Manage Marketing with a Budget

By Jean Marie Caragher

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Partners continue to demand a return on marketing investment.  This is not possible without a marketing budget.  Your budget provides the financial resources required to implement your marketing plan and track your return on investment.  

There are at least two ways you can look at developing your firm’s marketing budget. First, you can look at the amount spent in the prior year and increase/decrease, as appropriate.  Second, you can look at what you would like your firm to accomplish in the upcoming year and determine the amount necessary to help make it happen.  The latter strategy is proactive and gives your marketing program a greater chance to succeed.

Focused on Niches

Michelle Class, marketing manager, Barnes, Dennig & Co. (11 partners, 92 total staff, 1 office) has been responsible for developing her firm’s marketing budget for the past six years.  Class starts the process in mid-September and forwards the draft budget to the controller by mid-October.  She also evaluates the “surprise” categories with her managing partner.

“Our marketing plan and budget focus on our niches,” explains Class.  “Our budget categories include four industry niches, two service niches, public relations, referral source development, promotions, and firm development (activities with prospective clients, membership dues, and anything that isn’t niche related).”

The largest portion of Barnes Dennig’s marketing budget—23%–is client development, including entertainment and sponsorships.  The next largest line item is charitable contributions at 12%.  “I’ve learned to think like an accountant,” says Class.  “Standards have been set for our charitable contributions.  We evaluate the number of relationships a contribution may impact before it is approved.”

Barnes Dennig organizes 20 seminars each year.  The marketing budget helps Class determine the number of joint venture sponsors that are needed.

Barnes Dennig’s marketing budget is 2.59% of net revenue, not including marketing staff salaries.  Each month Class prepares a Monthly Allocation Sheet indicating the marketing dollars being spent that month.  “This is a great cash flow tool for our managing partner and controller,” says Michelle.

Focused on Projects

Brian Falony, director of marketing, Habif, Arogeti & Wynne (24 partners, 200 total staff, 1 office) creates the firm’s marketing budget around marketing projects.

Falony reviews the prior year’s budget.  Then he meets with each practice group director and other key partners to determine the marketing projects necessary to achieve their revenue goals.  “Tying the budget to specific projects enables us to discuss the expected results,” says Falony.

What Falony calls marketing infrastructure items, for example, advertising, databases are determined without partner input.  “The budget is reviewed by our Executive Committee,” explains Falony.  “If reductions are necessary, then I determine how the budget will be reduced.”  HA&W’s marketing budget is 2.8% of net revenue including marketing staff salaries.

Start With a Marketing Audit

Jill Lock, director of marketing, Isdaner & Co. (9 partners, 65 total staff, 1 office) created the firm’s first marketing budget when she joined Isdaner & Co. four years ago.  

“I conduct a marketing audit every year to help determine the firm’s marketing needs,” explains Lock.  “For example, when I joined the firm we didn’t have any brochures.  That was a big investment that first year.  The second year we invested in a trade show booth and the next year we developed an employee incentive program.”

Lock includes five columns in Isdaner & Co’s marketing budget: Project, Objectives, Timeline, Target and Cost.  The budget corresponds with the firm’s marketing plan.  Isdaner & Co.’s marketing budget is 1.5% of net revenue, not including marketing staff salaries.

“I solicit input throughout the year,” says Lock.  “The budget goes to my managing partner for approval.  Then, I present it to the partners.”

How Much to Invest?

How much are firms investing in marketing?  Capstone Marketing surveyed CPA firm managing partners and marketing directors to find out.  As a percentage of net revenue CPA firms are investing:

Managing Partner Responses Marketing Professional Responses
Less than 1% 2% 11%
1%-2% 29% 23%
2.1%-3% 35% 31%
3.1%-4% 15% 8%
4.1%-5% 8% 5%
5.1% or more 4% 1%
I don’t know 6% 17%


Fifty-two percent of managing partner respondents and 23% of marketing professional respondents indicated that their marketing budgets include marketing staff salaries.

The Association for Accounting Marketing recently published its 2006 Accounting Marketing/Sales Responsibility and Compensation Survey Results.  As a percentage of net revenue the marketing investment of AAM member firms is:

Just 29% indicated that their marketing budgets included marketing staff salaries.

Lessons Learned

Developing and managing a marketing budget is a valuable process, which contributes to a firm’s profitability.  Here are a few guidelines to keep in mind:

  • Involve your partners in the budgeting process.  This helps them take ownership in the process and the final budget.
  • Understand the numbers in your budget.  Be willing to be held accountable.
  • Allow ample time to develop a comprehensive budget.
  • Include a cushion for unexpected expenses.
  • Keep a list of unanticipated marketing items/activities that come up throughout the year for consideration the next year.
  • Monitor the marketing budget each month to confirm how your investment is being spent.
  • Stick to your budget yet be flexible enough to reallocate expenditures, if necessary.
  • Evaluate your marketing professional on her ability to develop and manage a marketing budget.  

Advice for First-Timers

If you are faced with creating your firm’s first marketing budget here are a few tips:

  • Develop a marketing plan before tacking the budget.
  • Determine the marketing expenses from the prior year.  Set up budget categories.
  • Include the objectives for each budget item.  What are you trying to accomplish?  Tie to expectations of increased revenue.
  • Work with a partner with experience in developing budgets for clients.
  • Be sure that your budget supports the mission, vision and core values of your firm.
  • Once the budget is approved the marketing professional should be responsible for management and implementation without further partner approval.

Wall, Einhorn & Chernitzer, P.C. (11 partners, 80 total staff, 1 office) created its first marketing budget in 2006.  “Creating our marketing budget helped us focus on how to spend our marketing dollars,” says Marty Einhorn, managing partner.  “The process was a positive experience.  It provided us with the opportunity to plan and to spend our energies in areas of importance.  We no longer spend time talking about things that don’t make sense.  And, my partners don’t question marketing spending anymore.”

Marketing professionals are encouraged to develop a marketing budget even when partners don’t think that a budget is important.  “Creating and managing a marketing budget helps establish your credibility,” explains Lock.  “It shows that you are taking your role seriously.”

Whether you are creating your firm’s first marketing budget or fine-tuning your budget process you will benefit from the ability to make smarter marketing decisions and to calculate your return on marketing investment.


Marketing Budget Line Items

  • Advertising
  • Consultants
  • Direct mail
  • Membership dues
  • Mixers
  • Networking events
  • Postage
  • Promotional items
  • Proposals
  • Publications
  • Research
  • Salaries
  • Seminars
  • Sponsorships
  • Subscriptions
  • Technology
  • Training
  • Web site
  • Miscellaneous