For any business, their marketing budget will form the basis of any expenditures involved in your marketing campaign. As a critical element of any business plan, your marketing strategy will carry you through the minefield of marketing your business. However, beforehand careful consideration needs to be given to your budget. This will essentially keep you in the know about how the marketing side of your business is faring financially, and track your spending down to the last penny.
Why is a marketing budget important?
Your marketing budget and ROI (return on investment) go hand in hand. Your marketing budget determines exactly how much money you have to play with, and how exactly to spend it. Simply ‘Winging it’ with your finances is a risky business. Being unaware of the capital available and how it is being used is how many companies go under. A business without an effective marketing budget and plan may find themselves unable to pay back costs, and owing companies money. It can fall back to potentially owing customers something that they now cannot deliver. Employees, too, could lose out. No matter who is impacted by your poor planning, it is all equally as damaging. Your business will take a massive hit both in reputation and in financial standing.
A well-devised marketing budget will aid you with the planning process and will help you to measure and manage the money you have, ensuring every expenditure is appropriately considered.
Before establishing your marketing budget and plan, you will need to make sure you have researched the following areas:
- Industry and market research
- Competitor Analysis
- Marketing audit
- Internal marketing performance records
What percentage of revenue is your marketing budget?
Working out your revenue is the first step in devising your workable marketing budget. You need to work out your disposable income in order to determine how much percentage to put into your marketing budget.
What to include in calculations:
Your revenue is calculated by determining your company’s income before subtracting any expenses. Your business expenses may include, but will not be limited to, the following: rent space, cost of materials and equipment, wages.
Every business is different. Once all your expenditure has been calculated, you will be able to then determine your revenue, at which point you can consider what percentage forms your marketing budget.
Working out this percentage can be tricky. Spend too much incorrectly, and you will be out of pocket with nothing to show for it. Spend too little, and you will have an excess amount of money for a short time, but no security in terms of how successful your business will be going forward. How you market your business is essential to get right, so your marketing budget estimates need to be spot on.
Serena Humphrey, Managing Director at F Word Training, advises:
The average of marketing spend should be between 10% and 15% of your turnover.
However, for new companies, more of your revenue should be considered within your marketing budget. If you are just getting off the ground, allocating more money to boost your business and see it make a name for itself is very important in the early days.
What should the marketing budget include?
Some marketing costs aren’t inherently obvious. Anything that involves marketing to your customers should be included in your marketing budget:
- Design and production resources
- Time and energy put into developing a campaign
- Your marketing strategy: namely your social media ads, PPC banners, content marketing, direct mail, targeted online display ads, and email marketing.
Your marketing strategy will be the primary expenditure of your marketing budget. By constructing a budget, you will be forced to think carefully about how exactly you want to spend your money and where. Are PPC advertisements your bread and butter? Maybe regular blogging and infographics on your website make the difference? The guidelines really depend on your own business and the sector in which you operate. For example in an eCommerce environment, a great deal of your budget will go on paid adverts, email marketing and direct mail. If you were in a niche industry, a more organic approach such as content marketing may account for the majority of your marketing budget.
As it depends on your circumstances, you could employ an agency with your marketing budget to produce a single, holistic marketing campaign incorporating elements of all the marketing strategies.
Essentially, your marketing budget should determine how you can best implement the marketing strategy you have developed within a workable budget. It works to forecast all possible expenditures, so you aren’t left out of pocket. Otherwise, you will be drifting in the dark, spending here and there with no real idea of whether you are investing the correct amount into this particular part of your business.
Where to spend the marketing budget
Areas to include within your marketing budget include:
- SEO and content marketing
- Your website
- Email marketing
- Print advertising
- Social media
- PR and media
- Event marketing
- TV/ Radio
Although it is important to consider all of these, the main players should be your content marketing and SEO, your social media marketing, and your email automation strategy. Digital marketing is the golden ticket to increasing exposure and outreach, so these should be where your company prioritises its efforts. Your marketing budget and plan should include a pool of resources and time to devote to this.
What happens if I don’t have a marketing budget?
If you don’t have a marketing budget, you will get your marketing strategy off at the wrong foot. Stabbing in the dark and being unfamiliar with your exact expenditure could see you spend more than you have. Communication and planning within the company and a precise forecast of expenditure will ensure every basis is covered. It will mean you will be able to confidently approach your strategy knowing how much you have to play with, which has the added bonus of showing clients and customers you can be taken seriously as a business. A budget can also factor in and allow for any hiccups along the way; running a business has ups and downs, and a budget will allow for this. Don’t make the mistake of assuming it’ll all work out. The old saying “fail to prepare, and prepare to fail” has never been more fitting.
For any business, devising a marketing budget may seem a timely exercise, but is worth its weight in gold. It will ensure you can take your business in the right direction, and with a firm budget behind you to deliver on promises, everybody will be satisfied.
How can we help?
At Relative Marketing, we can help you devise a realistic, successful marketing strategy, which takes into account your budget. Our full-service digital marketing agency will create campaigns across every aspect, including social media and content marketing. We understand every business is unique, and our bespoke digital marketing solutions reflect that. Don’t hesitate to contact us today.