How to Create a Successful Marketing Budget
Lilian Ngugi
Local SEO @ Yardinc / B2B SaaS content Writer / SEO Content Specialist/Building @kornwriters.
You have a killer idea that could solve a common market problem you have seen. You are excited and ready to offer your solution. There's only one problem, getting your name out there. Marketing has never been your fort, yet here we are.
What to do?
A marketing budget can help you start your success journey. Stand tall among the 50% of entrepreneurs that will not survive the first year of business. What should you do differently? A proper marketing campaign is the fastest way to turn heads and convert onlookers into buyers.
Those who plan have a greater chance of success. That means you need a diligent marketing budget, and we are going to show you how to do just that through a series of insights, tips, and procedures. Let's jump in.
What is a Marketing Budget?
A marketing budget outlines the amount of money a company or business intends to spend on marketing and marketing-related activities. A marketing budget includes costs like staff salaries, paid advertising, new marketing office space, and furniture, marketing automation software, and sponsored web content.?
Your budget varies depending on your targeted marketing goals and objectives. For instance, placing an advert during the Super Bowl will cost you more than you can spend on a regular TV ad. Advertising costs also depend on the industry, business location, and end goal. Ultimately, marketing costs are difficult to track if you are new to marketing.?
Companies do marketing budgets monthly, quarterly, or annually. Some expenses are recurrent and thus a meaningful part of your marketing expenditure. Experts recommend using a marketing budget template for all your marketing plans.?
How to Create a Marketing Budget?
Creating a marketing budget starts with understanding your marketing plan. It also involves a profound outlook on your business goals. It is far from a spreadsheet stating the costs of everything you intend to do for marketing.?
Having a marketing budget is vital to performing a marketing and communication audit. It is also essential to understand the marketing journey and goals. Here are a few things to do before preparing a marketing budget.
Know your Buyer's Journey.
Your buyer has specific behavior. Understanding how your customer changes from taking an interest in your product or service to becoming a buyer help you pick strategies that work for each stage. It also gives you insights into where to focus your efforts to attract more customers.?
Consider the following questions to help you know your customer's buying journey.?
After that, you can outline your current marketing process, what part of it works, and things wasting your budget. It will also guide you to parts of marketing that need more focus and financing.?
Align your Budget and Goals
Your expenditure plan and where to spend it will depend on what you would like to achieve. Most startups have a limited budget; focus on activities that match your marketing goals.?
Base your budget on the things that help convert your prospect to a buyer. Some goals you can set include:
The success of your marketing campaigns relies on conversion rates. Focusing effort and money on campaigns with high-value offers and conversion rates is vital. Marketing campaigns that target a large audience cost more for paid advertising. For instance, sites like Twitter charge more for extensive campaigns. Focus your money on conversion-generating ads rather than lead-generating ads because they will make you money.?
Prioritize Your Goals
It is easy to get distracted, especially if you are desperate to sell. Most marketing teams run in all directions trying to meet their goals. For instance, many advertised tools promise excellent results, but they all come at a price. Some companies will advertise on Instagram, Facebook, Twitter, and Google ads to gain relevance at once.?
There are countless SEO and PR tools for agencies and businesses. Some subscriptions cost a lot and can drain your budget quickly. Yet, focusing on one goal ensures that you do not chase endless leads to no avail.?
You can also keep tabs on everything that gets budgeted. Check on those areas that bring in desired results and prioritize them while kicking to the curb things that feast on your budget with no benefits.?
Keep an Eye Out for Hidden Costs.
Marketing may have hidden costs like planning, content audits, project management, missed deadlines, and design. Some omitted costs can eat up a chunk of your budget. Nonetheless, a spreadsheet record of all your marketing expenses helps you track everything you have spent money on in a year.?
An excellent example to consider is setting money aside for product marketing. Many focus on product launch and promotion efforts rather than hidden costs like product maintenance and research.
While most people focus on product promotion efforts, conducting proper market research and evaluating customer pain points should be a more meaningful part of your marketing budget. Launching a product that addresses the pain points is easier to sell.
