Setting a marketing budget is crucial, whether you’re beginning your first marketing budget or trying to determine what you can improve from your last one. In this article, we’ll break down what a marketing budget is and provide helpful tips to ensure your marketing budget is a success.
What is a Marketing Budget?
A marketing budget is the amount of money a business sets aside for expenses. Your marketing budget should include estimated prices for each marketing campaign you plan to execute.
Why Do You Need a Marketing Budget?
When you develop a marketing budget you’re investing time and resources into your business AND client base to ensure long-term success. Any business, regardless of size, can benefit from it. Creating a marketing budget may seem confusing at first, but the result is beneficial.
Some benefits include:
- Encourages leadership to buy into your plan of attack for the year and avoid having to fight for every nickel during the year.
- Gets the budgeting tools you need to be successful.
- Helps you gain the ability to layer in incentives for your staff so they stick around longer avoiding costly and frustrating turnover.
- Lowers wasteful spending that’s hurting your business.
- Help grow programs that are working and just need more investment.
- Forces you to develop a plan for the next year and gives you an idea of what you need in order to hit your goals.
Below are 7 tips your business should implement to develop a successful marketing budget.
Top 7 Tips for Planning a Successful Marketing Budget
1. Review the Current Year
Whether this is your first time creating a marketing budget, or you’re trying to enhance your current process, you should always begin by taking a look at your current year. What marketing goals did your company hope to achieve? Were they met? What were the highlights and low points of your campaigns? Reviewing your current year with these questions and more can help you take a step back and process just what needs to be done for the following year to ensure changes that are needed are made, and new ideas can be implemented and budgeted accordingly.
- Understand Your Marketing Expenses
Take a good look at your marketing expenses and break down exactly where money was allocated.
- Determine Your Sales Cycle
Sales cycles are the steps your audience takes to become paying customers. By determining your business’s sales funnel, you can identify where a digital marketing strategy may help you keep more leads from falling out of the funnel.
2. Determine What You Want to Accomplish Next Year
Setting an effective marketing budget begins with determining your short-term and long-term marketing goals. Marketing doesn’t generate sales overnight, and you should have an actual number goal you’re trying to hit. By setting a clear set goal you can better put a plan in place to get there.
Identify a Sales Goal
During tip 1, you looked over the past year. Going off of this, and what you want to accomplish, you can create a set of objectives for your sales team. Your sales goal should center around specific KPIs.
Note: To help ensure you meet your sales goal, make sure you create quarterly goals to reach. Establishing a big goal seems out of sight and reach. Quarterly goals set expectations and a sales goal for employees to meet.
Example: If you want to create 12 professional marketing videos you should first determine the cost, then break it up monthly. In your budget, you’ll account for 1 video per month for X amount of dollars.
3. Establish What You Need to Do to Get There
You’ve established the amount of money you want to go toward marketing for the next year, now you’ll need to establish where exactly that money goes and what you need to do to meet your sales goal. There are four main marketing channels you should consider when developing a marketing plan:
- Digital Marketing
- Outbound Marketing
- Inbound Marketing
- Brand Awareness Campaign (coincides with above channels)
Looking over your past year, and your established budget, you can allocate your money accordingly to each channel. All of these channels have associated costs, but lead generation programs are generally the most cost-effective for each.
Invest Money Into Successful Campaigns
As the saying goes “if it ain’t broke, don’t fix it.” You should invest the majority of your marketing budget into successful past campaigns as well as expand on them if beneficial.
Remove Unsuccessful Campaigns
A campaign could seem perfect on paper. Full-proof even. And then it doesn’t perform. Many hours of research went into this campaign only for it to underperform. But next year is a new year maybe it’s time to try it again?
The answer is no. The key to developing a successful marketing campaign is to focus on the successful campaigns, not the unsuccessful campaigns. Failed marketing campaigns are a learning experience and are helpful references when creating new successful campaigns.
Add a buffer or additional funds to help you hit your goal. You can’t be sure all your ideas will work but you can forecast that uncertainty is a possibility and that you will need more funds to adjust in Q2 or later in the year. Set aside an additional budget so that you can pivot or try a new program that wasn’t present when first creating your plan. The buffer also allows you to sell it to your leadership team at once. This prevents frustrating and time-consuming conversations later in the year. If the money is already in the budget, it’s much easier to spend freely.
4. Set Aside a Testing Budget
The customer journey isn’t as linear as it used to be, and your marketing campaigns should consider that. While it’s great to have successful campaigns you invest in, you need to always be looking for the next best campaign. Setting aside a testing budget gives you range and clear expectations that it may fail or succeed. Planning for this ahead of time is beneficial to your budget.
5. Plan for the What-if Scenarios
Developing a marketing budget with the unexpected in mind will make it easier to handle if something were to occur. For example, nobody could have foreseen the impact of Covid-19. However, for those who budgeted for an unexpected event to occur, it may have very well saved their business. You never know what will occur, so setting aside a budget for a “what if” scenario can’t hurt.
What if a new social platform emerges? What if your once successful campaign doesn’t do too well during the first quarter of the year? When developing your marketing budget list out your expected expenses and their “what if” scenarios. You must go into the year knowing all the possibilities of what can occur, and plan accordingly.
6. Set a Long-Term Financial Goal
To develop a successful marketing budget for the year, you need to have the future in mind. Achieving your short and mid-term financial goals ensures you’re always striving for progress. However, you might spend more or lack the motivation to push forward if you aren’t working toward a long-term goal. Setting a long-term financial goal will help when creating an appropriate budget yearly to reach that goal.
7. Think About Your People
A good marketing budget is never finalized. It’s something that should always be analyzed and optimized. As trends change, so should your marketing plan and budget. Something that doesn’t change that you should keep in mind when budgeting is new hires, freelancers, and content creation.
An effective marketing budget is well thought out, documented, shared, scrutinized, and finally approved by any and all parties that are part of the funding of this budget. It’s strategic in that it’s a tool to get your programs funded and approved ahead of time and tactical in that it allows you to dive into the details to determine what worked in the past and what needs to change or be added. It also helps you plan exactly how you plan to hit your goals for the coming year which many argue is one of its most valuable traits.
Invest in Your Team
Plan to grow your people. Better yet, include them in the conversation and put the investment dollars in the budget. Some of the ways you can budget and plan for employee growth include:
- Training programs and educational seminars.
- Raises for great employees.
- Promotions – how will that person’s responsibilities change during the year and how should you change their compensation?
Employee development is crucial to your business’s success in the long run. Make sure to budget and plan to take care of your great people.
How to Calculate for a Marketing Budget
You now know the 7 tips to create a successful marketing budget, now it’s time to do the math.
Marketing Operation Costs + (Goal Number X Goal Acquisition Costs) = Total Budget Spend
Include a Lead Generation Program in Your 2022 Marketing Budget
Lead generation isn’t as easy as it once was, but it is crucial for B2B businesses. 61 percent of marketers rank lead generation as their number one challenge. That doesn’t have to be the case when you work with a lead generation company. Did you know outsourcing lead generation generates 43 percent BETTER results than in-house lead generation?
At 360Connect, we source high-quality, true-intent prospects and deliver them directly to you daily. Want a steady stream of qualified prospects for your sales team? Make sure to include 360Connect in your 2022 marketing budget.