A marketing budget included the sum total of funds that your business has allocated to marketing and advertising your products or services to customers. The budget allocation is done either in a quarterly or annual basis.
Business owners don’t always look at all the avenues involved in marketing themselves before they decide on a marketing budget. Your marketing strategy isn’t limited to digital advertising or advertising campaigns.
Your marketing budget includes wages for your marketing department, technology and software used in marketing, website domain, inbound and outbound marketing, and all other aspects.
When you incorporate the sum total of all funds you’re required to invest in marketing and promotions, you can create a marketing budget that your employees can stick to. But that isn’t all. You also need to monitor and track your marketing budget
This helps ensure that your employees don’t spend more than the funds allocated to them. More importantly, at the end of the quarter/year, you can analyse how your current budget performed, and how it enabled business success. This lets you adjust your budget – by adding or reducing funds, the next time around.
5 Things You Need to Know about Creataing and Tracking Your Marketing Budget
1. Business Goals and Marketing Goals
Your marketing budget should aim to promote your business, and bring in more customers and higher sales. To that end, your marketing budget should align with your business goals.
If your business goals for the year are to reach a certain sales target, then your marketing budget should hold enough funds to enable that. Your marketing team should be able to access enough funds so that they can reach enough costumers to meet that target. Similarly, if your business goals are to promote a new product over an existing one, then your marketing team needs to make that happen.
To do this, they need funds that allow them to create content, use paid advertising, create advertisements and campaigns. Understanding your business goals is the first step to create your marketing budget. While you’re at it, it may also be a good idea to make sure your business insurance is in place. Click here to know more about business insurance.
2. Identify Your Sales Funnel
How many people are visiting your website every month? How many new leads are you receiving every month? How many of those eventually purchase products from you? What about returning customers?
Identifying the whole process of lead generation and audience conversion in your current stage can show you where you need to improve. Once you understand where your business stands at the moment, you should consider identifying core areas you want to focus on.
Divide your goals into long term and short term goals. Your long term goals include things like ‘increase revenue by 10% in this quarter’, while your short term goals can be ‘get 100 new followers every month’.
Listing out exactly what you want your marketing team to accomplish can set the stage for more accurate budget allocation.
3. Buyer Personas
A buyer persona tells you who the customer is. It’s essentially a template that lists out detailed information on the average customer. Details like their age, sex, marital status, job, income, nationality, hobbies, likes and dislikes etc. are listed in a buyer persona.
A buyer persona helps you understand your target demographic. It lets you know what they like and what will induce them to buy from your business. The better you understand your customer, the better you’ll be at target marketing them.
Conducting a detailed customer analysis is necessary to achieve this step. If you find that most of your customers are millenials, then you’ll be able to better market to them. Choose the social media platforms and communication channels they frequent, and you can better reach them. You can use trends and ideas that are popular among millenials, and market to them exclusively.
If your core audience is baby boomers, then digital media will only get you so far. Email marketing, direct mail marketing and advertising campaigns can better enable you to reach them. For a more diversified age range, you can select key ways to target market them separately.
Creating around give buyer personas gives you a summary of your most common types of customers, and how best you can market to them.
4. Competition Analysis
No marketing budget can be created without studying your competition first. Which social media platforms are they using? How are they engaging with their customers? How are their marketing strategies helping them succeed?
Identifying their strategies will let you know roughly how much they’re spending on their customers. This gives you an average of what you should spend as well. However, businesses should adjust their marketing budget to meet their personal business goals.
If you feel that you need to spend more, or can make do with less, then aim for that. However, it’s always better to invest slightly more than your competition and ask your marketing team to be more aggressive in putting your brand name out there.
5. Return on Investment
Your marketing budget is the amount you’re investing into getting customers and increasing sales for your business. If you’ve invested a substantial punt, and the ROI doesn’t justify that expenditure, then this shows that your current marketing strategy is not working.
On the other hand, if you’re fearful of spending on marketing, then don’t look at it as money spent, but an investment.
Once you’ve set your marketing budget, by taking into account multiple factors like your business goals, customers, and competition, you’ll need to monitor how those funds are being utilized.
Tracking Your Marketing Budget
What you’ll be tracking is not only how your marketing budget is spent, but what that expenditure brought for your business in return.
You need to track your campaigns, leads, sales, social media recognition and other factors. This goes beyond a simple spreadsheet.
Make use of tools like Google Analytics or Facebook Insights to get data on how your marketing team was able to promote your business during that quarter/year.
Don’t leave out the spread either. You can create a spreadsheet, and break down how your marketing budget was allocated. Add relevant figures to each section. These sections can include:
- Marketing Team
- Technology and Software
- Marketing Collaterals
- Content Creation
- Website Development
- Marketing Campaigns
- Paid Advertising
- Social Media
- TV/Radio/Press Releases
You can add as many areas that you intend to spend marketing funds into. Add the funds allocated to each section next to the name. At the end of the period allocated for the marketing budget, note the ROI from each section. This is especially important for sections dedicated to marketing and promotions.
The primary need of tracking your marketing budget, is to identify areas where you can improve, and note strategies that are working. If you want to find out more, then you can click here.