Spend What You Can Afford Wisely
You may not include everything on a marketing budget template you found online for your small business. Yet, you can spend money in a way that works for your business and budget. When you look at all the marketing strategies available, some may be irrelevant. Choosing the most profitable strategy will save you money.?
Follow these steps to choose a profitable marketing strategy.?
Consider email marketing, social media marketing, and other digital advertising for a large part of your budget allocation. Content marketing activities are also helpful in driving leads.
Eyes on the ROI
ROI (Return on Investment) help us know whether our efforts are paying off. Plan how you will measure the ROI. For instance, are you getting more reach? How many new subscribers did you get? You can increase its budget allocation if there is a positive return. If not, consider using other marketing tactics or strategies.?
Since most startups dig into their capital to raise marketing money, they have to keep a record of positive ROI.?
Marketing Budget Breakdown
Most companies spend between 7 and 10% of their revenue on marketing. Startups have less. It is equally difficult to allocate money to each strategy in mind.?
Distribution of Marketing budget Pie Chart
Use the 70 -20 rule to create your marketing strategy. A startup founder must prioritize 70% of their budget for marketing strategies that have proven results. 20% goes to new tools that may benefit the company in the future. In addition, companies need to discover new tools and experimental methods they may adopt in the future.?
The rule is also useful for overall business budget allocation. 70% should go to the staff and basic running of the company. 20% should go to new strategies, hiring, and gaining new tools. The rest of the budget can go to experiments.???
Here is an example of a marketing budget plan. A company sets aside $100,000 on marketing.
Mobile Marketing Campaigns
In 2022, data on Statistica shows a whopping 6.567 Billion people are already using smartphones. Experts predict the number will grow to 7.690 by 2027.?
Mobile marketing campaigns focus on selling via mobile devices like phones and tablets. Since most people have mobile phones, marketing campaigns can reach more people. An average person spends at least 4 hours on their phone per day.?
Mobile marketing uses technology features like location to create messaging that suits buyers from the said location. Essentially, successful mobile marketing uses tailored messaging to reach the target audience.?
Mobile marketing can promote businesses through text messaging, multi-media, in-app, and in-gaming app messaging. Many people regularly use their mobile devices in a particular pattern, which makes it easy to learn their habits and tailor marketing messaging. Mobile advertising rarely focuses on demographics for targeting new buyers.?
We all check our devices from time to time. The behavior is known as 'snacking'. A smart marketer uses instant gratification to woo customers to their products or services.?
The screen size of the device affects your marketing plan. An example is where iPad users find more value in detailed and illustrated messaging that focuses on interactive media and catchy imagery. Smartphone users gravitate towards informative content.?
Pros of Mobile Marketing
CONS
Over time, big and small companies have used mobile marketing features to reach their audience. Notable companies like Nissan and Samsung have recently launched powerful campaigns to advertise their new products. The Nissan' evil snowmen' Ad from 2017 promoting their Nissan Rogue was a genius advert that allowed the customers to view the car's features and also get weather and storm updates.?
There are many free mobile marketing apps one can use for their business. If you’re starting your mobile marketing journey, check out apps like Insider, Branch, and CleverTap. Ultimately, go for paid social media adverts and pop-up web ads. Social apps like YouTube and Instagram offer the best customer reach for most businesses.
How Much do Small Businesses Spend on Advertising and Marketing Budgets?
Small businesses can spend up to 10% of their revenue on advertising. The amount varies from industry and may increase where a company has a household name. Small business marketing budget templates are easy to plan.
An increase in marketing channels for a business is both helpful and a loss. A small business owner has many things to consider before starting their marketing journey. For instance, choose a channel, tailor messaging, and create a strategy that works.?
Advertising is vital for small businesses as it increases sales, enhances visibility, and encourages repeat purchases. Despite marketing and advertising costs, a company needs marketing to scale.?
Free marketing channels offer the best leverage if marketing costs sound too scary for a small business owner. Start with free tools and offers on marketing costs, and implement simple marketing ideas that do not require heavy funding.?
