Every budget season, finance has to put one number against marketing before marketing has finished asking for it. Here is a simple framework for setting that number so it holds up, for the board and for the year.
If you are the CFO or run FP&A in a large company, the marketing budget is probably one of the hardest lines you set each year. It is large, it is discretionary on paper, its returns are argued about rather than proven, and it tends to be the first place the board looks when the year turns difficult. At the same time you know that cutting it too hard costs you growth you will not see until much later.
This guide gives you a four-step way through it: size the starting number, test it against what marketing brings back, protect the year with agreed scenarios, and release the money in a way that keeps control without starving the plan. It is written for finance, and our CMO's guide to budget season covers the same months from marketing's side, which is useful to know before the two teams sit down.
Key takeaways
Set the starting number with one method and cross-check it with a second. The common methods are share of revenue, last year adjusted, objective and task, and listed peers.
The gap between finance’s number and marketing’s own plan is useful information, not something to split down the middle.
Ask marketing what’s already committed for next year, because a cut to the total lands entirely on the part that’s still flexible.
Agree two or three scenarios while the budget is being set, so a mid-year cut follows priorities everyone has already agreed.
Release the approved budget quarter by quarter, based on what’s committed plus planned activity, and hold back the rest until you see performance.
Step 1: Size the starting number
Most finance teams use one of four methods to arrive at a first figure for marketing, and each one has a place. The trick is to anchor on one and cross-check with a second, so that no single method decides the number on its own.
Method | How it works | Good when | Watch out for |
|---|---|---|---|
Share of revenue | Marketing gets a set percentage of next year's planned revenue | The business is stable and the ratio has held for years | It cuts marketing when revenue dips, exactly when share is cheapest to win |
Last year, adjusted | This year's budget, moved up or down for inflation, growth and priorities | You need a quick, defensible starting point | It rolls forward spend nobody has questioned in years |
Built from marketing's objectives | Marketing costs out the activity needed to hit agreed goals | Launches, new markets, or a real change in strategy | Plans can be generous; every line needs a measurable outcome |
Compared with listed peers | Advertising and promotion as a share of revenue at comparable companies | Checking whether the number is in a sensible range | Peers differ in mix, channels and stage of growth |
The peer comparison is more useful in India than many finance teams expect, because listed companies disclose their advertising and promotion spend. In the nine months to December 2025, for example, Hindustan Unilever spent about 10% of its revenue on advertising and promotion, while several FMCG peers held that spending growth under 5% to protect margins as urban demand stayed weak, as Storyboard18's analysis of FMCG results shows.
Step 2: Test it against marketing's plan
While you build your number from the top down, brand and category teams build theirs from the bottom up, and the two will not match. That gap is not a problem to be closed by splitting the difference; it is the most useful information you will get all season, because it shows you where marketing thinks the growth is and what it believes it needs.
So instead of negotiating the total, ask for the plan in a shape you can test. These are the questions that do the most work:
What did this year's budget actually buy? Planned, committed and spent, and why money moved during the year.
What is each major line for? The business outcome behind it, in volume, distribution, launches or share.
What is already committed for next year? Media deals, retainers and contracts that carry into April.
What would you protect, and what would you trade? Marketing's own priorities if the number comes in lower.
When do you need the money? The quarterly phasing around seasonal peaks.
The third question matters more than it looks. Annual media deals, retainers and multi-year contracts land on next year's books whatever the annual budget decides, so a discussion about trimming 10% of the total is really a discussion about trimming a much larger share of the flexible part. Our guide to committed vs actual marketing spend explains how to keep track of that line once the year starts.
Step 3: Protect the year with agreed scenarios
The moment that damages the relationship between finance and marketing is rarely the budget meeting. It is the mid-year cut, made in a hurry when volumes fall short, with nobody quite sure which commitments can be undone. A better approach is to agree to two or three scenarios while the annual budget is being set, so that a future cut becomes a decision the two teams have already made together.
Here is what that can look like. The numbers below are illustrative.
Base case | Volumes 10% below plan | Volumes ahead of plan | |
|---|---|---|---|
Planned revenue | ₹2,000 crore | ₹1,800 crore | ₹2,150 crore |
Marketing budget | ₹160 crore | ₹140 crore | ₹172 crore |
Already committed (media deals, retainers) | ₹60 crore | ₹60 crore | ₹60 crore |
Flexible spend | ₹100 crore | ₹80 crore | ₹112 crore |
What changes | Plan as agreed | Hold back new-market activity and the second half's brand campaigns; protect the two lead brands | Release the held-back balance to the brands ahead of plan |
Two things stand out when you lay it out this way. The committed ₹60 crore does not move in any scenario, so the real cut in the downside case falls on a much smaller base than the headline suggests. And because the protected lines are written down in February, nobody has to argue about them in September.
Step 4: Release it quarter by quarter
Once the annual number is approved, most large Indian companies release it a quarter at a time, against an agreed phasing that follows the seasons rather than an equal split, and re-forecast at the half-year and again around the third quarter. Releasing against what is already committed for the quarter plus planned activity, and holding the balance against performance, keeps control without starving the plan. Our guide to running the marketing budget quarter by quarter sets out the release calendar and the rules worth agreeing up front.
Frequently asked questions
How do CFOs decide the marketing budget?
Most CFOs start with a top-down figure, usually a share of planned revenue or last year's budget adjusted for growth and priorities, then cross-check it against listed peers in the same category. They test that figure against marketing's bottom-up plan, separate what is already committed from what is flexible, agree scenarios for a shortfall or an upside, and release the approved budget quarter by quarter.
What percentage of revenue should go to marketing in India?
It varies widely by category. Consumer goods companies typically spend far more than industrial businesses; Hindustan Unilever, for example, spent about 10% of revenue on advertising and promotion in the nine months to December 2025. The most useful comparison is against listed peers in your own category, using their disclosed advertising and promotion spend, rather than a global average.
Should finance use zero-based budgeting for marketing?
Zero-based budgeting, where each line is justified from scratch, is useful for clearing out spend that has rolled forward for years without a clear purpose. Applied to the whole marketing budget every year, it is time-consuming and can slow down the whole budget process. Many companies apply it to selected spend categories, or every few years, and roll the rest forward with an adjustment.
What should finance ask marketing for when setting the annual budget?
Ask for this year's planned, committed and spent figures with the reasons money moved; next year's plan by brand, region, channel and activity, with the business outcome behind each major line; what is already committed for next year; marketing's priorities if the budget is smaller; and the quarterly phasing.
How does a marketing spend governance tool like Brandintellé help finance set and control the marketing budget?
It holds the approved budget in the same structure marketing plans in, by brand, region, channel and activity, and shows each line's budget, quarterly outlook, available balance and consumed spend month by month. Increases, decreases and moves between lines follow approval limits that finance sets by line and amount, so the budget you approve stays the budget being spent.
A marketing budget that holds up is not the smallest number finance can defend. It is the one both sides agreed how to change before they needed to.
See how Brandintellé helps finance set and control the marketing budget.
