🍝 Your Q4 Marketing Budget

Hey friends,

After years of working with B2B marketers, it still surprises me how many hire a performance agency and then immediately throw a generic budget number on the table. 

B2Bs operate in a world where 95% of your ICP is out-market and only 5% are ready to buy (in-market). If you don’t budget the right amount for demand generation, it’s almost impossible for your ads to build mental availability with that out-market audience.

This comes back to bite you when they move in-market and need a product or service that you sell.

They won’t think of you. And there’s almost nothing you can do to win them back.

Here's how we help clients calculate accurate demand gen budgets so when their audience moves in-market, they hit their closed/won goals 👇

Most marketers approach demand gen budgets like this: "Let's try $15k a month across LinkedIn Ads and Google Ads and see what happens."

Every time I hear a marketer talk about a budget like this, it’s a red flag that the campaign goals won’t be hit. Because experience tells me realistic goals have not been mapped to the money being spent.

GTM programs need a systematic approach that factors in your actual audience size, realistic reach expectations, and frequency requirements to build mental availability with your ICP.

The biggest mistake marketers make when they set ad budgets is relying on vibes. You should never guess your budget, CPM targets, or audience sizes.

So, the first step to setting a realistic budget is to head over to Campaign Manager and grab your historical CPM data.

If you've been running ads for 12 months, map out your average CPM over time. This eliminates the guesswork from your biggest budget variable.

Next, calculate how much budget you need.

Here's the exact formula we use on every client account to make sure their demand generation goals are achievable:

Let’s say your ICP audience on LinkedIn is 150K and you want to hit 80% reach at 12x frequency.

Your historical CPM is $50 and you also have a 2-month sales cycle.

A $15k/month budget sounds decent, but in reality you're screwed because you actually need $36K/month to hit your demand generation goals.

The Reach Ratio™️ calculation scales frequency requirements based on your actual audience size. Larger audiences need higher frequency because there's more noise to cut through.

Use LinkedIn's targeting interface to estimate your actual audience size. Plug in your ICP characteristics—job titles, company sizes, industries—and LinkedIn will show you your target audience number.

If you have the budget, we recommend using a third-party audience building tool like Primer to get laser tight targeting across all major ad platforms. Primer also has a conversion lift analysis tool to clearly demonstrate incremental growth from your marketing efforts.

Everyone defaults to LinkedIn because "that's where B2B buyers are."

But LinkedIn has the highest CPMs in the game. You're paying premium prices to reach the same audience you could target cheaper elsewhere.

Primer can also give you LinkedIn-level precision targeting on Meta and Google. You'll get:

Your B2B buyers are scrolling Facebook and watching YouTube just like everyone else. The myth that "our audience isn't on social" is costing you thousands in wasted budget.

Most marketers can't answer whether their demand gen program is working or not because they measure the wrong metrics. I recommend using leading + lagging indicators to monitor if your ads are working or not.

Leading indicators will show up quickly:

While the lagging indicators can show up weeks, months, or even years later:

When demand gen works, it makes everything in the lagging column perform better.

Your retargeting converts higher, your sales calls are easier, and your organic search performance improves because people are actually looking for your brand.

Only a tiny percentage of your ICP is in-market to buy right now.

But when they do need your product or service in a month, six month…. next year? They'll remember the ad that stood out.

That's demand gen. You're not converting people immediately. You're building mental availability for when they move in-market.

It’s what I’m doing right now with this newsletter.

You might not need a performance marketing agency right now. But if you ever do, I hope you think about this newsletter and remember that it’s full of solid advice, from marketers who clearly know how to play the game.

And at that point, maybe you’ll drop me a DM to talk demand gen.

Hope you've found this useful and I'll catch ya in the next one!

Patrick 🤘

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