Changes in Traditional versus Digital Marketing Spending
Traditional marketing has significantly slowed down, while most budgets focus on digital marketing. It is because of the rising number of internet users. While that is seemingly the case, digital marketing only surpassed traditional marketing in 2020. The numbers were 54.2% Vs. 45.8% for conventional media.
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In recent years, digital marketing cost has increased by nearly 15% . Most people spend more time on their phones than they do watching TV. TV advertising is still relevant even if facing stiff competition. Traditional marketing budgets continue to decline at 1-2% annually.?
According to trends, internet marketing offers 50% greater interactions. But why would 45% of marketers still rely on media marketing? Why would Doritos pay for an ad on the Super Bowl featuring Megan Thee Stallion?
Traditional marketing involves all kinds of promotional material we interact with in the real world. It can be in print, broadcast, direct mail, and telemarketing. Traditional marketing was the only marketing means until the development of the internet in the 1990s.?
Digital marketing is marketing that revolves around the internet. There are several categories of modern marketing, including.
Traditional marketing is often expensive and tedious. For instance, mounting a billboard costs $2500 a month. The price of CPC starts at $0.25 on Facebook or $7.19 for CPM.?
Traditional advertising can be tedious and require a lot of labor while offering low investment returns.?
Traditional Vs. Digital Marketing?
While digital marketing seems like a perfect fix; it cannot entirely replace traditional marketing. The 45% reach to customers makes it worthwhile. Businesses can look into multichannel marketing. Multichannel marketing means using effective marketing methods, whether traditional or digital, that work for your business.?
Percentage Of Marketing Budget Spent On Digital Marketing
In 2022, CMOs report using up to 57% of their total marketing budgets on digital marketing. Social media takes much of the budget. In the 57%, CMOs must decide which marketing methods to allocate more money. Some marketing methods like AI and big data are more expensive.?
Other top marketing techniques include a digital display and paid search. With the many forms of marketing, most CMOs have to narrow down to a few methods that support their marketing goals.?
Which Social Media Channels Should I Invest in?
There are 3.59B social media users in the world. Some popular sites like Facebook and TikTok have over 1 Billion users. Startups have to connect with their target market in their element. Don’t pretend you haven’t been checking out TikToks on your lunch break.?
Investing in social media is a great way to ensure marketing works for you. There are more than a couple of social media channels available. The top social media sites include Facebook, Instagram, and Twitter.?
Choosing the right channel depends on your audience. While you may not focus on all of them, you still need to keep active profiles where your customers can find you. That keeps you connected to all your customers.?
The social media platforms with the most ROIs are;
The trend may change soon as some platforms like TikTok are catching up. TikTok has over a billion users. In 2022, it ranks as the third largest social media platform.
Facebook is essential as it has over 2.934 Billion monthly active users. That is a vast pool of customers to reach. The platform is popular with people of all demographics. Features like the Meta suit are easy to use, making it perfect for large and small businesses.?
Facebook ads are likely to attract more traffic than other social media pages. It is vital to note that most internet users spend time on the app.?
Instagram has been vital for most companies. It has 1.28 Billion monthly active users. Instagram and Facebook work seamlessly for most businesses. The Meta suit can easily switch from Facebook and Instagram shops, allowing you to manage users across platforms.?
Instagram is popular with millennials. It is still helpful for users, young and old. Popular accounts like Kendall Jenner get a lot of traction. Introducing the Meta suit and Instagram reels increases advertising modes on the platform. Instagram is the mother of influencer marketing. Big brands use the site to promote products through popular accounts.?
LinkedIn is another popular platform to connect with your customers. On LinkedIn, you also get to interact with potential employees. LinkedIn offers helpful lead-generation insights. You can use their platform to promote your business through ads.?
A company with a decent LinkedIn profile attracts quality applicants for jobs. Also, customers have no trust issues with them.?
Trends have seen most people use these platforms to generate as much buzz as needed for their entities. More companies are looking at TikTok as an alternative channel to catch up with their target audience.
