Welcome to our Guest Thinkers series, for which we’ve commissioned independent perspectives from marketing experts on topics salient to our readers. Today’s Guest Thinker is Jim Lecinski, clinical professor of marketing at Northwestern University’s Kellogg School of Management and the author of “Winning the Zero Moment of Truth” and “The AI Marketing Canvas.” Here he offers his thoughts on how marketers should approach annual marketing plans.
The views expressed in this perspective are those of the author and do not necessarily reflect the views of Google.
Imagine presenting an annual marketing plan that doesn’t just get approved, it ignites excitement in the C-suite. Too often, these plans become tedious lists of activities and costs, which fail to connect with the core drivers of business growth. What if, instead, your marketing plan was a strategic road map to achieving the CEO’s top growth target, crafted with the same ROI rigor the CFO applies to capital investments? Could this transform how the C-suite sees marketing’s value, elevating it from a cost center to a critical engine of success? Let’s examine how to do exactly that.
The common approach: task-based annual planning
I have written and reviewed hundreds of annual marketing plans during my career. The most common approach I have seen is the “task-based” approach. The team lists all the tasks they wish to undertake in the coming year and puts a price tag on each item. For instance, Next year we’d like to run 40 weeks of network TV, produce three new commercials, restage our website, refresh our packaging, sign six new influencers, and launch three new flavors, and so on. The team estimates the cost to complete each task, and sends the total to the C-suite as a plan and budget request.
If you hand what looks like a bill to your CFO, they naturally think about ways to trim it.
This common approach treats marketing as an expense: Here’s the cost to do next year’s marketing. While this method is certainly direct, it has big drawbacks. It reduces marketing to a nice but nonessential function: We’d like to do this list of cool things, if you can spare the budget for us.
The problem, of course, is that if you hand what looks like a bill to your CFO, they naturally think about ways to trim it. Your CFO inevitably gives the marketing budget request a haircut as it becomes part of the annual cost-cutting program. Marketers are asked and expected to do more with less next year. Marketing then faces budget cuts during economic downturns or rocky periods for the company, leading marketers to feel undervalued and misunderstood: My management just doesn’t get it.
In all of this, marketing’s powerful ability to help the company achieve strategic business objectives is lost.
I talked about this challenge with Andrew Gross, a highly respected CMO with deep experience writing annual marketing plans for brands like Unilever and Serta Simmons Bedding. He’s now SVP of marketing for Mariani Premier Group. Andrew agreed that the task-based approach is common but less than optimal.
He explained, “At Mariani, many of our portfolio companies grew organically through referrals and word-of-mouth, and didn’t view marketing as a necessary activity. It was a ‘nice to have’ and thus was not a funding priority historically. However the external environment in home improvement has softened post-pandemic. The phone simply doesn’t ring on its own like it did a couple of years ago, and our companies now face the difficult challenge to continue to grow well ahead of the overall market. I knew marketing could be a major growth driver, but we had to frame it differently.”
A strategic shift: outcome-based annual planning
It’s clear that the old task-based annual marketing plan needs a big makeover. That’s why leading marketers are shifting their approach to help the C-suite see marketing as a critical driver of business growth, rather than as a cost center to minimize.
The key to this shift is an annual marketing plan that reads more like an investment proposal. The annual plan should focus on the questions, “What business outcomes are we trying to achieve next year?” and “How can marketing help deliver these outcomes, while more than covering its own costs?” Let’s break them down.
Leading marketers are shifting their approach to help the C-suite see marketing as a critical driver of business growth.
Start by determining your company’s desired growth and the metric your CFO prefers, such as revenue, profit, or share. Next, determine what customer outcomes or changes would be required to deliver that growth. How many more new customers will you need? Does your typical customer need to spend 10% more? Do they need to buy from you more often? How many more purchases are needed? Roughly calculate the marketing investment needed to hit those outcomes, based on the historical data and industry benchmarks for your average customer lifetime value and customer acquisition cost. Present the results as an investment proposal to your CFO.
Here’s a simplified example of how to delight your CFO with outcome-based planning.
“Based on our previous discussions, we agreed the company’s main goal is to increase total operating profit by $1 million over the next three years, while maintaining our current net profit margin. The marketing team has developed a plan showing how we can deliver $1 to $1.2 million in profit during this period. Achieving this would require an annual marketing investment of $150,000.
“We determined we need to acquire, service, and retain 1,000 new customers over three years and calculated the marketing investment required to achieve this. While we’ve made some modest estimates and assumptions, we’re confident these provide a reliable basis for our decision-making. We look forward to sharing the details with you in our upcoming annual plan document and in-person discussion.”
