Creating a budget for your business is essential in ensuring that business operations sail effectively and efficiently and that resources are allocated, planned, and used within its set boundaries. Similarly, creating the right marketing budget ensures that the right amount of resources is allocated for effective marketing strategies to help the business grow.
Planning a marketing budget that fuels success takes into consideration various steps and factors that will allow businesses to create marketing plans that are goal and results-oriented—focusing on increasing sales, customer retention, brand awareness, and profitability.
Building a Marketing Budget
A good marketing budget does not need to be expensive to be effective. Here are the steps you need to consider to build the most optimal marketing budget for your business:
Be Clear about Your Goals and Objectives
We get it—you’re excited to start your business or introduce a new product line and let the world know of it. But before you jump the gun into spending heaps of dollars for a campaign, it’s important to know what you are aiming for and what your direction is in the first place.
Stephan Baldwin, Founder of Assisted Living, emphasizes the role of goals and objectives in creating a marketing budget, “So many businesses undermine the importance of proper planning in terms of creating a marketing budget when, in fact, setting your goals and objectives from the get-go is the compass of all your business operations—including budgeting.” He adds, “You need to be clear about your desired outcome so you don’t waste your resources unnecessarily, be it monetary or personnel resources.”
A clear marketing goal and objective means that you have the following:
- Identified your product position
- Identified your target market
- Identified your edge over your competitors
- Identified your desired ROI for each campaign
- Identified main metrics to rely on
Assess Your Historical Market Spend and Trends
If you have been in the business for a long time and are trying to correct your marketing practices, historical data of your previous marketing spend will significantly help ensure that you create a more effective budget this time around.
Ask your finance team to:
- Generate a list of your total marketing spend monthly, quarterly, or annually
- Sort them according to the type of marketing campaign, if you have multiple
- Identify your ROI by dividing your net income by the cost of your marketing spend
According to Anthony Martin, Founder and CEO of Choice Mutual, “Examining the historical data of your marketing campaigns will give you a clear overview of how much return (or loss) you have made with your previous marketing budget. From there on, you can decide to increase or decrease your budget and figure out why your campaigns did not work as predicted.”
Budget on Marketing Strategies that Align with Your Business
Ineffective marketing strategies are one of the major reasons why marketing efforts usually do not work, even with a significant marketing budget. You can’t expect to milk a sheep despite all your efforts, the same way you can’t expect an ROI in a marketing strategy that’s not aligned with your business.
Volodymyr Shchegel, VP of Engineering at Clario, says, “There are tens and hundreds of marketing campaigns you can develop for a product, and not every single one may work for your specific business. What may work for others may not always work for you.”
For example, a laundry business would not benefit from most online SEO content marketing campaigns, such as newsletters and blogs, so re-targeting marketing efforts to paid social media ads would generate more considerable results.
Know Your Target Market
Not knowing your target market before publishing your marketing campaigns is like going into a battlefield blind. If you want to build an effective marketing budget, make sure to identify who your target market is for the campaign. Is it geared towards the boomers, the Gen Xs, the Millenials, or the Gen Zs?
According to Shawn Plummer, CEO of The Annuity Expert, “When you know who your target market is before you even start making your budgeting campaigns and coming up with a marketing budget, you’ll be able to allocate ideas and resources in a direction that fits your market—saving your business and employees their time and money.”
Choose Effective Marketing Channels
You can’t just throw random content anywhere and expect to make it work. When you’ve got your ideas together, make sure to identify who this piece of information is for.
Say you’ve got your ideas for Gen Zs, but you’re throwing your marketing content on Facebook’s way. According to a report from Statista, the top three social media platforms for Gen Z in the US are Snapchat, Instagram, and TikTok, so redirecting your marketing efforts to social media platforms where your target market is would most likely generate more engagement, sales, and ROI on your marketing budget than any other platform.
Follow up and Track Progress
Your work doesn’t stop after you’ve set your marketing budget based on the abovementioned points. Monitoring, tracking, and following up on your marketing spending regularly is crucial in ensuring that you don’t overspend your budget or that the budget achieves the desired ROI statistics from your goals and objectives.
Gerald Lombardo, Head of Growth at Popl states:“It’s very easy to get thrown off your budget when you don’t monitor them.” He adds, “There are many factors that can affect going above and beyond your budget, and many of them are things you won’t be able to control unless you actively monitor your expenses—like erroneously classifying a utility expense as a marketing expense.”
Conclusion
In The Art of War, Sun Tzu explains: ‘If you know your enemy and yourself, you need not fear the result of a hundred battles.’ While this sounds too philosophical, it emphasizes the importance of knowing your product, business, and target market when creating a marketing budget that fuels success.
An effective marketing budget is a synergy of effective planning and execution, and a good knowledge of current market trends to get the most return out of your marketing investments.
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