Marketing is an essential part of any business, and therefore it must be taken care of in the right way. Marketing expenses are not just an expense; they are an investment for the company. That is why it is crucial to define a marketing budget. Managing this expense correctly and defining the parts that establish this budget is fundamental if we want to know if our marketing actions are producing results.
With the help of a marketing budget, companies can make decisions based on real information, optimise their marketing strategies, focus them more on the consumer and develop new methods to access the market while respecting budget constraints.
Today we are going to help you define this marketing budget to see how it should be distributed and the right way to set it up if you want your business to avoid overspending.
shall we get started?
what is a marketing budget?
A marketing budget is an outline of the costs that a company will spend on marketing its product or service. It covers a specific period of time, which can vary from a quarter to a year.
The marketing budget includes all expenses related to an organisation's advertising campaign, ranging from paid advertising, sponsored web content, additional marketing staff, targeted website design, print and online advertising, television commercials and much more.
Budgeting is a crucial part of any marketing plan; resources need to be allocated appropriately to meet the various marketing strategies set by the company. It's a complicated job that can be simplified by project management software such as HubSpot.
why is it important to allocate your marketing budget?
A well-allocated marketing budget is essential for any business looking to succeed. It helps you stay competitive in the marketplace and increase revenue. With a marketing budget, you know how much money you need to spend to effectively promote your brand and product. Your business needs marketing methods to capture attention, communicate your message and win customers. A well-marketed product will give you a good return on your investment.
Creating a comprehensive marketing budget is useless if the company does not use it correctly. Just because there are funds allocated to marketing expenses does not mean that the marketing manager and employees should continue to spend them without a well-drafted plan. That is why it is crucial to allocate these expenses correctly.
where should you spend your marketing budget?
The marketing budget breakdown encompasses everything that is needed for marketers to reach their target audience and increase their ROI. This refers to all expenses, including advertising budgets, employee salaries, and the tools and software needed to assist marketers in this task.
There are several categories included in a marketing budget, and here is a breakdown of what is included when allocating the costs of a marketing budget:
- Software/tools
- Salaries of internal marketing staff
- Suppliers and consultants
- Advertising (digital and print)
- Public relations
- Events/trade fair costs
- Training and conferences
- Additional revenue-generating tactics
Not only should these spend categories be included in your budget, but many of them are used to help marketers achieve their goals.
How to allocate your marketing budget correctly
So how can you allocate your budget to spend it on things that will deliver the best results?
Here are the steps to take to allocate your marketing budget and get the best ROI on your marketing plan:
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Set your marketing goals
When it comes to marketing strategy versus marketing objectives, it's a good idea to set your objectives first, and then set a strategy that includes allocating a budget to achieve them. This will help you determine what budget you need to achieve your desired objectives.
what do your stakeholders want to achieve, and what does the marketer need to do to demonstrate the true business value of your marketing efforts?
Determine the duration of the marketing plan and set SMART (specific, measurable, achievable, relevant and time-based) objectives.
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Review past campaign performance
Once all objectives and expectations have been established, the next step is to take a close look at the performance of previous campaigns and use this data to guide your planning.
Learn which digital marketing tactics and strategies have been tried, which have been omitted and their results. This helps to allocate budget where it is most likely to make a positive contribution to profitability.
It is advisable to regularly track campaign performance so that underperforming campaigns and channels can be stopped in time.
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Reduce your overheads
Businesses enter an unstable state of equilibrium when their expenses rise above their revenues. This is precisely what we mean by overheads.
Apart from recurring costs, overheads eat up a significant part of your marketing budget, such as penalties, late payment fees, high-priced SaaS tools (without significant contribution), high dependency on outsourcing, subscriptions to non-required software, high-cost ads, etc.
Analyse all your company's expenses and cut those that are not contributing enough to your organisation.
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Determine your budget
Once you have established your objectives and reduced unnecessary expenses, you need to determine the budget that will cover your marketing plan. Budgets cover a certain period, whether it is monthly, quarterly or yearly.
Knowing how much you need to spend on marketing can help you determine the budget for your marketing plan. Budgets can be set based on past data, but should take into account the objectives you are trying to achieve.
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Calculate the Return on Investment (ROI)
It is also advisable to calculate the potential return on investment. While it is, of course, difficult to define exactly what your ROI will be, an estimate can help you determine how to allocate your marketing budget. When adding up costs, be sure to take into account all potential expenses, including the less obvious ones.
Some of the expenses you may encounter include:
- Hiring an agency, freelancer or additional team member
- Software and tools
- Potential failed attempts, such as PPC ads that don't convert
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Design your marketing plan
Planning and budgeting are closely related. Creating a marketing plan will determine how you go about achieving your goals. Take advantage of data-driven information to determine your marketing plan.
The plan should include the campaigns and expenditures over which the marketing budget will be distributed.
Today's marketing plans focus their efforts on different channels or facets of digital marketing:
- SEO
- Advertising/SEM
- Email marketing
- Social media
- Public relations
Now comes the most important question, how are you going to use these campaigns to achieve your objectives?
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Marketing budget allocation
how much do you need to spend to achieve your objectives in certain campaigns, and more importantly, what do you need to spend to achieve them? This is where defining best practice marketing budget allocation comes into play.
Deciding how much to spend on different channels, platforms and campaigns will allow you to get the results you need to achieve your goals. Employees, software, training, freelancers and hired consultants all need to be factored into campaign-specific tracking.
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Track your campaigns and refine your strategy
As your campaigns develop, closely track key performance indicators and measure the success of your campaigns. You can then use these results to refine the way you allocate your marketing budget. If a campaign performs exceptionally well, you may choose to allocate more funds to it.
Conversely, if a campaign is underperforming, evaluate whether you should adjust your tactics or reduce the funding allocated to it. Avoid prematurely withdrawing funds from a channel that is important to achieving your objectives. In addition to adjusting spending on the fly, collect campaign and ROI data and use it to plan next year's marketing budget.
