November 15, 2023 • 24 mins
Hey there, savvy marketers! It’s time to roll up our sleeves and get real about marketing budgets in the AEC industry. In this latest episode of "AEC Marketing Strategies," I’m taking you through a deep dive into crafting a business development and marketing plan that’s not just a document, but a dynamic tool for your firm’s success in 2024.
This episode is a gem from our AEC Annual Planning Empowerment series, where I peel back the curtain on how to tailor a marketing budget that actually makes sense for your firm. Forget the one-size-fits-all approach; I’m here to guide you through the maze of budgeting with methods that include everything from revenue percentages to competitive analysis.
I’ll walk you through key questions that will shape your understanding of your firm’s financials and set the stage for a budget that aligns with your strategic vision. To sweeten the deal, I’ve got a downloadable Marketing Budget template ready for you to make your own—just head on over to marketerstakeflight.com/145.
We’re not just talking theory here; we’re about actionable insights. From defining the mix of marketing and business development expenses to tracking and adjusting your spending for the best ROI, I’ve got you covered. It’s all about empowering you to lead your firm’s marketing charge with confidence and clarity.
So, are you ready to dive in and start building a budget that serves your firm’s growth? Tune in now and don’t forget to hit subscribe—you won’t want to miss out on the wealth of knowledge coming your way in this series.
I can’t wait to see you in the comments section at marketerstakeflight.com/145, where you can share your budgeting triumphs and challenges. Together, let’s make 2024 a standout year for your firm’s marketing success. Catch you in the next episode—until then, keep making your marketing meaningful!
Want more AEC marketing goodness?
- New to proposals? Download my FREE “RFPs for Beginners – The Ultimate Proposal Management Checklist.”
- Stop planning, start creating with my FREE “Ultimate AEC Content Marketing Starter Kit.”
- Follow Lindsay on LinkedIn and Instagram.
- Collaborate with other AEC Marketers in our Facebook Group.
- Purchase bite-sized, on-demand templates and training at the Marketers Place.
- Enroll in online training: The Proposal Pro or Content Marketing Clarity.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Hey there, I'm Lindsay Diven and I'm passionate
about everything marketing,productivity and career growth.
With over 17 years ofexperience in the architecture,
engineering and constructionindustry, I know firsthand the
ins and outs of this excitingfield, from my early days as a
marketing coordinator tobecoming an award-winning
(00:23):
marketing professional.
In firm principle.
I've learned the ropes throughcountless late nights and
challenging deadlines.
Now I'm thrilled to bring youthe AEC Marketing Strategies
Podcast.
Here I'll be sharing simple yetpowerful, step-by-step
marketing strategies that youcan implement to achieve the
(00:44):
same level of success.
Consider me your go-tomarketing mentor, someone who
truly gets the unique challengesyou face in the AEC industry.
Whether you're an AEC MarketingPro or industry newbie, this
podcast is your personal coffeedate with your marketing bestie.
Together, we'll navigate theever-changing landscape of
(01:06):
online marketing and digitaltrends, ensuring you stay ahead
of the curve.
If you're ready to unlock themarketing secrets they never
taught you in college and tailorthem specifically to the AEC
industry, then you're in theright place.
Now let's get started.
Well, hey there.
Marketers, welcome back toanother episode of the Marketers
(01:29):
Take Flight Podcast, and overthe past several episodes, we've
been talking all about planning, specifically as it relates to
your firm's business developmentand marketing plans.
You can find the links to allof the series episode and
today's freebie, a marketingbudget template, over on the
show notes page over atmarketerstakeflightcom, forward
(01:50):
slash 2424.
And if you're really ready todive deep into business
development planning andfacilitate this process at your
firm, you can sign up for mybusiness development planning
mini workshop.
In this mini workshop, I teachyou my proven approach to
writing a business developmentplan, including how to develop
the right mix of strategy,meetings and research.
(02:13):
Then I walk you through how toexecute that plan so it doesn't
just get written and sit on theshelf.
You'll walk away with theknowledge and the tools to lead
the business developmentplanning for your firm.
Best of all, it's all on demandso you can access at the right
time for you and your firm.
Learn more about that miniworkshop and register over at
(02:33):
marketerstakeflightcom forwardslash BD plan.
Okay, so let's dive into today'stopic.
Today I'm going to be talkingall about budgets, specifically
marketing budgets.
Budgeting, specifically how toallocate for marketing, is a
common question I get.
Unfortunately, there is not aone size fits all approach or
(02:58):
answer to this question, so intoday's episode I'm going to be
going to attempt to provide youwith a framework that you can
apply to your firm as you puttogether your marketing plans
for the next year.
But before we begin, I want tocaution you.
Are you ready?
Here's what you need to know.
Every firm is different andbecause of that, you will need
(03:20):
to consider a few things beforeyou start developing and
calculating your budget.
