Kellblog

Since many of you are in the midst of presenting your annual marketing budgets to your CEO, CFO, and board, I thought I’d write a quick post to remind people what board members actually care about when it comes to the marketing budget.

I understand that, in the throes of budgeting, CMOs can get dragged down into a lot of detail. Diving to a deep level of detail is important, because that’s usually the difference between a real plan and a basic budget.

But, remember people: when we’re talking to the board, we need to be board level. Otherwise, they’re going to mistake you for the VP of marketing operations. (Was the CMO out sick today?)

The board doesn’t want:

• Vapid marketing cheerleading, particularly if the company is missing plan
• Overwhelming volume (e.g., 28 slides with a 15-slide appendix)
• “Banker slides” that overload them with numbers
• Recycled QBR slides, built for a different audience and purpose

While I’m all in favor of a few introductory slides that present current-year marketing performance, they should be sober and matter of fact. Too often, when CMOs try to present such slides, they end up sounding like this:

So what does the board want?

• A short deck, maybe 5-8 slides (with a slide on 2024 performance, a list of key objectives, an organization chart, and an overall budget)
• Some slicing-and-dicing of the demandgen budget that discusses both coverage and efficiency
• Slides that are custom built for the board audience

And what are the questions that are actually on their mind?

• What are marketing’s key objectives for the year? Do they align to corporate strategy? Do they align to sales? Are they the right objectives?
• Where did the budget come from?  Was it trended off last year or built from a bottom-up model?
• If it was trended, is the total spend growing slower than revenue? Could it be growing slower still? Should it be growing faster?
• If it was built off a model, who built the model? Are they any good? Is there a single model for sales, marketing, and finance, or is there a cage fight behind the scenes? Can we hit plan if we rely on this model?
• What does marketing spend look like as a percent of revenue? As a percent of new ARR bookings? Are those percents going down over time? How do they compare to benchmarks?
• What is our CAC ratio and CAC payback period? How much is marketing contributing to each? Is marketing’s relative contribution going down or up?
• And if they’re good, what is the sales/marketing expense ratio and how has that trended over time? How does it compare to industry benchmarks? On whose back are we placing the GTM efficiency monkey, and what risks does that entail?
• Where does the CMO want to spend the marketing money?  How much is going to people vs. programs vs. infrastructure? How has that mix changed over time?
• Is there any marketing money outside marketing? Does the CEO carry a pet-projects budget for billboards? Do we run a massive user conference? If that money’s not in the budget I’m looking at, then where is it?
• Do the CRO and CMO seem aligned on the marketing budget and priorities? If not, where do they differ? Does the CMO seem caught in the middle between CEO and CRO priorities?
• Does the company have an overall model for who generates how much pipeline? That is, pipeline generation targets by pipeline source (aka, “horseman”) by quarter?
• Has each pipeline owner accepted clear responsibility for their portion of the pipeline and a have a clear plan to deliver it?
• Does marketing have a plan for how they are going to spend the proposed demandgen dollars? Can I compare that plan to our historical performance to see if it’s realistic?
• Is marketing focused solely on pipeline generation or do they also worry about pipeline coverage?
• Does the marketing plan show pipe/spend and cost/oppty ratios? How does the plan compare to our historical performance? Are we increasing efficiency? Is that spreadsheet magic or are there actual reasons why those ratios should increase?
• Where are we looking at using AI to improve marketing efficiency? What are we experimenting with? How big an improvement can we expect? Have we looked at AI SDRs?
• How much money is going into squishy things like branding? Can the CMO defend that proposed expense? Do the CEO and CRO agree that this squishy spend is a priority?
• Can I trust the CMO to execute this plan? If we give them what they ask, will they deliver on the pipeline generation goals and key objectives?

I’m not suggesting that you proactively answer each of these questions in your eight slides. But these are the questions you should be ready for. In terms of how I’d map these to slides:

1. Current-year marketing performance. Metrics on the left, OKRs on the right.
2. Next-year proposed OKRs.
3. Next-year proposed organization chart.
4. Top-down S&M analysis, e.g., CAC, CPP, sales/marketing expense ratio, history, benchmarks.
5. Top-down marketing budget analysis, e.g., spend by people/programs/infra, headcount, total cost/oppty.
6. Overall pipegen and coverage model, e.g., targets by horseman, how pipegen ensures coverage
7. Demandgen budget analysis, e.g., spend by channel, pipe/spend, DG cost/oppty, coverage.
8. Menu of 3-5 optional programs with benefits and costs — i.e., try to sell the top ideas you couldn’t fit into the baseline plan in a quest for incremental money.

(Edited 12/2/24 at 9:04am to include last section on slide mapping.)