At Transcend360 we have worked with numerous businesses in deploying our Marketing Operations solution to address planning, budgeting and financial management processes in marketing departments. During this time, we have seen some great examples of good and best practices, but we have also seen some common problems and issues that result in poor outcomes and wasted funds.

A marketing plan is often created by combining data from multiple sources. In this process we often see data being re-keyed from one source into another and this is when transposition errors can occur. We also see templated planning spreadsheets where formulas or the integrity of the template have been tampered with (in most instance unintentionally) which results in columns and row totals adding up the wrong values resulting in incorrect totals that may over or under-represent planned budget numbers.

Most marketers experience difficulties with budget visibility and understanding actual spend versus planned spend. The more actors in the chain intensifies the problem, no more so than when some of those actors are external to the organisation like distributors, resellers and agents. Without a precise view into the actual spending vs. plan, most marketers choose to spend conservatively to make sure they don’t exceed their budget – this in turn can lead to “blocked budget” described below.

We see many marketing plans at all levels failing to capture planned metrics for marketing programs and marketing activities consistently. Not only does this impact the quality of the marketing planning process, it also has an impact on the evaluation of the (effectiveness of) marketing activities once they are completed. Accurate metrics throughout the process from planned to actual will result in better results and allow the organisation to learn more effectively.

So, what is a “blocked budget”? A blocked budget results from poor forecasting and typically results in leaving money (budget) on the table. Bearing in mind marketing funds are designed to deliver a return on investment it is not just the money that is left on the table, it is the “return” that would have resulted from the correct spending of the budget that is lost to the business forever.

Marketing budgets are complex beasts. Spend can exist in multiple status’ including, (but not limited to) budgeted, planned, committed and spent. There are also differences from what finance wants and what marketers need. This disconnect between marketing and finance can cause enormous difficulties. Timing of the accounting of expenses can produce material variances in the understanding of the actual expenditures versus the finance view. It is critical to get this timing right so the business has the correct view of committed and spent funds so that necessary amendments can be made whilst a quarter is in flight with full knowledge of the current situation.