I'm going to go through aseries of questions and these
are going to help you.
Really, there's no right orwrong answers, but they're going
to help you learn a little bitmore about your firm and the
financial aspects at your firm.
So you'll want to make surethat you have a clear
(03:42):
understanding of each of thesequestions that I'm going to go
through in a minute, and if youneed help finding those,
accounting is your friend, andso once you have good clarity
around these questions, thenthat'll really help you develop
your budget and then later on,track your budget as well.
Okay, so those questions arenumber one does your marketing
(04:03):
budget include both marketingand business development or
sales activities?
Marketing often includes themarketing staff, maybe
conferences or advertising,while business development often
includes maybe networkingevents or golf outings or when
we can travel to see clients.
And then there are pursuits andproposals.
(04:25):
Those are tracked differentlyat each firm and they could be
argued that they go into eithermarketing or business
development buckets, but I'llget to a little bit more on that
later in this episode.
So that was question number one.
Does your marketing budgetinclude both marketing and
business development activitiesor just one or the other?
Question number two how do youtrack your marketing time?
(04:49):
Do you have separate project orcharge numbers for each
activity or separate numbers foreach pursuit or proposal?
And then who can charge timeand expenses to those numbers?
I've worked at both differentfirms where only marketing can
charge time to the marketingnumber and operations charge to
(05:10):
different numbers.
So it's important to know soyou know how detailed to make
your budget and how to track it.
If you only have one number foryour entire firm, that's just
general marketing, it's gonna bevery hard to track your
marketing budget.
So question two was how do youtrack your marketing time?
Question number three whatpercentage of your pursuits do
(05:33):
you pursue as a prime, asub-consultant, and or do you
have design build pursuits?
Each of these will require adifferent level of effort and
hence bigger budgets.
If 60 to 75% of your pursuitsare design build, your pursuit
budget is going to besignificantly higher than if
(05:53):
you're predominantly a designsub-consultant.
However, other marketing and orrelationship building
activities might be higher as adesign sub-consultant than for
maybe a design build pursuits.
Next up is question number fourdo your technical staff charge
time to specific pursuit numbersor specific proposal numbers?
(06:18):
And if they do, what getscharged to those numbers?
Is it their fully loaded hourlyrate?
It's kind of like theirbillable rate that they would
build to projects.
It includes their salary, theiroverhead and a profit
multiplier.
Is that number that fullyloaded hourly rate, that being
charged against your marketingbudget?
(06:38):
When they charge put time tothat marketing number?
Or is it a rate that is closerto maybe their raw hourly rate,
which just includes salary andoverhead, or is it a blend of
both?
This is great information tohave because, especially if
you're allocating proposal hoursand a project manager on the
(06:59):
technical side is going to becharging 20 hours to a proposal,
his fully loaded rate is gonnalook a lot differently than his
closer to a raw hourly rate.
So your controller or CFO oraccounting lead can help you
answer these questions on howthose what rates get charged
towards your marketing oroverhead numbers.
(07:19):
So question number five do yourprincipals charge their time to
marketing efforts?
Again, I've worked at firmswhere principals never charge
their time to any proposal ormarketing number and I've worked
at other firms where they do.
So kind of get a good gauge onhow your principals or your CEO
or your firm leadership arecharging, if they are charging
(07:41):
time to marketing or BD efforts.
Question number six is itexpected or company culture that
marketing time or BD time is anoff the clock function for the
technical staff in your firm?
And we all like to say we putall of our honest time on our
time sheets.
(08:01):
But there are a lot of firmsthat do their just their best 40
hours and it's kind of anunwritten rule or an unsaid rule
that if you're working on aproposal or a marketing effort
it's not part of your best 40those hours.
So that is really gonna skewyour budget because you don't
(08:23):
really know who's charging orwho's really spending time on
marketing if they're not puttingit on their time sheet.
And then question number sevendo you allow or require your
staff to charge for their timefor marketing and business
development events outside ofnormal working hours, such as
evening or weekend networkingevents.
(08:43):
Again, this kind of goes backto the previous question about
kind of best 40 and the writtenor unwritten rules around
charging time.
And then last, is yourmarketing staff hourly or salary
and specifically, are theycompensated for overtime hours?
(09:04):
And, if so, this can greatlyaffect your budgets depending on
your firm's workload,specifically around proposals
and this is gonna change stateto state because there's a lot
of different labor laws aroundeach state that I have found and
I have seen marketingcoordinators and marketing
assistants be hourly employeesand then I've seen them be
(09:25):
salary and then I've even seensome where they're salary but
they also get time and a half ifthey work beyond their 40.
So those are all questions ifyou're developing a marketing
budget that you're gonna want toat least know the answers to
and I hope you are starting tosense a theme here Before you
can even start putting togethera budget, you need to know all
(09:46):
the people and the hours thatcould be charging to that budget
and how your future budgets canbe tracked.
