Running a business can be difficult at times, and one area that gives a lot of business a lot of stress is marketing. More precisely, where to spend their marketing budget to see a successful return.
Below, we’ve outlined everything there is to know about spending your marketing budget.
What is your budget?
Before you can even think about where to spend your budget, you’ll need to know how much marketing budget you have. If you’re wondering how much you should be spending on marketing, this can vary from business to business. On average, companies in growth mode tend to spend 10% of their total revenue, while those in maintenance mode tend to spend 5%.
Meanwhile, the marketing budget can also vary from industry to industry, with the overall marketing budget for a consumer-packaged-goods company standing at 24% of its total budget compared to a business in the manufacturing sector, where it accounts for 8%.
Of course, if you’re a small business, you’ll need to take a look at how much money you have coming in and going out in terms of staff, manufacturing, equipment, office space and bills. From this you’ll then be able to see how much is left, enabling you to determine how much you have for marketing. If it isn’t much, maybe start small and work your way up.
Start with a plan
Once you’ve defined your budget, you’ll know how much money you have to spend on your marketing. This should help you to set some goals and create a plan for the next 6 – 12 months.
However, you’ll need to ensure this plan aligns with your business priorities. For example, are you spending the next year focusing on building a brand? Building a client or customer base? Or selling as much of a particular product as possible?
Once you know this, you’ll be able to make the two align, knowing what to push where and when. This will help you to create a wealth of strategies, from SEO and PPC to print media, social media, PR, email marketing and more. But, most importantly, it’ll help you to determine where the money should be allocated and how much should be allocated.
If you own a small business and you’re working on a small budget, you’ll want to ensure you’re dividing your budget right and what channels are there to help. And, if you’re starting small and working up you’ll need to make sure you’re spending on the right channels
Where to spend it
So, you have your service or product, you know how much you can afford to spend on your marketing efforts and you know the goals you want to achieve over the following 6 – 12 months – what next?
The next step is to decide what channels to assign a budget to. However, in the world of marketing today, there’s a wealth of channels to choose from, such as;
- Print advertising (leaflets, billboards, postcards, flyers, magazine adverts)
- Search Ads (Google Ads or Bing Ads)
- Social Media Ads (Facebook, Instagram, LinkedIn, Twitter, Snapchat, Pinterest)
- Content marketing
- Influencer marketing
- Social media marketing on channels such as Facebook, Instagram, LinkedIn, Twitter, Snapchat or Pinterest (this is different from the above ads)
- SEO and on-site marketing
- Email marketing
- Digital signage
- Affiliate programs
- TV advertising
- Radio advertising
As you can see, there’s a lot to take in, and knowing where to allocate your cost can be tricky. Therefore, you’ll need to take a look at what channels will help you execute your goals best and assign your time and budget to this.
Remember, don’t bite off more than you can chew. Don’t try to attack all the channels at once. If you’re a digital e-commerce website specialising in fashion, everything will be online, which will help you to narrow down your options. When it comes to social media marketing you may want to focus on Instagram coupled with influencer marketing, while SEO and on-site may be best for helping you to boost your website and search ads could help too.
Meanwhile, a company specialising in the B2B world may want to focus their attention on SEO and on-site marketing, content marketing and LinkedIn adverts.
Also, with elements of social media and content marketing falling into the same bracket, you may want to spend time working on this and building the right branding and TOV before investing money into it.
Either way, all businesses are different and will need to go down different marketing avenues. It’s knowing which ones will provide you with the best return, which takes us on to our next point.
When you’re investing money into a certain area, you’ll want to be sure you’re not just throwing money at the wall and hoping something sticks. Therefore, measuring your ROI (return on investment) is key.
It’s important to do this for all marketing activities, as it’ll help you to see if something was successful or not. You’ll then be able to assess what channels are working and what ones aren’t, and if something didn’t work, you’ll be able to go back to the drawing board and see what can be done.
ROI itself is the gain from an investment minus the cost of the investment, divided by the cost of the investment ratio of resulting sales divided by marketing expenses of the activity ROI = (gain-cost)/cost.
Therefore you need to account for everything, including staff time, to help you to successfully determine what marketing is working and what is not. Overall, studies have indicated that the highest ROI is email marketing, followed by SEO and paid search.
However, not all businesses are the same and you need to remember that results don’t happen overnight. Therefore, something like SEO could take months to show its full potential, so don’t be too quick to stop certain channels.
Another way companies can work to successfully allocate their budget is to work with a marketing agency. Agencies are filled with experts in their field and will know how to help you handle your budget, directing it to the right channels based on prior experience and success.
If you’d like to find out more about Relative Marketing and how our team can help you, please get in touch today.