

Confirm the process with stakeholders

As CMO, you need to understand your budget and targets approval process to prepare the right materials and manage your time effectively.

Key questions to ask:

• Are growth targets and budget approved separately, or is it one combined process?
• What's your approval path - who are all stakeholders that need to review it?
• Will you have an opportunity to present your budget, or just submit the file?
• Are you expected to prepare different budget versions (like optimal and aggressive), or just one?
• What was the typical process length and number of revision rounds in previous years?

Push for a Strategy Meeting First

Always try to secure a 30-minute meeting with key stakeholders before submitting your budget file. Use this time to present your strategy, growth targets, and required marketing budgets. Show them which channels are proven to work and what bets you are making. Explaining the connection between growth targets and budget needs in person will likely speed up your approval process. It's also your chance to address concerns early.

Your finance team has specific requirements, systems and frameworks for budget planning and expense management. Marketing budget management should differ from how finance needs to see it.

Why? There are multiple simple differences:

• Marketing uses different categorization (example: while finance focuses on cost centers, marketing needs channel-based for effective budget management)
• Marketing uses different terminology and calculates revenue differently (example: MRR calculation)

But, still, you need to be able to export your revenue plans and marketing budget in a format that can be easily understood by the Finance Team and imported into their systems.

Budget Structure

Most finance teams require a specific spreadsheet structure for budget submissions. Get their template early and confirm required columns (e.g. cost center, description, amount, currency, payment terms, vendor details).

Understand their preferred level of detail. Some finance teams want every campaign broken out separately, while others accept higher-level groupings. Get this clarity early as it affects how you structure your line items.

"Marketing Budget Template ≠ Finance Budget Template"

Finance and marketing have different goals for planning budgets. Finance needs them to accurately forecast cash flow. Your goal is different. Creating a budget that helps you reach marketing targets and bring new customers. How you work with your budget can differ from how you submit it to finance. Create a “translation layer” between your working budget and finance's required format. Marketing budgeting software like Etropo can export your budget to finance team's format. This saves you from manual reformatting work.

Cost Centers Structure

Every line item in your marketing budget must be assigned to a cost center. Cost centers are tracking codes used by finance teams to categorize and monitor expenses across the organization. Cost centers act as financial labels that help organize spending into specific buckets for accounting purposes. Here's an example structure:

Example cost center structure for a marketing department. The cost center code identifies the team or function, while the GL account number maps to your company's general ledger for financial reporting.

Get your current cost center list and check if they're self-explanatory. If not, ask finance for definitions and examples.

Review the cost center structure. A new marketing strategy might require consolidation of old cost centers and addition of new ones. For example, you might have separate cost centers for “Social Media Ads”, “Search Ads”, and “Display Ads” from years ago that could be consolidated into a single “Digital Ads” cost center.

When planning such changes or adding new cost centers, clarify with finance:

• Can you propose cost center updates? (usually it's possible once a year in Q4)
• What's the proposal process and who needs to approve the changes

While cost centers are crucial for finance reporting, don't let them dictate how you categorize expenses in your day-to-day marketing budget management.

Currencies

Your marketing budget needs a clear approach to handling multiple currencies, especially if you're working with international campaigns or contractors.

First, confirm your reporting currency with finance. This is your company's primary currency where all business metrics are recorded - both revenue and costs. Even if specific line items (e.g. software or contractors) are being paid in a different currency, they will be converted to the primary reporting currency at a given exchange rate.

Companies typically follow one of two approaches for handling exchange rates:

• Company-Wide Fixed Rates - Finance sets standard exchange rates for the entire fiscal year, and all departments must use these rates for budget planning. You don't take the risk of exchange rate fluctuations - it's managed at the company level by the finance team. Your job is simply to assign the correct original currency to each line item.
• Market-Based Flexible Rates - Departments use current market rates and manage currency risk independently. In this case, add at least a 3-5% buffer to your budgeted amounts to protect against rate fluctuations.

