The document provides guidance on how to allocate a marketing budget by first identifying strengths and weaknesses of current activities, conducting research to understand customer motivations, and developing a marketing roadmap. It recommends starting with smaller, easier to measure activities before moving to larger ones, and carefully measuring results before allocating more funds. The key steps are to identify what's working and not working, conduct quick customer research, build a marketing roadmap with a mix of small, medium and large activities, launch activities and refine based on results.

1. How to Unpack a Marketing Budget
Overview
This paper describes how to allocate a marketing budget by 1) identifying the strengths and
weaknesses of the existing marketing activities. 2) Conducting research in order to better
understand buying motivators of the target market. 3) Developing a marketing road map which
includes a marketing Gannt chart of various “small,” “medium” and “large” marketing activities.
The initial mixture of activities in the marketing road map includes more small activities than
medium ones and few, if any large marketing activities. Finally, the first marketing activities are
launched and then carefully measured before allocating more marketing dollars to them.
Once Upon a Time…
Not too long ago, a wise man took a pile of rocks and divided them into three piles of large,
medium and small rocks. Next, he put the large rocks into an empty container, followed by the
medium size rocks and then the small ones. When he was done he asked his audience whether
or not the container was full. The audience looked at it and said, “Yes it is.”
Then, the wise man grabbed several handfuls of pebbles and he put them in the container until
they filled all the way up to the top. Again he looked at his audience and asked if it was full. The
audience carefully looked at the container and said, “Yes, this time it’s full.”

2. The wise man then grabbed a bucket of sand and poured it into the container until the sand
completely engulfed the pebbles and rocks. Then he turned to his audience and asked the same
question. This time they did not reply, so he pulled out a pitcher of water and filled it all the
way to the top of the container and sealed it air tight. “There,” he said, “now it is completely
full.”
The reason I share this analogy with you is because whenever you are planning something as
important as allocating a marketing budget, you don’t ever want to feel that you did something
wrong or out of sequence. If a marketing budget isn’t carefully planned or measured, it can
have grave consequences for even the most successful companies.
The way I plan a marketing budget is to “unpack the filled container.” By that I mean I start with
the small, easily measured marketing disciplines (the water, sand, pebbles and small rocks) such
as Pay-Per-Click advertising, email marketing, or landing page optimization, then quickly test
their effectiveness. Next, I move on to larger marketing “rocks” such as print advertising, public
relations, event marketing, and other forms of online and offline marketing activities that
require more resources and time to measure their effectiveness.
But before I go on, I would be remiss if I were to tell you that there is only one, single best way
to build out a marketing budget. There isn’t. Each company has its very own unique set of
attributes and detriments.
In other words, each company has its unique set of “rocks” and
“sand” to work with. While there is an overlap in the assessment of
marketing pieces from testing smaller ones to measuring larger ones,
each marketing activity has it its own strengths and weakness, just as
some rocks have their own unique shapes and sizes.
Said another way, preparing a marketing budget is similar to how the
wise man prepared to fill the container. But before determining how
to unpack the container we need to look at how the container was
filled in the first place.
The wise man first looked at the strengths of his current resources (rocks, pebbles, sand, etc.)
as well as the weaknesses (shapes and sizes of rocks, amount of water, etc.). Then he tested his
theory and measured the effectiveness of his actions before successfully filling the container.
The very first thing to do then is to identify what is working and what isn’t working in your
existing marketing activities. Once these two polar extremes are identified it’s easy to capitalize
on what is working and eliminate or cut back on what isn’t.

3. Far too often, the main problem I’ve uncovered is that marketing activities are not being
measured. The old saying “I know 50% of my advertising works; it’s just I don’t know which
50%” doesn’t fly in today’s economy where everything online “and offline” can be measured by
clicks, tweets, phone calls, event attendance, submission forms filled out, post cards, free
downloads, single and multiple purchase activities, live chat, etc., etc.
After measuring the degree of success of each activity, it’s time to unpack the tight container.
Although pay per click (“PPC”) is a great way to test for market readiness inexpensively, it may
not be the first solution to address for improving sales.
There are four major components of a double funnel marketing diagram (DFMD) to look at first;
traffic generation, conversion optimization, recapturing and nurturing leads, and list building.
The 4 Components of the DFMD
The first component is Traffic Generation. It includes such marketing activities as PPC, search
engine optimization (“SEO”), print advertising, affiliate marketing, etc. These activities are used
to drive traffic to the site.
The second component is called Conversion Optimization. This component identifies what
happens after traffic comes to the site - did they make a purchase, if not what can be done to
change the conversion rate? The conversion rate is a measure of how many people completed a
desired action. A conversion rate can be the number of people who watched a webinar, filled
out an order form, clicked on a link, or completed any other measurable action.
Increasing the bottom line conversion rate (the number of people who made a purchase) by a
little can greatly improve sales and decrease the cost of ROI or Return on Ad Spend (“ROAS”).
After all, you might spend a lot of money generating traffic to your site but you might have very
low sales if you have a low conversion rate.
Conversion Optimization follows a practice of marketing kaizen – a continuous improvement of
measured actions resulting in greater efficiency and effectiveness. By first defining which
metrics will be used to measure a desired action, it is possible to accurately test the success of
that action and continuously improve its performance.
The third component is what I call “Recapturing and Nurturing Leads.” This component focuses
on 1) people who did not buy when they first came to the site but are familiar with the
company’s offering or 2) have already made a purchase. This component consists of email
marketing techniques, value added resource (“VAR”) creation and other activities used to
recapture and nurture prospects and existing customers. Additionally, this component provides