So if you're unsure of any ofthese answers or I'm just
talking about something that'slike way over your head please
go talk to your accounting orfinance manager.
He or she will be able to giveyou a wealth of knowledge.
Enchances are, you'll needtheir help to set up and report
(10:08):
on the budget as well.
So it's again it's always goodto be friends with accounting.
Okay, so now that we wentthrough some considerations of
how time and expenses might becharged to your budget, let's
talk about the differentapproaches to developing a
budget.
There are a few common methodsto develop marketing budgets for
(10:30):
AEC firms.
First is a percentage ofrevenue.
This is probably the mostfrequently used method.
In this method, you take apercentage of your estimated
revenue to obtain the budget.
Let me give you an example.
If your estimated revenue forthe year is $50 million and you
say you want to spend 4% of thaton marketing, your marketing
(10:53):
budget would be $2 million, $50million times 4%.
Now you might be asking where Igot 4%, and that's a great
question, while I still haven'tseen any documented industry
standard as what percentage touse, what percentage of
marketing expenses you shoulduse for revenue?
(11:14):
In my experience, we've usedanywhere between 3% and 8% as
numbers, and many of factors gointo those percentages.
You might have a higherpercentage number, like maybe
the 6, 7 or 8, if you'reexpanding into a new market or
geographic area and that's goingto take more marketing expenses
(11:35):
.
If you have a merger oracquisition, those expenses
might go up because you're nowacquiring a new firm.
It's going to be some morecommunication, some more brand
awareness, a rebrand for anyreason, and then it's going to
be based also on your pursuittypes.
So if your pursuit types arepredominantly public versus
(11:56):
private, they might havedifferent types of more proposal
efforts.
If you're design build, ifyou're sub versus prime, and
then just in the markets thatyou pursue, for example, if your
main market is the federalgovernment, your pursuit costs
are more than likely going to bea lot higher than if your
(12:18):
primary market is mostly repeatprivate client work and you're
just putting together a fewproposals.
So if your primary market isthe federal government, your
pursuit costs might be up at thehigher end of maybe 5%, 6%, 7%,
8%, whereas if you're mostlydoing repeat private client work
, your proposal and maybemarketing expenses might be a
(12:42):
little bit lower than 3%, 4%.
That was the percentage ofrevenue method.
Another method is using yourmarketing budget history and in
this method uses your current,yours marketing budget and
compares you know this year'sbudget and how you did right,
(13:03):
did you go over or did you gounder and, depending on if you
and your leadership team arehappy with you know where you
went over or where you wentunder, this can be a great start
for the next year.
But obviously this assumes thatyou have a pretty detailed
budget this year and goodtracking to see what is working
(13:24):
and what isn't, and it alsodoesn't use.
Using just this method doesn'ttake into any account any new
strategic initiatives that youwant to undertake next year that
isn't in this year's budget.
However, it is a good startingplace.
If you have, you know, acurrent budget, it's a good
place to start and then adjust.
(13:45):
And that's what leads me to abetter method, which is the task
oriented budget.
With this method, you start byrecording all of the marketing
activities you plan to do in theupcoming year and then you add
them all up to get the totalamount for your marketing budget
.
Well, this may seem like adream come true for a marketer.
(14:08):
Be prepared to have thisinitial number cut.
I used this approach at my lastfirm and listed out all of our
marketing initiatives and tasksand pursuits and staffing, and
then my initial number alwaysgot cut, but at least I used
this task oriented budgetapproach.
(14:29):
Another thing that's hard aboutthis task-oriented budget
approach is that you may beestimating what activities cost
based on outdated information orjust your gut or experience at
another firm, so it may lead tosome under or over budgeting.
Another method for developingyour budget is
(14:49):
competition-oriented and thismatches what your competitors
spend, and it's another way todevelop a marketing budget, and
the assumption with thisapproach is that you want to
stay competitive and spend asmuch as your competitors are
spending on marketing andbusiness development.
All of my years in thisindustry I haven't personally
(15:10):
approached budgeting this way,but at my last firm we did start
to kind of take note on whatour competition was doing
marketing-wise during ourcompetitive intelligence
gathering, and I do know thatthere's been a push in the
industry to kind of get someresearch on what people are
spending on marketing andbusiness development and on
(15:32):
pursuits, and so if thatresearch ever happens and is
published, then you'll see whatyour competitors, or at least
industry averages, are.
Then there is the randomallocation method, and this
method is probably the secondmost frequently used method
(15:53):
Random allocation and I wouldn'tbe surprised if it isn't being
used in your firm now.
And this method follows no planand requires no justification.
It's just when the managementteam or a firm owner randomly
picks a number they feelcomfortable with.
It doesn't need any strategicthinking or planning.
(16:13):
They just say, yep, ourmarketing budget is $100,000,
and that's what it is.