Regional Tax Requirements

When adding line items, you might need additional properties related to tax management, such as:

• VAT? (yes/no)
• Vendor's tax registration region (EU/US/Canada/Other)
• Certificate of residence needed? (yes/no)

Planning Horizon

While you're focused on next year's budget, check if your company requires multi-year projections:

• Some companies need 3-year plans for strategic planning
• Others require 5-year projections for board or investor relations
• You might need different detail levels (detailed Year 1, high-level Years 2-3)

Team Compensation Planning

Team salaries and bonuses often represent a significant portion of your marketing budget. Check with your HR and finance teams how to handle:

• Your salary - should it be a separated line item in the marketing budget (or is it covered in the Board/Leadership budget)
• Annual salary increases - whether to plan as one bulk line item for the whole team or individually per role. Is there any extra approval process you should follow?
• Performance bonuses - if marketing budget can include them or if they're managed centrally by HR
• Sales provisions - especially for roles like Partner Marketing that might have revenue-based compensation

Start by creating a visual timeline. Most companies follow a standard budget cycle:

Your finance team likely provides these high-level deadlines. However, you need to break down that first “Department Planning” phase into actionable steps. A structured internal planning process ensures your budget aligns with business targets and is backed by data. Each step builds on the previous one. Let's breakdown the “marketing planning” into phases.

Marketing KPIs and conversion metrics

Every marketing budget needs to optimize for one key conversion metric. Marketing teams often get confused trying to track multiple metrics at the same time. Focusing on one key metric that directly ties to revenue is the only way for your plan to succeed.

Understand your CPA

CPA should always relate to the chosen KPI from the earlier section. Know your target blended CPA for the whole marketing budget and define target CPA for the particular channels. Use the marketing budget calculator to estimate how much you should spend based on your CPA targets and conversion rates.

Blended CPA

Calculate your blended target CPA as: Total marketing spend / Total conversions (in your chosen metric). Assuming that the whole marketing team goals' is working on new customer acquisition, this gives you a realistic benchmark of how much really it costs to acquire a new customer.

Channel-Specific CPAs

Individual channel CPAs are usually much higher than your blended CPA. Also, significant CPA variations between channels are normal and expected.

Example scenario (for conversion MQL in B2B Tech SaaS):

• PPC CPA: $500
• Organic CPA: $50
• Blended CPA: $150

This variation is healthy – expensive channels can still be worth it, if they are included in a healthy channel mix.

LTV and ROI Calculations

Understanding customer Lifetime Value (LTV) is crucial for budget planning and ROI of your actions. Check if there are any major differences between average deal size or LTV across channels. Example: MQLs from PPC might have a lower deal size than industry events.

Target a minimum 4:1 ROI for paid channels. This means for every $1 spent, aim to generate at least $4 in lifetime revenue.

Remember: These metrics aren't static. Review them quarterly and adjust based on market changes and your company's growth stage.

Start by analyzing your existing conversion sources. Use your CRM, BI tools, or Google Analytics to understand your key existing marketing channels.

Your marketing channels might include:

Document Channel Performance

For each existing channel, document the following metrics:

• Last year conversion volume
• Channel CPA
• Scalability constraints
• Resources needed

Look beyond just conversion numbers. Sometimes channels with higher CPAs deliver better quality leads that convert at higher rates.

Identify new initiatives and channels

Research potential new channels for next year's investments. Consider:

• Where your target audience spends time
• What competitors are using successfully
• New platforms or ad formats
• Emerging marketing tactics
• Entering new markets with localized marketing

Remember: Focus on channels that can meaningfully impact your key conversion metric. It's better to focus on fewer channels than to spread resources too thin.

Before creating any line items, establish a clear structure for your budget. This will allow you to analyze the budget later on by owner, goal, category, or any other line item property.

Set Up the Basics

Pick your primary budget currency and establish exchange rates upfront - align with your finance team's rates to ensure consistent company reporting.

Define your planning period in months, typically covering a 12-month span.

If you want to create multiple scenarios, choose the primary budget version to work with (if it's e.g. “optimal”, “aggressive”, “conservative”). While stakeholders might request multiple scenarios later, focus first on creating your working version that aligns with current company goals.

Categories

You need clear categories to track different types of spending. While these often relate to company cost centers, keep them separate. Categories should reflect marketing operations and your strategy.

