If you’re at the helm of a marketing team, part of your job is to know how to manage a marketing budget. Your web design and paid ads won’t work with an empty wallet. Many businesses make basic and common mistakes when budgeting for marketing, resulting in wasted money and missed opportunities.
A marketing budget is an essential tool to help you understand what you are doing and how to get better results. But what if you are not a financial expert? Maybe you know a lot about SEO and social media marketing, but you are not familiar with creating and maintaining a budget.
Although budgeting can seem daunting, it’s not that complicated if you know the best ways to manage your budget. In this article, we will show you how to create a marketing budget for your business.
What Are Marketing Expenses?
Marketing costs are expenses for anything that serves to promote your business. This includes your website’s domain and design, logos and photos, traditional marketing, copywriting, and printing; the list of things you can spend on to increase revenue is endless.
A marketing budget is a plan that summarizes and prioritizes how much you can (or should) spend on marketing and where you will allocate funds for various marketing strategies. Marketing budgets include spending on processes and additional costs such as buying software or outsourcing work.
Importance of Prioritizing
An excellent way to compare “nice-to-haves” with “must-haves” is to organize your spending and focus on your central goal. For example, when it comes to public relations (PR), there are many tools you can set aside some budget for. This can lead to you spending too much money on areas that are not vital rather than the essentials. Therefore, it’s crucial to prioritize and align your goals with your budget.
A List of Marketing Costs
Marketers today have a huge range of costs that fall under the term marketing, including:
- Website setup and maintenance costs
- Branding, creation of your visual identity
- PR campaigns & crisis management
- Marketing automation tools
- Travel expenses
- Video conferencing & webinars
- Design & development costs
- Digital advertising (social & research ads)
- Video production
- Promotion & hosting of your events
The biggest challenge for marketing managers is keeping track of these payments. It’s normal to overlook something or go over budget on a large campaign. However, sometimes these mistakes are unacceptable; a well-run company cannot afford to operate this way.
7 Steps to Take When Planning Your Marketing Budget
Now that we have defined the marketing budget and brought some examples let’s discuss the main steps to manage the budget.
1- Align Your Budget with Your Goals
How much or where you spend depends on what you want to accomplish. When you start creating your marketing budget, make sure you only spend money on things that are necessary for your current marketing goals, such as
- Display ads to promote a new product
- Sponsored posts on social media to attract new followers
- Paid search ads to drive traffic to a specific product page
- Blog articles to generate more organic search traffic to your website.
2- Optimize & Customize your Marketing Budget
Look at your current expenses for each item and ask yourself if you need to change the amount to meet your development plans. An important consideration is the ROI of each activity. For example, if your goal is to increase sales by 20%, you may need to update your website, hire more marketers, or run more ads.
Consider both quick wins and longer-term tactics to achieve your business goals. You can also compare your spending to industry averages to assess your status.
3- Compute Your Costs
Once you have a complete list of activities that might benefit you, go through them again and consider how much each item would cost. This step can be tricky because the cost estimate for each activity looks different. Prices for certain activities, such as PPC, can also vary significantly.
Do your best to estimate how much you are likely to spend on each activity. Here are a few valuable tips you can use:
- Start simple: first, list the most manageable costs you can identify. You may already know how much to budget for things like salaries for your current employees. The same goes for many activities with a fixed fee, such as software.
- Use past numbers: you can usually learn more from your budget history than anything else. Look at your marketing team’s past spending to figure out how much you typically spend on a particular activity.
- Set limits: Some activities, like PPC campaigns, don’t have a fixed cost – they can cost as much as you are willing to pay for them.
Once you have an estimate for all the items on your checklist, add them up and see what comes up. But chances are, it’s well beyond the scope of your marketing budget. Do not worry; you should have expected this! Your actual list is a brainstorming session where you write down everything you propose to your marketing team. Still, you can not do it all.
4- Prepare to Measure ROI
If you have put a specific amount of money into a certain area in the past, you need to determine if your budgeting has helped or hurt you when creating future budgets. The best way to do that is to measure ROI – return on investment.
If your spending on one item results in your business making more profit, you should increase the budget next year. If you have not accomplished anything with your money, you should reconsider your plans.
5- Invest in the Right Tools
Collecting as much data as possible and investing in the right platform are critical to your success. A solution that meets your team’s needs will drastically improve your ability to manage your budget by saving you resources and time. This ability will allow you to control the marketing tasks necessary to efficiently achieve the results you want.
6- Analyze Your Past Actions
When you begin to create a budget, you should examine your past efforts. Which of your methods has yielded the highest return? Which ones have not proven successful? You can analyze your competitors and general market statistics all you want – nothing will beat the relevance of your company’s historical data.
7- Target Your Investment in Digital Marketing Methods that Already Produce Value
You should know the acquisition cost for each marketing tactic, which is the amount you spend on average to acquire a customer using that approach. Some techniques will be more expensive than others, and you may find that some strategies generate no value.
Once you have identified the techniques with the lowest acquisition costs, you have found the most effective tools in your marketing toolkit.
Takeaways; How to Manage a Marketing Budget
A marketing budget essentially has only one purpose: communication. Budgets need to follow a consistent structure to be understandable and communicable. Depending on your team, you may want to break it down by business unit or product line, region, campaign, allocation, framework, or even a combination.
Making sure your team has a consistent strategy for marketing budgets will help you avoid chaos and control spending, giving you visibility into your investments. The clearer the communication in your budget, the easier the entire budgeting process will be for your marketers, and the sooner they can turn their attention to marketing!
Get in Touch
If you need help increasing your ROI and managing your marketing budget, consider partnering with GoDRTV. We have helped many businesses and would love to add you to our list! To get started, contact us today.
