Marketing Budgets: 3 Buckets Banks and Credit Unions Need

Many community bank and credit union CMOs and marketing directors can relate to the experience of being asked to grow with money they don’t actually have, and having to explain it to senior leadership. Leadership looks at the marketing budget, sees the total, and asks some version of the question:

“You have a million dollars. Why aren’t we growing faster?”

The honest answer is one most marketers keep to themselves:

“Because I don’t actually have a million dollars.”

WHAT’S ACTUALLY IN THAT BUDGET NUMBER

Peel back most bank and credit union marketing budgets, and you’ll find three fundamentally different types of spending grouped under one line item:

• The Goodwill Bucket: Donations, sponsorships, gala tables, golf outings, festival booths, and the check the CEO promised the chamber last spring. These investments create real value and strengthen important relationships, but generating measurable growth is rarely their primary purpose.

• The Tools & Tech Bucket: The website, CRM, analytics platform, marketing automation, and data infrastructure that make marketing possible and measurable. While these are essential investments, they do not directly generate growth on their own.

• The Growth Bucket: Media, campaigns, creative, direct marketing, research, and sales support. These are the dollars aimed at generating loan demand, growing deposits, and acquiring new households. This is the growth engine.

Three buckets, three different measures of success. Yet they are usually lumped together in a single marketing budget with the same expectations.

THE HIDDEN MATH

Let’s take a closer look at what is really in that $1 million budget, sorted by bucket:

• $300,000 to $350,000 goes to the Goodwill Bucket
• $150,000 to $200,000 goes to the Tools & Tech Bucket
• Leaving roughly $500,000 in the Growth Bucket

So, really, you’re only working with half the budget – and even that isn’t necessarily the amount marketing can actually invest in new initiatives.

A meaningful share of the Growth Bucket may already be committed before the year begins:

• Media contracts signed last November
• Agency agreements
• Production already underway
• Campaigns carrying over from the fourth quarter

The truly discretionary amount – the dollars you can actually direct toward what leadership decides matters most this year – may be significantly smaller.

So, the $1 million leadership sees may really represent $500,000 in growth spending, with only about $350,000 available to move.

Less than half of the total budget may be flexible, yet that distinction is rarely factored into the conversation. And yet, when leadership sees $1 million and expects $1 million in growth, the gap between expectation and reality is often treated as a marketing performance problem. But that’s not what it is. It’s a categorization problem.

HOW TO SET THE RECORD STRAIGHT

Before your next planning conversation, clean up the way the budget is presented:

1. Audit last year’s spending. Sort every dollar into Goodwill, Tools & Tech, or Growth.
2. Report the Growth Bucket separately. This is the budget to benchmark against peers and hold accountable for measurable business results.
3. Bring leadership into the categorization process, especially for the Goodwill Bucket. Community obligations should be visible as leadership decisions, not buried inside marketing. Make the trade-offs and opportunity costs clear.
4. Set the right expectations for each bucket. Measure Goodwill through reputation, access, and community presence. Measure Tools & Tech through productivity, capability, speed, adoption, and data quality. Measure Growth through leads, funded accounts, balances, and revenue impact.

None of this diminishes the value of community giving. The money spent on reputation-building is well spent, even though the direct benefits are harder to track on a spreadsheet. Sponsorships and donations do important work for a community bank or credit union. But they serve a different purpose than a campaign. Evaluating both with the same yardstick makes each look less effective than it really is.

THE CONVERSATION YOU WANT TO HAVE

By proactively categorizing the budget in your reporting to senior leadership and moving toward goal-based budgeting (which we will discuss in a separate post), you may avoid the question of why growth is not tracking with total marketing spending.

But if the question does come up, the answer should not be a defensive review of tactics. It should focus on the purpose and performance of each budget category:

“Here’s the goodwill investment and what it delivered in community presence. Here’s the technology investment and the capability it created. And here’s the growth spending and what it produced.”

That is the reframing that needs to happen.

Need help working through your strategic plan and budget? LIGHTSTREAM helps community banks and credit unions build marketing budgets that stand up to executive scrutiny and support the growth leadership expects. Let’s talk.