One of the keys to keeping a company afloat is organisation in all its departments and at all levels: who is responsible for what, which department works together for the same objective and which others depend on the fulfilment of certain goals. This is also true for the management of resources and this is where the marketing budget comes in.
In this article we will talk about the importance of a marketing budget and how to create one.
what is a marketing budget?
It is the plan in which you allocate the financial resources that exist for the efforts dedicated to advertising, campaigns, communication strategies and other tactics related to the marketing department of a company. It all depends on the needs that your business requires and where you want to allocate part of your resources to meet your business and marketing objectives.
This tool, as well as working as a guide to manage the budget available in a set period, can check which actions have generated the most profit and which opportunities should be taken advantage of in the future.
In short, if you have a marketing plan, you also need a budget to deliver it.
what are the marketing expenses?
A budget is not just a random number, in order to make sense of the total figure, it is necessary to plan individually for each of the expenses that need to be covered. These include:
- Agency or marketing professionals: Many companies go for a strategically focused in-house sector, but outsource the execution to specialised agencies or freelancers. In this case, the cost of contracts needs to be considered within the marketing budget.
- Printing: Marketing still works a lot with printed materials, such as posters, folders, catalogues and business cards. In the long run, this expense adds up to high amounts, especially because they are special and high quality prints. Therefore, don't forget to include this element in the budget.
- Digital ads: Most companies have already embraced the use of digital ads, such as Google AdWords and Amazon Ads. They can be used to promote company blogposts, product pages, landing pages, etc. They are a good strategy to get more visibility and generate leads, so it is worth investing in them.
- Software licenses: As your marketing team acts on a more strategic front, you will probably need some software to perform various tasks, so it is necessary to consider investing in software related to your business.
- Events: Corporate events are also part of the scope of the marketing sector. Don't forget to include in the budget a value for organising the company's participation in fairs and exhibitions or promoting your own events. Depending on the type of event, the expenses (and the amount needed) can vary a lot.
why is it important to make a marketing budget?
Making a marketing budget will allow you to demonstrate that what you spend on marketing is a smart investment. Some strategies take more time, but the payoff is worth it if they are well executed.
Among the many benefits of having a detailed and organised marketing budget are the following:
- Knowing what resources and activities to invest in and how much, so you know how much to spend for each marketing strategy.
- You can quickly see if certain items are costing more than you anticipated and adjust your costs accordingly.
- You can use your previous budgets as a guide for future years and assess what changes your company needs to make.
- Set goals - if you decide to include a new item in your budget, take the opportunity to define what you would like to achieve in the long term.
- Understand marketing expenditure as an investment and, therefore, an opportunity for company growth. You will learn how to generate more and better opportunities for business development, making the most of everything you invest.
Tips for setting it up correctly
Many companies set their marketing budgets by allocating between 1% and 10% of their revenue in relation to sales. This method assumes a direct relationship between revenue generation and marketing. But in many cases this is not the case.
To create your marketing budget it is important that you take a detailed look at your budgets over the last few years against the goals you have achieved. This will give you a good idea of where you are and where you want to be in the coming year to create your goals.
A simple way to set the budget is to tally the costs of all the marketing activities planned for the coming year. The total amount gives you the marketing budget for the coming year.
Do a market analysis to find out how much your competitors are spending and get a good idea of how to set your marketing budget.
Track the effectiveness of your budget allocation, it is much easier to set up a marketing budget and justify it if you are actually able to analyse the effectiveness of your allocation in order to optimise it.
Some initiatives are easier to track than others. However, you should do your best to measure actual performance against expected results. Remember that you are responsible for ensuring that your budget is spent in the most efficient way for your brand to achieve the objectives and strategies set out in the marketing plan.