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Optimizing Your Marketing Budget – Strategies for Financial Marketers

Shagun Mehta

Shagun Mehta

PR and Content Specialist
  • Last Updated: January 31, 2024

In This Article

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The task of crafting a precise marketing budget, especially in an ever-evolving world of financial marketing is among the most crucial.

An effective budget not only allocates resources efficiently but also serves as a persuasive tool when justifying marketing expenses to senior leadership – in terms they care about: financial results.

However, given the rapid pace of change in financial marketing, a flexible framework that combines structure with adaptability is essential.

If you’re seeking a cost-effective marketing channel with a high return on investment contact us and discover our customized affiliate marketing solutions designed for financial institutions.

Man in a blue shirt arranges coins in piles

1. The Top-Down Approach

Top-down budgeting is a widely adopted method in the financial sector. In the past few years we’ve witnessed the power of data-driven decision-making.

CFOs and CMOs now leverage robust data analytics to set annual marketing investment targets. According to a recent study by Deloitte, 85% of financial institutions report using data analytics to inform their budget decisions.

These targets are then divided into significant expenditure categories. Mid-level marketing leaders receive these budgets and further allocate them based on departmental needs, such as marketing channels or functional teams.

Finally, individual marketers or marketing team leaders use these budgets for high-ROI programs, campaigns, and activities.

Most banks structure their top-down budgets in one of three ways:

– By Business Unit
Common in banks with diverse product lines, this classification includes units like savings accounts, credit cards, private wealth management, and investments.

– By Region
Suitable for banks operating across multiple regions or with a strong geographical focus, such as rural banking networks.

– By Functional Area 
This approach allocates budgets along functional lines like sales, marketing, compliance, and treasury, with further subdivisions for activities like events, public relations, and digital marketing which could further be divided into social media or affiliate marketing. Many banks also use a combination of these structures

Pro’s and Con’s

The advantage of this top-down approach is the clarity and structure it brings to budgeting. Senior leadership defines the overall strategy and allocates resources accordingly.

Middle and junior management then manage programs based on these decisions, ensuring coordination across the organization.

However, its downside is its lack of flexibility. Once budgets are set, obtaining additional funds for time-sensitive opportunities during the fiscal year can be challenging.

This rigidity can also encourage departments to advocate for larger budgets at the start of the year, potentially leading to inefficient capital allocation.

2. The Botton Down Approach

To address the issue of inflexibility, the bottom-up budgeting method collects input directly from the frontline.

In this approach, each marketing team creates a wishlist of preferred programs for investment.

These lists are submitted to mid-level marketing managers, who collaborate with team leaders to prioritize the most promising programs. Finally, these recommendations are presented to senior leadership for approval.

A well-executed bottom-up approach is always tied to clear marketing goals and metrics which are continuously monitored and adjusted using real-time data.

Frontline marketers must have a solid grasp of their numbers to justify their requests. Building a marketing budget that aligns with your objectives involves a fundamental formula:

Variable Costs + Per Piece Costs + Fixed Operational Costs

Let’s break this down:

1. Variable Costs

Variable costs are not only easy to compute but also financially preferable. These encompass pay-for-performance marketing channels, like affiliate marketing or PPC campaigns.

The Fintel Performance marketing platform excels in this regard, offering powerful multi-event tracking and reporting features and a transparent view of your affiliates’ performance.

This grants you effortless access to where your budget is allocated and enables swift identification of the most effective areas to invest your resources.

The formula for variable costs boils down to:

Cost per Acquisition (CPA) x Number Of Goal Conversions

What makes variable costs attractive is their simplicity. Once you’ve calculated the lifetime value (LTV) of each customer, you can efficiently scale your variable costs until the CPA exceeds the LTV, ensuring cost-effectiveness.

2. Per-Piece Cost

Some marketing channels, such as content marketing or display ads, aren’t directly tied to conversions.

For these channels, determining costs involves establishing an average price for each conversion generated by a specific piece of content. The formula goes like this: 

Cost of Piece of Content Production/Number of conversions

This number allows you to multiply it by your conversion target for that channel, giving you the total per-piece costs for the budgeting period.

3. Fixed Operational Cost

Lastly, there are fixed operating costs, which encompass regular expenses necessary to maintain your marketing machinery.

This category includes salaries, software licenses, subscription fees, team education, and professional memberships.

By combining these three components, you’ll develop a robust budget that can be presented for approval.

This budget not only provides a clear financial picture but also ensures your marketing efforts are aligned with your goals, enhancing your chances of success.

Pro’s and Con’s

The bottom-up approach excels in grassroots focus. Marketing teams in the field are better positioned to identify emerging opportunities, contributing tactical granularity to budgeting.

Engaging frontline staff in the budgeting process also fosters operational buy-in. Since they contribute to the budget’s design, the team is more likely to take ownership and feel responsible for executing it successfully.

However, this approach may struggle to scale, especially in large, complex organizations. Administrative costs can also pose challenges. For such organizations, a top-down approach with bottom-up feedback might be more feasible.

Striking a Balance – Finding the Golden Mean

The financial marketing landscape has evolved to embrace data and technology more than ever before.

Effective bank marketing budgets incorporate elements of both top-down and bottom-up data-driven strategies to find the golden mean.

Armed with an understanding of both approaches, you can craft a budget that combines data-driven precision with adaptability, ensuring your financial marketing initiatives thrive in this dynamic environment.

If you’re looking for a high ROI, cost-effective marketing channel to enhance your portfolio, feel free to reach out to us and explore our affiliate marketing solutions tailored for financial institutions

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