4. a “closed loop” in the marketing funnel by gathering insights about customers’ buying behavior
and evaluating marketing activities according to bottom line results.
The last and perhaps most critical component of the DFMD, is List Building. This component is
used to 1) multiply the company’s sales by marketing to the existing customer base in order to
create cross sells, and up sells and 2) convert customers into raving fans.
To better understand how these four components work together, please view the diagram,
“The Double Funnel Marketing Diagram” below.
The four components of the DFMD can be compared with the four elements the wise man used
to fill the container. The first component, Traffic Generation, is rocks. The second component,
Conversion Optimization, is pebbles. The third component is sand and the last is water.
Traffic Generation can be thought of as large rocks because it can require large amounts of
resources to operate. However, the activities in Traffic Generation can and should be tested in
small quantities first (i.e. small rocks) before increasing their budgets.
Once the four components have been analyzed and it has been determined which activities
within the four components to focus on first (i.e. whether it’s SEO for driving traffic, persuasive
copywriting for converting traffic, email marketing for nurturing leads, etc.) then it’s time to
unpack the “small rocks.”

5. Unpacking Small Rocks
Small rocks are marketing activities that can be quickly tested by utilizing only a small amount
of resources (time and money) to prove their effectiveness. Different marketing activities have
varying degrees of “sizes.” For instance, email marketing is a small rock because it requires very
little capital and time to create and its ROI can be measured fairly quickly. In contrast, SEO is a
medium size rock, because it requires more time to see results (typically six months or so), but
it requires relatively little capital in comparison to a large rock, like a 12 month, nationwide
print advertising campaign in a major trade publication; which requires a large amount of time
and money to prove its effectiveness.
Small rocks are first tested for their usefulness by utilizing only a small budget to calculate their
ROI. Once the marketing activity has proven to be successful, more marketing dollars can be
added to it and small rocks can turn into large “rocks” (i.e. proven marketing activities with
large budgets).
Just as the wise man filled the container with large rocks first, it is important to unpack the
filled container with small rocks and begin testing marketing efforts that can be quickly
identified as having a sufficient ROI before allocating large amounts of money and time to
them. Small rock marketing activities include:
 PPC (if tested after first identifying competitor intelligence – there are a variety of ways
to do this correctly and inexpensively)
 Email marketing (if it provides value and is tied to a clearly defined call to action)
 Landing page optimization (if web analytics show large bounce rates more than 70% on
key landing pages and changes can be implemented quickly)
 Social media (if accurately traced to bottom line results for converting warm leads)
 Print advertising (if first tested in small, niche publications with a strong call to action
and defined metrics such as a separate phone line, landing page, offer, etc.)
 Affiliate marketing (if it is already established and nurtured)
 Joint venture marketing (depending on the partner and resources required – especially
helpful during point of purchase for cross sell opportunities)
 Direct Mail (if marketing to existing customers in order to increase up sells and cross
sells)
 Live Chat (especially helpful for gathering research and converting leads during ready-
to-buy activities)
 Etc.
What’s important to know about these small rocks is that they can easily be converted into
“medium” and “large rocks” by allocating more time and resources to them. However the

6. reverse isn’t true. Some marketing activities inherently require more time and money to
determine their ROI and therefore must be classified as either medium or large.
Unpacking Your Rocks
The goal of allocating the marketing budget is to utilize resources as efficiently while gaining
market share as fast as possible.
As the Chief Marketing Officer, it is your job to design a marketing campaign that includes the
best possible mixture of rocks. If you are working for a small, fast growth company with limited
resources then you will measure the effects of many “small rocks” while concurrently running
and tracking campaigns of a few “medium rocks” and some, or possibly none, “large rocks.”
However, if you work for a large, slow growth company with a large marketing budget your
mixture will consist of many small rocks used to 1) test brand new activities and 2) increase the
performance of existing medium and large size activities. You might also include several
medium size rocks to test new activities and increase the performance of a few large size
activities as well.
In order to determine the best initial mix of marketing activities, it is necessary to first identify
relevant customer behaviors such as where prospects find information related to their buying
decision, and the criteria they use in making buying decisions.
Although market research reports can be purchased to identify the activities of an entire
industry, they usually fail to provide specific insights into your unique customer’s actions. As an
internet marketing consultant for Jupiter Research, I heard multiple clients describe analyst’s
reports as a “compass” for making broad, strategic decisions, and custom research reports as a
“road atlas” for making tactical, practical decisions.
Traditionally, marketing strategies consisted of written text and visual graphics used to describe
how to penetrate the target audience and convince them to buy. New, more practical and
informative marketing strategies called road maps, provide a clear direction of multiple
methods for engaging prospects and influencing their thought process until (and after) they
buy.
Identifying a Clear Path with a Marketing Road Map
Marketing road maps are different from traditional marketing strategies because they weigh
the costs of taking the action against other actions and provide a clear indication of which
activities can run concurrently. Unlike the traditional linear path of most marketing strategies, a