I mean, that's the randomallocation method, and then you
just have to figure out what youcan do with that money.
Obviously, I would highlyrecommend using this approach,
this random allocation method,at all costs, but if you're
(16:34):
trying to at least get a budget,and this is all you have,
that's what you start with.
Okay, the last method is ahybrid method.
Probably the most used is thehybrid method.
It takes many of the elementsof the different methods I've
talked about already and come upwith.
(16:54):
It uses them together to comeup with a realistic budget.
And this method takes intoaccount the entire firm and its
strategic initiatives, not justthe marketing department.
It also looks at thecompetitive landscape and, most
importantly, how much you canrealistically afford to spend.
Okay, so now we've talked aboutwhat considerations make up how
(17:17):
you calculate your budget indifferent methods you can use to
develop your budget.
So let's recap, becausehopefully you're taking some
notes, but if you're not, let merecap for you.
The different budgeting methodsthat I talked about today were
a percent of revenue, somewherebetween three and a percent of
revenue, using last year'smarketing budget number or
(17:41):
amount and just starting withthat for next year.
Task-oriented budgeting,competition-oriented budgeting
and the random allocationbudgeting and, lastly, a hybrid
of several of these methods todevelop your budget.
So now you might be thinking,well, what goes into my
(18:03):
marketing budget?
Well, I'm happy you asked,because that's what I'm going to
talk about.
Next I'm going to list out allmany components that I have put
into my marketing budgets orhave seen in other marketing
budgets, and again, this is notan all inclusive list, but I
hope it will give you some ideasto help get you started with
your marketing budget.
And before I get to the list,let me remind you that I put all
(18:26):
of this in a template that isfree to download.
Just head over tomarketerstakeflightcom for slash
24 to download the marketingbudget template.
And also, because we're onaudio and I can't like really
show you these on screen, I'mgoing to lump the different
budgeting components intomarketing budget items and
(18:47):
business development budgetitems.
This might help you visualizethem as I talk about them.
So let's start with marketingactivities.
I consider any activity amarketing activity if it
broadcasts our firm's brand tomany people, or the masses
really remember marketing is oneto many.
Your firm may classify thesedifferently and that's okay.
(19:09):
It's just important to identifyand organize them in a way that
makes sense for your firm andyour accounting department,
because they're going to helpyou track these.
So I lump into marketing.
So what I've lumped in the pastinto my marketing budget items
would include your marketingstaff, website development and
(19:32):
maintenance, promotion,promotional activities,
conferences and trade shows,content development,
organizational membership, duesspecifically for your marketing
staff, networking andorganizational events, maybe
those that you're likesponsoring or advertising and
marketing research or marketresearch.
(19:53):
So those were the marketingactivities.
And then business developmentactivities are those that
advance the relationship withclients and when the work, and
they're typically more focusedon a specific client, maybe a
list of targeted clients ortargeted projects, rather than
(20:14):
to the masses.
And business development budgetitems could be your business
development staff, if you havededicated staff, or the time
that your seller do or spend onbusiness development, client
relationship activities, likethose coffees, the lunches, golf
outings, whatever we can do now, right, client relationship
(20:35):
activities, a project, clientand competitor research, if
you're paying for any of thatresearch, clients, specific
fundraisers and sponsorships.
So if we had clients that wereputting on golf tournaments for
their philanthropies or theirfoundations, we'd put that under
business development.
Sometimes they'd straddle both.
(20:56):
They could be in marketing orbusiness development.
But if they're for a specificclient and we're only
participating in that golftournament because of that
client and it's that client'sfoundation, then we'd put it
under business development.
And then pursuits and proposals, time and expenses to win the
work and this does includeproposals, presentations, you
(21:21):
know anything like that.
So no matter what method you useto develop your budget or what
components or line items youhave in your budget, none of it
matters if you don't track it,if you don't have a system in
place to properly trackmarketing and business
development expenses, don'tworry about doing a detailed
(21:41):
budget.
There will be no way for you togauge how you've performed to
compare to that budget, or it'llbe really, really difficult.
You won't be able to show, ifthere has be able to gauge,
where you're over or under onyour budget.
So you won't know how you'redoing to budget.
If that makes sense, again,work with accounting and start
(22:03):
with bigger buckets to try tostart tracking it.
You know, develop the budgetand maybe have some of the
bigger buckets that are numbersso you can start tracking, so
you can see how you're doing toyour goal.
And the real purpose of settinga budget is to provide your team
with guidance and setpriorities.
The activities that have higherpriorities should have the
(22:26):
higher budgets.
Even as you move throughout theyear, you can calculate your
ROI or, as my friend Jen puts,r-o-o return on opportunity, on
those efforts and change courseas needed throughout the year.
If you have one marketingnumber for your entire firm, you
won't have the information youneed to properly calculate your
(22:47):
budget adherence, let alone yourROI.
