How to Get Budget Approval for Marketing Initiatives

You’ve got a problem. See, you’ve come up with the best marketing idea you’ve ever thought of—the most awesome campaign, the most effective yearly budget, whatever—but there’s one thing standing in your way: the decision-maker who decides who gets the money and who doesn’t.

In many organizations, marketing tends to end up on the outside looking in when it comes to permission to take off (that is, budget approval). Why? There’s a chance, and I’m just guessing here, that it relates to your ability to prove the value of marketing efforts.

The key to getting approval for your ideas—and the budgets to match—is in becoming an expert at speaking to the value of marketing efforts. Thankfully, we’ve got some tips on how to help get you from marketing budget zero to organization champion hero, and how you can become besties with your finance department.

Getting to Know the Bottom Line

If you want to become an expert at getting marketing budget approval, you’ve got to learn what makes your organization tick. I’m not talking about what makes the marketing team happy, but what keeps you and everyone in your company in business.

How does your company make money? What is the cost of the goods or services you sell? What are the revenue targets for the year, your sales goals, etc.? The answers to those questions will help you understand the real target you are aiming for—even if your marketing goal is something like “increasing organic search traffic by 20%.”

Marketing Value Calculation

In my agency experience, some organizations can be notoriously tight-lipped about things like margins and revenue. Getting the information we were just talking about—sales goals, revenue targets, margins, and goods or services sold—can feel like pulling teeth, especially if transparency isn’t a value your business commits to.

One of the biggest traps for marketers can be in failing to uncover those numbers, and giving up in order to focus on something more directly in their control. But there’s something to be said for learning where your knowledge and control end, and how to forecast metrics beyond what you know. Understanding how to demonstrate value beyond your metrics (traffic, email click-throughs, form submissions, etc.) will help you learn how to get budget approval from even the most tight-lipped decision makers.

How do you do this? Start with what you know, and build out from there. Let’s use our “increase organic search traffic by 20%” example from earlier as our target goal.

Assume you know the number of marketing contacts you generate each month—for the sake of easier math for this example, let’s say it’s 1,000. For every two contacts you generate, one becomes a marketing qualified lead (MQL). And for every five MQLs, you generate one sales qualified lead (SQL). At this point, you’ve got a handy metric sheet that looks like this:

Because you’re a smart marketer, you’re using a marketing automation platform to keep track of your contacts and leads, and you’ve also set up an event in Google Analytics to keep track of form submissions. Using these two sources, you’ve got a pretty good idea of the breakdown of where your contacts come from.

For our example, let’s say that organic traffic drives 50% of your contact generation, and that your MQL and SQL conversion rates stay the same (50% and 20%, respectively). To keep our math simple, we’ll also say Google Analytics says we get 10,000 visits a month to our website from organic search. We can adjust our metric chart to look like this:

We want to spend $3,000 a month on search engine optimization to raise traffic by 20% (for the purposes of our illustration, let’s say that as a smart marketer you’ve done your homework on SEMRush and you have a content plan that will allow you to do this).

If the above is true and your $3,000/month budget request is approved, your chart should improve to look like this:

Okay, what did you do? You’re proposing to spend $3,000 a month to generate 10 more SQLs. Is this a good investment? It all depends on the information that you would add to the bottom of the chart. Like this:

If you can get that information, all the better—maybe if you show your calculations up to this point, you’ll have more luck getting that money. But if you can’t, chances are you might be able to find a study for your industry that includes some target percentages from other companies. Most of the time, sales will be willing to share their close rates with marketing, so you can use those numbers or the numbers from an industry study to fill in the blanks.

Let’s say you find an industry study that shows that, on average, SQLs convert to opportunities 20% of the time in your industry, and opportunities convert to closed-won deals 25% of the time (there are obviously great sales people in your industry). Comparing your current state to your proposed “20% more traffic” state, you get an analysis like this:

What are we really proposing? The math breaks down like this:

$3,000 = 20% growth in organic search = one new closed-won deal.

Why would anyone do this? Well, that depends on what kind of revenue your business generates from a closed-won deal, and the margin of your product.

Let’s say your closed-won deal is for an annual service contract that averages to $900,000 annually, which equals $75,000 each month. Your company makes a 20% margin on these deals, so that’s $180,000 to the company each year, or $15,000 each month.

What are you asking for when you ask for $3,000 each month to increase organic search? In this case, you’re asking for $3,000 in order to increase the closed-won total by one sale—which creates $15,000 more revenue for the company per month. A 5-to-1 return on investment when all the accounting is settled is not a bad idea at all!

Of course, these numbers are an oversimplification of marketing, sales, and business metrics. However, you can demonstrate your thinking to your decision makers by doing as much of the calculation as you can—and then asking for them to fill in the rest, or speculating what the return may be by using industry studies and the information you do know.

Telling the Right Micro-Stories

The example above is just one demonstration of how to use the information at your fingertips to forecast results for SEO efforts on your website. The same approach can be used for email campaigns, digital ads, and other types of efforts. Sometimes the math gets tricky, with long-term investments and marketing improvements that require time and maturity to bear fruit. Truly, the SEO example above is in that category—a long-term investment that pays off over time, not right away—and content marketing is similar as well.

But people who can craft micro-stories around your budget needs and marketing activities will help you not only have better conversations with executives and decision-makers at your organization, but they will help you better understand how your business makes money, and how your marketing efforts can impact the bottom line.

The Bigger Picture: Closed-Loop Reporting

The Holy Grail. The thing every marketer that knows what’s what strives for. True closed-loop reporting—knowing the return on every dollar that goes into marketing efforts. It’s a lofty goal, and with today’s ever-changing technologies it’s one that can take a lot of work, communication, and maintenance to achieve.

But once you start having conversations like the one above—telling micro-stories around marketing metrics, budgets, and return on investment—it should become easier to get organization-wide buy-in to the need to establish better reporting.

And it has to be organization-wide buy-in—it will likely take your IT department alongside your marketing and sales teams in order to build a functional reporting model, and you’ll need software for connecting platforms and creating reporting dashboards as well.

Begin to build your own story about why that’s needed now. Start with understanding your marketing metrics, and work towards having compelling budget conversations with your decision-makers to show how marketing could make an impact on the business. Every company is interested in growing revenues and margins—as a marketer, it’s on you to learn how to understand the business and think in terms of the bottom line in order to grow your budgets, teams, and activities.