Your marketing budget can seem scary. How are you going to meet all of your goals this year with the little money being allotted to marketing efforts?
And even if you have a lot of money in your budget, what do you do with it?
There are a lot of factors that can impact the size of your budget – and, more importantly, what you should do with it:
- The size of your company;
- The age of your business;
- How much the execs give you to work with;
- Who your audience is;
- Where your audience spends their time; and
- The nature of your business.
This list could keep going, but hopefully you get the point.
Your marketing plan depends in large part on you, and that means nobody can give a one-size-fits-all answer on how to create and use a marketing budget.
However, there are a few things every marketing professional – regardless of budget size – should know.
How to Create a Marketing Budget
There are a lot of tips out there about how to create a marketing budget.
They basically come down to one question, though: what percentage of your gross revenue should be spent on marketing?
Laurel Mintz, founder and CEO of Elevate My Brand, wrote an article for Entrepreneur that discusses her company’s recommendations to clients.
Here is how she breaks it down.
- Businesses <1 year old should be working on the business before spending money on marketing.
- Businesses between 1-5 years old should be spending 12-20 % of gross revenue or projected revenue.
- Businesses 5+ years old should be spending 6-12 % of their gross revenue.
While you do not have to follow this formula exactly, it might be a good idea to use it as a guide as you start planning for your marketing budget.
Your Marketing Budget Should Grow as You Do
Although you should spend a smaller percentage of your revenue on marketing in the infancy of your business, it is important to remember your budget should still be growing over all.
After all, your income will hopefully be growing significantly, which will mean more money for marketing at a lower percentage of your profits.
So as your budget grows, so should the sophistication of what you are using that budget for.
Perhaps when you first started, you couldn’t afford a commercial on a network channel, but now you can.
Perhaps you were running your website from a template before, but you can now afford to hire someone to do a more professional job for you.
Remember that as time goes by, just because you have always done something in a certain way does not mean you should continue it.
Keep building your marketing budget and the strategies you use to manage that budget if you want to reach new levels of success.
Your Audience Should Be Affecting How You Use Your Budget
Who are you trying to attract? Knowing your audience greatly contributes to what you do with your marketing budget.
Hilary Johnson, writing for Inc., says that thinking of your product or service when building your marketing is egotistical. Instead, focus on the customer.
Who you want to reach will allow you to determine where you are most likely to find them.
Continuing this thought, knowing where to find your audience will allow you to budget your marketing around those sources.
For example, say your target audience watches a lot of TV. Perhaps you want to make sure commercials are in your budget.
You could find out what channels your target audience is more likely to watch and try to put a commercial on during those shows or on that channel.
Alternatively, maybe your target audience doesn’t like watching TV and spends most of their time online.
In this case, it may make more sense for you to focus your efforts on Internet ads on the sites your audience is most likely to be visiting.
How to Use Your Analytics to Set Your Budget
The next thing you need to know about your budget is that analytics are vital.
When dealing with a budget of any nature, you want to use your money wisely.
When dealing with marketing, acting wisely means monitoring for success.
Analytics let you examine what is working for you and what needs work. It lets you know what you should just stop doing and what efforts you should be kicking up.
As you set your budget, take a minute to examine your analytics.
- Where are your sales coming from the most?
- How are you developing your leads?
- What type of marketing is working best for you?
- Where could you be improving?
Looking at your own analytics will help you, but looking at others is also smart.
What are you competitors and influencers doing? Is it working for them?
If an examination of yourself and competitors shows that you are falling behind, use those analytics to figure out how to fix it.
Then, start focusing your budget on the areas that could actually help you.
There are lots of great tools out there that can help with this. Alternatively, you can get help from a marketing agency.
No matter how you go about it, though, you need to keep track of what you have been doing and the results of those efforts as you go along.
You cannot evaluate success – or failure – without knowing this information.
Your Marketing Budget Does Not Define Your Marketing Plan
Perhaps the most important thing you need to remember about your marketing budget is that it does not define your marketing.
There are many ways to build your brand and increase your marketing efforts in incredible ways – all without spending a lot or even any money.
Just because you do not have a big marketing budget does not mean that you cannot have a big marketing plan.
- Social media costs nothing more than time.
- Just keep up with the research out there on what platforms you should be doing and what works, and then do it yourself.
- Or hire an intern or an entry-level employee to do it on a small salary.
- Even getting an agency or freelancer to do it for you can be cheap.
- You can donate something you sell or offer to a local charity so that you can get your name out there and do some good.
- Another option might be to present at conferences or other industry events if you can find one that is in need of speakers.
There are many more ideas along these same lines. Marketing does not have to be expensive at all.
Mintz’s article, as previously mentioned, has many more examples of great ways to use marketing to the fullest even when you have practically no budget to work with.
Your Marketing Can Bring in a Lot More than It Puts Out
Using 5-15 % of your gross revenue on marketing may seem like a lot.
Even if it turns out that overall you are not spending much, it still means a lot less that you are bringing home to pay your bills at the end of the day.
You need to find a way to do it anyway, though.
Marketing over time is what is going to start making you money. In order to be successful, you need a marketing budget even if you do not know how you will afford one.
To an extent, you can use many of the cheap tricks discussed earlier, however, you will still need to spend some.
This is one of the reasons funding is so important. If you are going to be running a business, you might want to find enough startup money to include a healthy marketing budget.
Your Budget Shouldn’t Be Spent on Just One Thing
Even if your target market spends a majority of time doing one thing, such as watching TV, your marketing budget should not be spent on that one thing.
You will find the most success if you diversify your marketing efforts.
Make sure you use a wide array of marketing strategies. This will help you reach a much larger volume of potential customers as well as help you figure out where you are getting the most bang for your buck.
Things to consider trying include:
- Booths at conferences;
- Radio spots;
- Online ads;
- Website content;
- Direct mail; and
- Many more.
Final Thoughts on Your Marketing Budget
There is a lot to consider when you are figuring out how much money to put into marketing and what to do with that money once you have made a budget.
However, you do need to be aware and take into account all the things discussed above.
If you would like help with your marketing, get a hold of us today!