So don't even bother setting abudget if you only have one
number.
So start working withaccounting first to get some
more numbers or your firmleadership so you can calculate
it appropriately.
And you might not be able toset a budget this year, but try
(23:09):
to get some tracking in placefor next year.
Then, a year from now, you'llat least have some historical
data to start from and to startfor your 2022 budget.
Okay, now it's time to turn thisinsight into action.
If you've never developed amarketing budget.
Go grab my template to help getyou started.
(23:30):
Find it over atmarketerstakeflightcom, forward,
slash 24.
And if you've done a budgetbefore, answer some of these
questions in the comments overon that show notes page.
How did you set your marketingbudget?
What approach did you use?
What did you like or dislikeabout that budgeting approach?
(23:51):
Again, let me and the otherlisteners know over at
marketerstakeflightcom forwardslash 24.
Make sure you're subscribed tothis podcast so you don't miss
any great episodes from me orthe awesome business developers
and marketers I have scheduledor have already had on the show.
Okay, until next week.
(24:11):
Bye for now.
Hey there, I'm Lindsay Diven and I'm passionate
about everything marketing,productivity and career growth.
With over 17 years ofexperience in the architecture,
engineering and constructionindustry, I know firsthand the
ins and outs of this excitingfield, from my early days as a
marketing coordinator tobecoming an award-winning
(00:23):
marketing professional.
In firm principle.
I've learned the ropes throughcountless late nights and
challenging deadlines.
Now I'm thrilled to bring youthe AEC Marketing Strategies
Podcast.
Here I'll be sharing simple yetpowerful, step-by-step
marketing strategies that youcan implement to achieve the
(00:44):
same level of success.
Consider me your go-tomarketing mentor, someone who
truly gets the unique challengesyou face in the AEC industry.
Whether you're an AEC MarketingPro or industry newbie, this
podcast is your personal coffeedate with your marketing bestie.
Together, we'll navigate theever-changing landscape of
(01:06):
online marketing and digitaltrends, ensuring you stay ahead
of the curve.
If you're ready to unlock themarketing secrets they never
taught you in college and tailorthem specifically to the AEC
industry, then you're in theright place.
Now let's get started.
Well, hey there.
Marketers, welcome back toanother episode of the Marketers
(01:29):
Take Flight Podcast, and overthe past several episodes, we've
been talking all about planning, specifically as it relates to
your firm's business developmentand marketing plans.
You can find the links to allof the series episode and
today's freebie, a marketingbudget template, over on the
show notes page over atmarketerstakeflightcom, forward
(01:50):
slash 2424.
And if you're really ready todive deep into business
development planning andfacilitate this process at your
firm, you can sign up for mybusiness development planning
mini workshop.
In this mini workshop, I teachyou my proven approach to
writing a business developmentplan, including how to develop
the right mix of strategy,meetings and research.
(02:13):
Then I walk you through how toexecute that plan so it doesn't
just get written and sit on theshelf.
You'll walk away with theknowledge and the tools to lead
the business developmentplanning for your firm.
Best of all, it's all on demandso you can access at the right
time for you and your firm.
Learn more about that miniworkshop and register over at
(02:33):
marketerstakeflightcom forwardslash BD plan.
Okay, so let's dive into today'stopic.
Today I'm going to be talkingall about budgets, specifically
marketing budgets.
Budgeting, specifically how toallocate for marketing, is a
common question I get.
Unfortunately, there is not aone size fits all approach or
(02:58):
answer to this question, so intoday's episode I'm going to be
going to attempt to provide youwith a framework that you can
apply to your firm as you puttogether your marketing plans
for the next year.
But before we begin, I want tocaution you.
Are you ready?
Here's what you need to know.
Every firm is different andbecause of that, you will need
(03:20):
to consider a few things beforeyou start developing and
calculating your budget.
I'm going to go through aseries of questions and these
are going to help you.
Really, there's no right orwrong answers, but they're going
to help you learn a little bitmore about your firm and the
financial aspects at your firm.
So you'll want to make surethat you have a clear
(03:42):
understanding of each of thesequestions that I'm going to go
through in a minute, and if youneed help finding those,
accounting is your friend, andso once you have good clarity
around these questions, thenthat'll really help you develop
your budget and then later on,track your budget as well.
Okay, so those questions arenumber one does your marketing
(04:03):
budget include both marketingand business development or
sales activities?
Marketing often includes themarketing staff, maybe
conferences or advertising,while business development often
includes maybe networkingevents or golf outings or when
we can travel to see clients.
And then there are pursuits andproposals.
(04:25):
Those are tracked differentlyat each firm and they could be
argued that they go into eithermarketing or business
development buckets, but I'llget to a little bit more on that
later in this episode.
So that was question number one.
Does your marketing budgetinclude both marketing and
business development activitiesor just one or the other?
Question number two how do youtrack your marketing time?