The 5% Rule
The 5% rule dictates that only 5% of your audience will likely buy from you at the moment. While that may sound discouraging, the rest of your audience may consider your business or product at a future time. The 95-5% states that 5% of your buyers will buy today while the rest (95%) are likely to believe in the future.?
Think of something you saw in an advert on TV years back. To this day, maybe you will swear to buy it once you have enough money. You will probably buy the item some years later based on the ad's influence on you.?
While the reach will always be more important than the conversion, many reached people may still buy from you after discovering your business.
Which Marketing Strategy & Tactics to Get The Best Results?
There are profitable marketing strategies you can quickly implement to boost sales. Most of the tactics are something you can implement for long-term results.?
Use Social Media Often.
Most users are on social media interacting with friends. They chat about their favorite brands when they want to ask about something. The good thing about social media is that you can do it yourself. If it’s within your budget, get a social media manager.?
Interact with people by sharing industry knowledge and other helpful information. Sharing your authentic self helps build an authentic brand. Grow a following for your brand by sharing your products or services with potential customers.?
Use Videos for Marketing
Video content is currently the fastest way to find your customers. Video content is easy to follow, and most people want to learn on the go. Tutorials help someone learn how to use a particular product or service. Most people prefer consuming video content to text. Good content can market your brand for days on end.?
Implement SEO
SEO is the fastest route to web traffic if you have a blog and website. It may seem like a drag, but it is effective in the long run. Some websites generate thousands of website visitors a month through SEO strategies. That gives a brand authority over competitors. SEO is not a quick fix; learn some techniques for your business. Alternatively, hire an SEO specialist to help. You may as well outsource SEO services to an agency.?
Target old Customers using Facebook Ads
Facebook has a way of tracking your activity and bringing you related content. Using Facebook ads can help you reach out to people who have interacted with your brand in the past. Craft ads that compel them to buy again or sample a new product.?
Properly use LinkedIn
LinkedIn is a powerful tool when used right. Set up a professional profile for you and your business. More people will trust your brand if you have a presentable LinkedIn profile and encourage your employees to create profiles where they can connect with potential customers.?
How to Track Your Marketing Spend?
Excellent CMOs are constantly tracking their marketing budget. If you’re an entrepreneur, tracking your budget is vital to stay ahead. There are three main ways to track your marketing budget.?
CPC
CPC stands for cost per click. It is a way to calculate the amount of money spent by establishing the cost of every click you get. You calculate the cost by dividing the amount of money spent on advertising by the number of clicks you receive.?
CPL
The cost per lead metric estimates the amount of money spent on making every new lead. It lets you understand how much money it takes to get your business a single customer. You can calculate the figure by dividing the amount spent on leads by the number of customers gained.?
CPA
CPA refers to the cost per acquisition. An acquisition is when you get a customer to buy an app, get a product, or subscribe to a website. You can calculate the amount by dividing the amount spent on advertising by the number of acquisitions.?
CPA, CPL, and CPC are the three main ways marketers keep tabs on their marketing budgets.???
Common Marketing Budget Mistakes
Marketing budget mistakes are costly. Instead of making them, we have a list to warn you what not to do when marketing. Here are common marketing mistakes you should avoid at all costs.?
Key Marketing Budget Statistics
2021 saw record lows in marketing budgets. On average, the marketing budgets stood at 6.4% of the revenue.?
In 2022, CMOs have ramped up the average marketing budget to 9.5% across industries.?
The numbers are still below the percentages before the pandemic. Between 2018 and 2020, the average marketing budgets stood at 10.6%.?
Top industries include travel and hospitality, tech products, and financial services. The highest industry spending is financial services at 10.4%, tech products follow closely at 10.1%, and travel and hospitality take 8.4%.?
Another noteworthy industry is consumer goods which stood at 8.4% in 2020. Now the industry is at 8.0% in 2022.
Final Word on Marketing Budget
Create your marketing budget to reflect your goals. Follow an example of a marketing budget to make things easier. A simple marketing budget template outlines important marketing methods for your business. Implement the winning marketing strategies above and catapult your business to greater heights.
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2 年I like how detailed your article is.