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.
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.
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:
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:
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.