(04:49):
Do you have separate project orcharge numbers for each
activity or separate numbers foreach pursuit or proposal?
And then who can charge timeand expenses to those numbers?
I've worked at both differentfirms where only marketing can
charge time to the marketingnumber and operations charge to
(05:10):
different numbers.
So it's important to know soyou know how detailed to make
your budget and how to track it.
If you only have one number foryour entire firm, that's just
general marketing, it's gonna bevery hard to track your
marketing budget.
So question two was how do youtrack your marketing time?
Question number three whatpercentage of your pursuits do
(05:33):
you pursue as a prime, asub-consultant, and or do you
have design build pursuits?
Each of these will require adifferent level of effort and
hence bigger budgets.
If 60 to 75% of your pursuitsare design build, your pursuit
budget is going to besignificantly higher than if
(05:53):
you're predominantly a designsub-consultant.
However, other marketing and orrelationship building
activities might be higher as adesign sub-consultant than for
maybe a design build pursuits.
Next up is question number fourdo your technical staff charge
time to specific pursuit numbersor specific proposal numbers?
(06:18):
And if they do, what getscharged to those numbers?
Is it their fully loaded hourlyrate?
It's kind of like theirbillable rate that they would
build to projects.
It includes their salary, theiroverhead and a profit
multiplier.
Is that number that fullyloaded hourly rate, that being
charged against your marketingbudget?
(06:38):
When they charge put time tothat marketing number?
Or is it a rate that is closerto maybe their raw hourly rate,
which just includes salary andoverhead, or is it a blend of
both?
This is great information tohave because, especially if
you're allocating proposal hoursand a project manager on the
(06:59):
technical side is going to becharging 20 hours to a proposal,
his fully loaded rate is gonnalook a lot differently than his
closer to a raw hourly rate.
So your controller or CFO oraccounting lead can help you
answer these questions on howthose what rates get charged
towards your marketing oroverhead numbers.
(07:19):
So question number five do yourprincipals charge their time to
marketing efforts?
Again, I've worked at firmswhere principals never charge
their time to any proposal ormarketing number and I've worked
at other firms where they do.
So kind of get a good gauge onhow your principals or your CEO
or your firm leadership arecharging, if they are charging
(07:41):
time to marketing or BD efforts.
Question number six is itexpected or company culture that
marketing time or BD time is anoff the clock function for the
technical staff in your firm?
And we all like to say we putall of our honest time on our
time sheets.
(08:01):
But there are a lot of firmsthat do their just their best 40
hours and it's kind of anunwritten rule or an unsaid rule
that if you're working on aproposal or a marketing effort
it's not part of your best 40those hours.
So that is really gonna skewyour budget because you don't
(08:23):
really know who's charging orwho's really spending time on
marketing if they're not puttingit on their time sheet.
And then question number sevendo you allow or require your
staff to charge for their timefor marketing and business
development events outside ofnormal working hours, such as
evening or weekend networkingevents.
(08:43):
Again, this kind of goes backto the previous question about
kind of best 40 and the writtenor unwritten rules around
charging time.
And then last, is yourmarketing staff hourly or salary
and specifically, are theycompensated for overtime hours?
(09:04):
And, if so, this can greatlyaffect your budgets depending on
your firm's workload,specifically around proposals
and this is gonna change stateto state because there's a lot
of different labor laws aroundeach state that I have found and
I have seen marketingcoordinators and marketing
assistants be hourly employeesand then I've seen them be
(09:25):
salary and then I've even seensome where they're salary but
they also get time and a half ifthey work beyond their 40.
So those are all questions ifyou're developing a marketing
budget that you're gonna want toat least know the answers to
and I hope you are starting tosense a theme here Before you
can even start putting togethera budget, you need to know all
(09:46):
the people and the hours thatcould be charging to that budget
and how your future budgets canbe tracked.
So if you're unsure of any ofthese answers or I'm just
talking about something that'slike way over your head please
go talk to your accounting orfinance manager.
He or she will be able to giveyou a wealth of knowledge.
Enchances are, you'll needtheir help to set up and report
(10:08):
on the budget as well.
So it's again it's always goodto be friends with accounting.
Okay, so now that we wentthrough some considerations of
how time and expenses might becharged to your budget, let's
talk about the differentapproaches to developing a
budget.
There are a few common methodsto develop marketing budgets for
(10:30):
AEC firms.
First is a percentage ofrevenue.
This is probably the mostfrequently used method.
In this method, you take apercentage of your estimated
revenue to obtain the budget.
Let me give you an example.
If your estimated revenue forthe year is $50 million and you
say you want to spend 4% of thaton marketing, your marketing
(10:53):
budget would be $2 million, $50million times 4%.
Now you might be asking where Igot 4%, and that's a great
question, while I still haven'tseen any documented industry
standard as what percentage touse, what percentage of
marketing expenses you shoulduse for revenue?