7. marketing road map provides a list of marketing activities according to start and end times, that
is very similar to how a list of manufacturing processes are displayed on a Gantt chart.
See the diagram below for an example of a marketing road map Gannt chart.
The secret to creating a successful road map is to build a list of activities, then categorize each
activity according to ROI and timeliness, while carefully interpreting the results of each
individual activity.
Creating a road map requires evaluating the unique strengths and weaknesses of a company’s
existing marketing efforts in order to identify the path of least resistance. Utilizing information
based on industry averages or previous marketing strategy “best practices” is akin to using the
driving directions of one person looking for a grocery store in Peoria and another looking for a
shopping mall in Palo Alto.
The misdirection will only guide the driver to the wrong location and consume a lot of time and
gas in the process.
What if, for example, a company decided to implement a major TV campaign because the Chief
Marketing Officer heard that his competitors were doing so, without identifying the strengths
and weaknesses of the company’s marketing campaign first? At best, Conversion Optimization
may be operating at an optimum result and the CMO is “only” over-allocating Traffic

8. Generation resources. At worst, the Conversion Optimization component might be performing
very poorly and all the money spent driving traffic to the site is wasted due to a low conversion
rate.
Therefore, it is necessary to identify where to go and how to get there after identifying the
strengths and weaknesses of the current marketing campaign. Just as the wise man first
evaluated his resources, then designed his theories, current marketing activities must be
evaluated before new theories are tested.
The best way to gather custom research is from your front line – sales representatives, web
analytics, online chat professionals (they aren’t only used for customer service any more),
online and offline surveys, webinar polls, etc.
Once research has been conducted it can be turned into a sales and marketing tool called a
“persona.” A persona is a detailed description of your prospects’ buying behavior according to
personality types and purchase requirements. Personas are used to design semi-custom
messaging to the target market (usually consisting of 3-5 persona groups) so the segmented
audience feels that the marketing message addresses their specialized needs.
The problem with market research is that it requires time and can get in the way of creating
useful action.
Donald Trump is famous for identifying opportunities set before him, as well as for carefully
evaluating the costs incurred by opportunities not taken. By spending too much time on market
research, you lose the opportunity to take action. However, if you don’t spend enough time
conducting research (or if it it’s done incorrectly) the money spent on marketing could be
wasted. Therefore, it is necessary to spend just the right amount of time required to conduct
research appropriately. The old saying, “You never know why John Smith buys what John Smith
buys until you see the world through John Smith’s eyes, “still rings true today.
Working for Jupiter Research provided me the opportunity to conduct in-depth research and to
shape the marketing strategies of dozens of fortune 500 companies. But it is my nine years of
experience in marketing consultation that led me to identify very effective ways to develop
marketing road maps for small and midsized companies through the use of low cost research
methods coupled with a very few (if any), expensive market research tools.
Summary
As the Chief Marketing Officer it is important to first identify what’s working and what isn’t
working for your existing marketing activities in each of the four components of the DFMD. This

9. can be accomplished by using multiple free and inexpensive software tools to measure the ROI
and ROAS for all online and offline marketing activities.
Next, quickly conduct research and build out three to five personas to craft semi-custom
marketing and sales messages that strongly resonate with the target markets’ specific needs.
These messages can be used to create content for landing pages, emails, sales scripts, print and
interactive ads, press releases, direct mail, PPC ads, tweets, webinar scripts, and VARs such as
white papers, ebooklets, product comparison tables, and other free downloads etc.
Additionally, the insights gathered from market research can be used to improve conversion
optimization practices and recapturing and nurturing leads.
After identifying the motivators of the personas, build the marketing road map by identifying a
mixture of small, medium and perhaps large marketing activities to begin with and place these
activities into a marketing Gannt chart.
Finally, launch the activities, measure the results and refine the marketing strategy according to
how well the activities performed. Wash, rinse, repeat.
If you follow these steps you’ll be able to quickly capitalize on what’s working, improve what
isn’t and identify new ways for effectively gaining marketing share.