Must-Have Budget Categories for Marketing Teams

Essential Rules for Categorization

• Keep categories between 3-8. Additional breakdowns create unnecessary complexity and make analysis impossible.
• Combine small categories. When a category represents less than 5% of total budget, merge it with a related larger category. For example, combine “Marketing Events” into “Promotion” if events are a small portion of spending.
• Avoid using an “Other” category. It's impossible to analyze a bucket of random expenses.

Additional Categories to Consider

Consider these categories if relevant for your strategy:

• Creative Production - Covers asset creation costs like studio rentals, video production, and event materials
• Detailed 'Promotion' breakdown - split promotion into PR & Events, Content Marketing, and Influencers & Sponsorships
• Travel & Entertainment - separate tracking if these costs significantly impact your budget

Plan your headcount category

Create a separate category for headcount costs. Split your workforce budget between full-time employees and contractors. During budget approval and analysis, you'll need to know what percentage of your total budget goes to FTEs (hardest to reduce) versus contractors (quickest to cut if needed).

Each marketing role must align with a clear business goal: acquisition, conversion, or retention. In a growth-driven company, most of your team should focus on acquisition activities.

Line Item Properties

Each line item in your budget needs specific properties assigned to track and analyze spending effectively. These properties will help you manage approvals, track spending patterns, and analyze budget allocation.

Recommended Line Item Properties:

Setting The Budget Growth Target

Before diving into specific line items, establish your overall budget target. Your approach here depends heavily on your company's growth plans and your autonomy in budget planning.

Three key considerations for setting your budget targeted amount:

• Calculate your base target using Year-over-Year (YoY) growth compared to last year's budget. This gives you a rough framework for planning. Make sure it's aligned with your KPI target growth.
• Put your target budget sum into tools like Etropo. When adding line items, you'll directly see how much budget you have left to allocate. This prevents over-allocation and helps prioritize remaining expenses.

Marketing budgets require input from multiple team members. Channel owners know their numbers best - their conversion, CPA projections and cost estimations will be always more accurate than yours. Whenever possible, make your team members line items or even categories owner. This will help you speed up with the process and build the culture of collaborative ownership.

Get rid of multiple planning spreadsheets

The biggest problem faced by CMOs: running budget planning through multiple spreadsheets. One for headcount costs, another shared with finance, and separate one shared with your marketing team. That makes consolidation a nightmare. Use a single budgeting tool like Etropo that supports collaboration and category access control. Your team members input their numbers directly, with restricted access to sensitive data like headcount costs. Each line item should have the owner and you might have even owners for the whole category (like PPC), where all line items will be automatically assigned.

Review Existing Expenses First

• Start with importing the previous year's budget. Decide which expenses to keep, reduce, or scale.
• Consider price increases, especially for software tools. Most SaaS companies raise prices annually by 10-20%. Consider this in your calculations.
• Convert monthly subscriptions to annual plans. Not only will this reduce your internal administrative work, but also many tools offer significant discounts for yearly packages, specifically during Black Friday sales in November.

Add new line items

Focus first on new channels and experiments you want to test. Map out marketing initiatives and campaigns before deciding on additional headcount or contractor needs.

Don't waste time creating multiple budget versions upfront. Instead, first align with your CEO and stakeholders on the core strategy approach - whether you're pursuing aggressive growth or taking a conservative path.

Still, many CEOs request multiple budget versions: conservative, balanced, and aggressive. This often leads to wasted effort as typically only one approach aligns with the company's true strategy. After all, if your company aims for aggressive growth, why spend time preparing a conservative budget that doesn't support this goal?

If you create multiple versions too early, you'll split your focus between different strategies instead of perfecting the one that matters most.

Better Approach to Budget Versions

Don't create budget versions if you're not forced to it. Use this approach instead:

Multiple versions at the start usually mean unclear strategic direction. Push for alignment on company's growth targets before detailed budget planning. Budget versions are useful during the approval process. Use them to show trade-offs when you need to cut specific line items or adjust growth targets.