(11:14):
In my experience, we've usedanywhere between 3% and 8% as
numbers, and many of factors gointo those percentages.
You might have a higherpercentage number, like maybe
the 6, 7 or 8, if you'reexpanding into a new market or
geographic area and that's goingto take more marketing expenses
(11:35):
.
If you have a merger oracquisition, those expenses
might go up because you're nowacquiring a new firm.
It's going to be some morecommunication, some more brand
awareness, a rebrand for anyreason, and then it's going to
be based also on your pursuittypes.
So if your pursuit types arepredominantly public versus
(11:56):
private, they might havedifferent types of more proposal
efforts.
If you're design build, ifyou're sub versus prime, and
then just in the markets thatyou pursue, for example, if your
main market is the federalgovernment, your pursuit costs
are more than likely going to bea lot higher than if your
(12:18):
primary market is mostly repeatprivate client work and you're
just putting together a fewproposals.
So if your primary market isthe federal government, your
pursuit costs might be up at thehigher end of maybe 5%, 6%, 7%,
8%, whereas if you're mostlydoing repeat private client work
, your proposal and maybemarketing expenses might be a
(12:42):
little bit lower than 3%, 4%.
That was the percentage ofrevenue method.
Another method is using yourmarketing budget history and in
this method uses your current,yours marketing budget and
compares you know this year'sbudget and how you did right,
(13:03):
did you go over or did you gounder and, depending on if you
and your leadership team arehappy with you know where you
went over or where you wentunder, this can be a great start
for the next year.
But obviously this assumes thatyou have a pretty detailed
budget this year and goodtracking to see what is working
(13:24):
and what isn't, and it alsodoesn't use.
Using just this method doesn'ttake into any account any new
strategic initiatives that youwant to undertake next year that
isn't in this year's budget.
However, it is a good startingplace.
If you have, you know, acurrent budget, it's a good
place to start and then adjust.
(13:45):
And that's what leads me to abetter method, which is the task
oriented budget.
With this method, you start byrecording all of the marketing
activities you plan to do in theupcoming year and then you add
them all up to get the totalamount for your marketing budget
.
Well, this may seem like adream come true for a marketer.
(14:08):
Be prepared to have thisinitial number cut.
I used this approach at my lastfirm and listed out all of our
marketing initiatives and tasksand pursuits and staffing, and
then my initial number alwaysgot cut, but at least I used
this task oriented budgetapproach.
(14:29):
Another thing that's hard aboutthis task-oriented budget
approach is that you may beestimating what activities cost
based on outdated information orjust your gut or experience at
another firm, so it may lead tosome under or over budgeting.
Another method for developingyour budget is
(14:49):
competition-oriented and thismatches what your competitors
spend, and it's another way todevelop a marketing budget, and
the assumption with thisapproach is that you want to
stay competitive and spend asmuch as your competitors are
spending on marketing andbusiness development.
All of my years in thisindustry I haven't personally
(15:10):
approached budgeting this way,but at my last firm we did start
to kind of take note on whatour competition was doing
marketing-wise during ourcompetitive intelligence
gathering, and I do know thatthere's been a push in the
industry to kind of get someresearch on what people are
spending on marketing andbusiness development and on
(15:32):
pursuits, and so if thatresearch ever happens and is
published, then you'll see whatyour competitors, or at least
industry averages, are.
Then there is the randomallocation method, and this
method is probably the secondmost frequently used method
(15:53):
Random allocation and I wouldn'tbe surprised if it isn't being
used in your firm now.
And this method follows no planand requires no justification.
It's just when the managementteam or a firm owner randomly
picks a number they feelcomfortable with.
It doesn't need any strategicthinking or planning.
(16:13):
They just say, yep, ourmarketing budget is $100,000,
and that's what it is.
I mean, that's the randomallocation method, and then you
just have to figure out what youcan do with that money.
Obviously, I would highlyrecommend using this approach,
this random allocation method,at all costs, but if you're
(16:34):
trying to at least get a budget,and this is all you have,
that's what you start with.
Okay, the last method is ahybrid method.
Probably the most used is thehybrid method.
It takes many of the elementsof the different methods I've
talked about already and come upwith.
(16:54):
It uses them together to comeup with a realistic budget.
And this method takes intoaccount the entire firm and its
strategic initiatives, not justthe marketing department.
It also looks at thecompetitive landscape and, most
importantly, how much you canrealistically afford to spend.
Okay, so now we've talked aboutwhat considerations make up how
(17:17):
you calculate your budget indifferent methods you can use to
develop your budget.
So let's recap, becausehopefully you're taking some
notes, but if you're not, let merecap for you.
The different budgeting methodsthat I talked about today were
a percent of revenue, somewherebetween three and a percent of
revenue, using last year'smarketing budget number or
(17:41):
amount and just starting withthat for next year.
