Spending money on marketing is an investment in business growth. Marketing does indeed drive revenue growth at 38.4% of companies. Devoting some time to developing a marketing strategy can help promote brand awareness, boost your customer base, and increase business profitability. To make sure your strategy is a success, you need to learn how to create a marketing budget. Creating an effective marketing budget will help you stay on track financially and ensure you have enough money to accomplish your business’s promotional goals.
What Is a Marketing Budget?
A marketing budget specifies how much businesses plan to spend on promoting their products and services in a specific timeframe. The spending plan will outline all the estimated costs of accomplishing a business’s marketing goals, usually within the next quarter or year.
All the expenses involved in promoting your business, such as paid advertising, website maintenance, blogging, marketing software, and hiring new staff will be included in the budget. In 2020, the average marketing budget was 11.3% of total revenue, showing how businesses recognize the importance of marketing in determining business success.
Why Is It Important To Create a Marketing Budget?
If you’re developing a promotional strategy for your business, learning how to create a marketing budget will help you avoid overspending during the campaign. Planning a budget will help you find out which strategies or digital marketing company’s packages you can afford so you can get the most out of your investment without undermining your company’s finances.
A marketing budget also helps you minimize future problems in the campaign due to funding shortages. When enough money is allocated to different marketing strategies, you are less likely to halt a project abruptly or experience campaign failure because of insufficient funds. Creating the ideal budget helps you get your finances in order so you can run a smooth and successful marketing campaign, increasing brand exposure to help your business grow and reach its full potential.
How Can You Create an Ideal Marketing Budget?
Now that you’ve learned about the benefits of developing a spending plan for business promotion, you’re probably wondering how to create an effective marketing budget to achieve your goals. Developing an effective marketing budget is essential to ensure that your promotional campaign is a success, helping promote business growth and longevity. Follow the tips below to create a smart budget for your marketing strategy:
Specify Measurable and Achievable Goals
Before you start working on developing a budget, you must identify the goals you wish to accomplish from the marketing campaign. When you know what goals you want to achieve, you are better able to set aside the right amount of money to fund the activities that help accomplish your objectives. As a result, to create the ideal marketing budget, you must base your spending plan on your business goals. Common business goals include:
- Boosting brand visibility
- Increasing website traffic
- Ranking higher in Google’s SERPs
- Growing the number of followers on social media
- Expanding your customer base, and
- Generating more sales
When you set business goals, make sure they’re specific, measurable, and achievable with your resources. Specific goals that allow you to measure progress are 33% more likely to succeed. Avoid specifying vague objectives, like “boost sales”, and instead opt for more specific goals like “increase online sales by 5 percent within the next two quarters,” as it will help you better estimate the marketing budget needed to accomplish the project.
Analyze Your Sales Funnel
If you want to know how to create an effective marketing budget, you should analyze and understand your sales funnel. The sales funnel is the journey a potential buyer goes through before they become a paying customer. You can use data from customer relationship management software (CRMs) and marketing automation software to gain more insight into your business’s customer journey. Having an in-depth understanding of your business’s sales funnel is critical to a successful marketing budget and strategy.
Analyzing your buyer’s journey will help you identify which marketing strategies need more investment to push people down the funnel and generate more sales. If you find that you’re losing too many people at the interest stage, you should allocate more money to content development in the marketing budget to engage with prospects and hook them on to your brand. Knowing the ins and outs of the sales funnel will help you budget your marketing money more wisely.
Evaluate Other Costs
To learn how to create an effective marketing budget, you should take all the other costs of running your business into consideration. You need to know how much other operations and activities are costing your business so you can allocate sufficient funds to your marketing budget. Setting aside enough money for marketing your products and services is crucial for business growth. The US Small Business Administration (SBA) recommends companies making less than $5 million a year allocate 7-8% of their annual revenues to marketing.
If you underspend on marketing, you will not be able to compete with other companies, resulting in lost market share and potential business failure. If other business costs prevent you from creating a marketing budget, you should find ways for cutting expenses to free up money for promoting your company. Besides evaluating operational expenses, you should also find out if outsourcing marketing to an outside agency would cost your business less than doing it in-house, helping you save more money on promotional campaigns.
Research the Market and Competition
If you want to learn how to create a marketing budget that generates a high ROI for your business, you should research your target audience to find the most effective strategies for reaching them. For instance, if you sell arthritis pain relief products to older consumers, you might not want to allocate funds in your marketing budget for social media advertising. Studies show that only 40% of people over 65 years old use social media. Improving your knowledge of the market can help you create a smarter and more effective budget.
Along with understanding your audience, you should also study the competition meticulously. Who are the top players in your industry? Research the marketing strategies they use to reach their target audience. Use online web analytics tools to find your competitors’ website traffic source so you can learn where they spend most of their marketing budget. When you discover your rivals’ successful marketing tactics, you can allocate more money for these strategies in your budget to compete with them more effectively.
Compare Prices for Different Tactics
When you reach this point, you should already have a general idea of which tactics you want to use to market your business. Whether you choose to run an in-house SEO project or outsource your PPC campaign to a digital marketing agency, you need to know how much different tactics will cost so you can choose a mix that is compatible with your marketing budget. Picking budget-friendly marketing tactics will help grow your business without straining your finances.
If you’re struggling to determine how to create a marketing budget that is within your means, you can partner with a digital marketing agency to develop an affordable plan that maximizes the return on your investment. An agency will manage your marketing budget and run your promotional campaign so you can focus on issues that matter most to your business.
Seek Help to Plan the Ideal Budget for Marketing
Marketing is essential for long-term business success. Your marketing budget is not another operational cost, but an investment in business growth and profitability. A tight budget should not prevent your business from developing an effective marketing strategy. A smart and effective budget for marketing can help businesses thrive.
If you don’t have the resources to create the ideal budget for your business, you can seek help from digital marketing agencies. Digital marketing agencies can design a budget-friendly package that fulfills your business’s marketing needs. If you need guidance as you search for the right digital marketing agency, read the Best SEO Service Companies blog to learn everything you need to know.