Ask any channel marketer what happens to their MDF in the last fortnight of the quarter, and watch them wince. There’s a specific kind of panic that sets in. Budget that has to be spent before it disappears. A claim form demanding results nobody can show yet. An offshored admin team poised to reject anything that looks slightly off. I’ve sat in that scramble, working with a distribution client, and it taught me something the industry still tiptoes around. The market development funds problem was never really about the size of the budget. It’s about the calendar.
The recent Omdia figure showing roughly 60% of MDF going unused each quarter set off the usual debate. Tie it to pipeline. Treat it as working capital. Bolt AI onto it. Scrap it entirely. All of that argues about utilisation, about whether the money gets spent. I’d park that, because I’ve seen the other failure mode up close. On one security vendor’s programme the money rarely went unspent. The vendor’s ask was impossible to meet with the budget on offer. Fully committed, every quarter, and still mostly wasted. You can spend every penny of your MDF and get almost nothing back, because the calendar leaves no time to do the work properly.
Here’s the mechanic. Plans had to be submitted by the start of the last month of the quarter, for the quarter ahead. Around a quarter of the budget was earmarked for sponsoring the vendor’s own events before the partner programme saw a penny. Then the funds were confirmed late, often at a reduced level, near the end of the first month of the new quarter. No partner or distributor starts work before approval lands, but the deadline to show results doesn’t move. So a three-month programme, one month of which is setup, gets squeezed into about sixty days. Run a campaign for a few weeks and you simply cannot produce the kind of results the claim form wants. The activity was sound. The timing was fixed. The form had no way to say so.
There’s an open secret here. Vendors manage MDF “yield”, budgeting on the assumption that a good slice won’t be claimed. If every partner spent every pound, finance would have a problem. The only reason that’s acceptable is that nobody can prove what MDF actually returned. Get the attribution right, draw a clean line from a fund to pipeline, and an unspent budget becomes a failure rather than a saving. Attribution is its own discipline, and it’s a big part of the thinking behind Incentivizer, but the point holds: you tolerate the waste you can’t measure.
The fix is unglamorous, which is probably why it gets skipped. Plan and approve MDF annually, in Q4 for the year ahead, rather than scrambling quarter by quarter. Give partners the runway the work actually needs. A campaign that needs a quarter gets a quarter. An adoption motion that needs two gets two. The activity sets the timeline, not the finance calendar. That single change does more for MDF utilisation than any new portal ever will.
Annual planning suits the partners who can plan a year out. It does little for the long tail, which is most of the channel. A smaller partner usually has one marketer wearing every hat, running their own marketing and co-marketing across several vendors at once. Expecting them to build a twelve-month plan for your co-funding is optimistic. So enable them instead. You already own proven messaging and campaigns; dropping them on a portal isn’t enablement. Distributors hold the long-tail relationship, so build the support there, with your distributors, and stay invested in the training rather than offloading it. This is the kind of execution gap we close every day in channel marketing at The Essential Agency.
Before your next planning cycle, run one question down every line of MDF spend. What behaviour did this change? If the honest answer is “nothing, they’d have done it anyway”, you’ve just found the budget for the things that would. And if your partners can’t turn funds into pipeline fast enough, that execution gap is exactly what we fix at The Essential Agency. The model works. The calendar doesn’t.