Task-oriented budgeting,competition-oriented budgeting
and the random allocationbudgeting and, lastly, a hybrid
of several of these methods todevelop your budget.
So now you might be thinking,well, what goes into my
(18:03):
marketing budget?
Well, I'm happy you asked,because that's what I'm going to
talk about.
Next I'm going to list out allmany components that I have put
into my marketing budgets orhave seen in other marketing
budgets, and again, this is notan all inclusive list, but I
hope it will give you some ideasto help get you started with
your marketing budget.
And before I get to the list,let me remind you that I put all
(18:26):
of this in a template that isfree to download.
Just head over tomarketerstakeflightcom for slash
24 to download the marketingbudget template.
And also, because we're onaudio and I can't like really
show you these on screen, I'mgoing to lump the different
budgeting components intomarketing budget items and
(18:47):
business development budgetitems.
This might help you visualizethem as I talk about them.
So let's start with marketingactivities.
I consider any activity amarketing activity if it
broadcasts our firm's brand tomany people, or the masses
really remember marketing is oneto many.
Your firm may classify thesedifferently and that's okay.
(19:09):
It's just important to identifyand organize them in a way that
makes sense for your firm andyour accounting department,
because they're going to helpyou track these.
So I lump into marketing.
So what I've lumped in the pastinto my marketing budget items
would include your marketingstaff, website development and
(19:32):
maintenance, promotion,promotional activities,
conferences and trade shows,content development,
organizational membership, duesspecifically for your marketing
staff, networking andorganizational events, maybe
those that you're likesponsoring or advertising and
marketing research or marketresearch.
(19:53):
So those were the marketingactivities.
And then business developmentactivities are those that
advance the relationship withclients and when the work, and
they're typically more focusedon a specific client, maybe a
list of targeted clients ortargeted projects, rather than
(20:14):
to the masses.
And business development budgetitems could be your business
development staff, if you havededicated staff, or the time
that your seller do or spend onbusiness development, client
relationship activities, likethose coffees, the lunches, golf
outings, whatever we can do now, right, client relationship
(20:35):
activities, a project, clientand competitor research, if
you're paying for any of thatresearch, clients, specific
fundraisers and sponsorships.
So if we had clients that wereputting on golf tournaments for
their philanthropies or theirfoundations, we'd put that under
business development.
Sometimes they'd straddle both.
(20:56):
They could be in marketing orbusiness development.
But if they're for a specificclient and we're only
participating in that golftournament because of that
client and it's that client'sfoundation, then we'd put it
under business development.
And then pursuits and proposals, time and expenses to win the
work and this does includeproposals, presentations, you
(21:21):
know anything like that.
So no matter what method you useto develop your budget or what
components or line items youhave in your budget, none of it
matters if you don't track it,if you don't have a system in
place to properly trackmarketing and business
development expenses, don'tworry about doing a detailed
(21:41):
budget.
There will be no way for you togauge how you've performed to
compare to that budget, or it'llbe really, really difficult.
You won't be able to show, ifthere has be able to gauge,
where you're over or under onyour budget.
So you won't know how you'redoing to budget.
If that makes sense, again,work with accounting and start
(22:03):
with bigger buckets to try tostart tracking it.
You know, develop the budgetand maybe have some of the
bigger buckets that are numbersso you can start tracking, so
you can see how you're doing toyour goal.
And the real purpose of settinga budget is to provide your team
with guidance and setpriorities.
The activities that have higherpriorities should have the
(22:26):
higher budgets.
Even as you move throughout theyear, you can calculate your
ROI or, as my friend Jen puts,r-o-o return on opportunity, on
those efforts and change courseas needed throughout the year.
If you have one marketingnumber for your entire firm, you
won't have the information youneed to properly calculate your
(22:47):
budget adherence, let alone yourROI.
So don't even bother setting abudget if you only have one
number.
So start working withaccounting first to get some
more numbers or your firmleadership so you can calculate
it appropriately.
And you might not be able toset a budget this year, but try
(23:09):
to get some tracking in placefor next year.
Then, a year from now, you'llat least have some historical
data to start from and to startfor your 2022 budget.
Okay, now it's time to turn thisinsight into action.
If you've never developed amarketing budget.
Go grab my template to help getyou started.
(23:30):
Find it over atmarketerstakeflightcom, forward,
slash 24.
And if you've done a budgetbefore, answer some of these
questions in the comments overon that show notes page.
How did you set your marketingbudget?
What approach did you use?
What did you like or dislikeabout that budgeting approach?
(23:51):
Again, let me and the otherlisteners know over at
marketerstakeflightcom forwardslash 24.
Make sure you're subscribed tothis podcast so you don't miss
any great episodes from me orthe awesome business developers
and marketers I have scheduledor have already had on the show.
Okay, until next week.
(24:11):
Bye for now.
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