State-of-the-art AI models like Google’s Gemini can now really help marketers work out these kinds of outcome-based calculations and pro forma financials. Of course, as with any AI tool, be sure to always check its logic, calculations, outputs, and recommendations in your own pro forma spreadsheet model.
This approach also prevents the all-too-common situation where management cuts the marketing budget but still expects the original results.
Notice how this approach changes the conversation with your CFO by flipping marketing from a cost center into a strategic profit driver for the company. In our example, instead of a $150,000 invoice, we propose an annual $150,000 investment to deliver major profit returns over the next three years.
It also prevents the all-too-common situation in which management cuts the marketing budget but still expects the original results. With this method, the expected results adjust as the CFO-approved budget changes.
Marketing is then allowed to become a key contributor in hitting the company’s profit target and demonstrates its potential for a high return on investment. In fact, we can calculate the marketing return on investment (mROI) using the formula: [(Incremental Gross Profit – Total Marketing Investment) / Total Marketing Investment].
![A bearded man with light skin in a gray shirt holds a calculator. A speech bubble reads “mROI.” Next to the man, a formula reads [(Incremental Gross Profit – Total Marketing Investment) / Total Marketing Investment]](https://storage.googleapis.com/twg-content/original_images/TwG_US_2553_-_Think_Piece_by_Jim_Lecinski_-_Inlines_v2_1.png)
For instance, if the mROI is 2.5, this means that for every dollar invested in marketing, $2.50 in profit is generated over the three-year period, over and above the cost of the original marketing investment. That’s a very solid investment proposal to your CFO.
Now your CFO can compare marketing investments with other potential investments the company might be considering. This breaks down the usual departmental budget silos, which can hinder the effectiveness of marketing investments. MROI also allows the CFO to shift resources throughout the year as new market opportunities and challenges arise. Your CFO may prefer other comparative measures, such as gross margin return on investment or internal rate of return, so have a conversation with them about whether mROI is indeed the preferred measure that will unlock budget silos in your organization.
The outcome of outcome-based planning
In my conversation with Andrew Gross, he shared how he gave Mariani Premier Group’s annual marketing plan a makeover by adopting just this kind of outcome-based approach. “We established a common definition of marketing, ‘the process of getting and keeping a customer.’ With this in mind, we developed a three-year business planning process that incorporates quantitative objectives for client acquisition, revenue expansion, and retention. These goals naturally flow into annual marketing planning where we can set measurable objectives against each of these fundamental drivers and align our strategies and tactics to these ultimate objectives.”
Andrew’s veteran advice for annual planning? “Go for simplicity and clarity. We keep things simple with a four-page plan format: strengths, weaknesses, opportunities, threats (SWOT); overall objectives and strategies; detailed activity budget tied to these objectives; and an activity calendar showing all the initiatives. This ensures that marketing is tightly linked to the overall objectives of the business and therefore marketers are seen as credible business leaders on par with other functional leaders in the business.”
Takeaways and actions
Marketing plans should get the same rigor and ROI focus as capital investments. When you frame your plans in terms of their expected mROI and how they match business growth objectives, CMOs will secure greater buy-in and budget from the rest of the C-suite and drive more impact.
Here are some key things to try in your next annual marketing planning process:
- Align your marketing initiatives to the goals you want to reach, like grow revenue by X or acquire Y new customers, with clear mROI projections.
- Develop detailed mROI calculations to predict the impact of marketing initiatives on business growth.
- Embrace AI tools in planning and budgeting processes, such as calculating customer lifetime value, customer acquisition costs, and marketing return on investment.
- Don’t present marketing plans solely as a list of activities and costs. Instead, link plans to business impact.
- Avoid talking about marketing as a discretionary expense in senior-level meetings.
- Don’t keep rigid budgets within your own organization. Measure results and reallocate money to the best-performing initiatives. This will benefit you in the next planning cycle.
- Track and report on key performance metrics that show how marketing contributes to business growth.
- Regularly share these metrics with senior leadership.
- Focus on mROI to reinforce marketing’s value as an investment.
Whether you have a global or midmarket brand, try giving your annual marketing plan this strategic, outcome-based makeover. It’s the best way to ensure that marketing is seen as a vital driver of ROI and business success, not simply a list of tasks with price tags. I wish you much success with your makeover!
About the Author
Jim Lecinski is a clinical professor of marketing at Northwestern University's Kellogg School of Management, where he was named 2022 Professor of the Year. A recognized marketing expert with over 30 years of experience, Jim teaches popular MBA courses on marketing strategy, omnichannel marketing, and AI for marketing. His seminal book, “Winning the Zero Moment of Truth (ZMOT),” has been read by over 300,000 marketers worldwide. His latest book is “The AI Marketing Canvas,” published by Stanford University Press. Follow him on LinkedIn and watch for future articles from Jim here on Think with Google.