The line item review requires a structured approval approach. Your team must use clear statuses as line item property to track progress and enable efficient collaboration. Use this status flow to manage all budget line items:

Focus on evaluating each category owner's submissions thoroughly. Pay special attention to items that seem disconnected from team or company targets. For example, if your paid media specialist proposes a 200% budget increase while projecting only 50% conversion growth, that calls for discussion.

When rejecting or significantly modifying budget items, provide clear feedback through comments. This helps team members understand expectations and adjust their proposals effectively without requiring meetings for every change.

After completing all reviews, do a final check of the aggregate numbers. Verify that the total approved budget aligns with your target metrics and company growth goals. This becomes your baseline for stakeholder discussions.

Always run first the analysis on your own and adjust budgets if anything raises your concerns. Never skip the Budget Charts Visualization before seeking approval. Missing this step often leads to major budget revisions later, damaging your credibility as CMO.

The stakeholder approval process requires two different approaches: one for the board/CEO, and another for the finance team. Each group needs specific information presented in their preferred format.

For CEO and Board - Business View

The CEO and board need a concise pitch deck visualizing the budget plan. Focus on metrics they care about: budget versus conversion growth, major category changes, and marketing spend as a percentage of total company revenue. Address potential questions proactively by including relevant charts from your budget analysis. Show clearly how your budget plan aligns with company growth targets.

For Finance Team - Technical Requirements

As covered in Learn Finance Team Rules, the finance team needs your budget in a specific technical format. Export your budget with their required line item properties:

• Cost center names and IDs
• Currency details
• VAT information
• Payment terms
• Vendor details (if applicable)

Use dedicated marketing budget tools like Etropo to generate export files matching your finance team's requirements. Or, if preferred, sync your marketing budget directly via dedicated Google Sheets integration. This saves time and reduces back-and-forth about formatting issues.

Remember that final CEO approval typically comes after the finance team reviews all department budgets. They need to evaluate marketing spend in context of the total company budget. Be prepared to wait for this broader financial review to complete before getting final signoff.

After submitting your budget, stay available for questions. Quick response times during the review period can significantly accelerate the approval timeline.

Common Budget Review Questions

The most common scenario is that you will get follow-up questions after submitting your budget. Prepare answers to these typical questions in advance:

Budget revision is a critical moment that tests your strategic thinking. The way you handle budget cuts shows your ability to protect growth while being flexible and responsible.

Budget Reduction Process

When reducing your marketing budget, follow this recommended order to minimize impact on business growth:

Focus on fewer initiatives - one new initiative per quarter maximizes its potential and makes impact measurement clear.

Budget Version Presentation

Create another version of your original budget to show changes clearly. Present to the Finance team and Board using their language - cost centers, not marketing categories. Finance teams think in cost centers, not marketing categories. Speed up approval by matching their structure. Show what bets you're making with the remaining budget and set clear evaluation timelines. For each major initiative that raises budget concerns, document:

• Expected outcomes
• Evaluation timeline (no more than 3 months/1 quarter) - this is most important to do!
• Maximum budget at risk

Real-Time Media Platform Data

Connect your paid advertising accounts directly to marketing budget tools:

• Google Ads actuals
• LinkedIn campaign spend
• Meta advertising costs

Use tools like Etropo (for holistic automated actuals tracking) or Splitmetrics (just to pull costs from your media tools) for automated media tracking.

Invoice Automation

Use invoice automation tools to extract details from PDF invoices and automatically match them to budget line items. Upload invoices directly or forward them via email, and AI-powered extraction handles the amount, date, and description—reducing manual data entry. With Etropo, your team can forward vendor invoices to a unique email address. The system extracts the details, matches them to the right line item, and a reviewer confirms before actuals are applied to your budget.

Team notifications to update actuals

Set up automated notifications for team members who own specific line items to update actual spend or remind about submitting invoices to your accounting team.

Budget Variance Analysis

Before you move any dollars, you need to know where you stand. Budget variance analysis is the foundation for smart reallocation decisions — it tells you exactly which line items are overspending, which have room, and how far off you are from the plan. Use these three metrics to guide every budget movement:

Don't let finance processes slow down your campaign decisions. Use real-time data to determine if you should pause or continue marketing initiatives.