Marketing budgets can feel like a chore without a dedicated marketing team crunching the numbers, but every business needs one to succeed. Why?
Because every dollar spent differentiating your business from your competition can earn you five to ten dollars in revenue.
That’s how valuable having a marketing budget is, yet, most businesses find themselves marketing by the seat of their pants because budgeting is a challenge.
What’s The Challenge?
The time and resources required to develop an effective marketing budget are usually scarce, especially for small to mid-sized businesses. The budgeting process is more than just picking a dollar amount, choosing your marketing channels and then creating marketing pieces. It also has to account for research, personnel and tracking.
Before You Begin
It may be your first instinct, but marketing budgets should not begin with how much you are willing to spend. They begin with establishing who your target audience is and researching who can benefit from your product or service the most. Define what they look like, what they do for fun, where they go for information and what they value.Then ask yourself, “What about my brand will differentiate us from our competitors in the target audience’s eyes?”
With a clearer view of your target audience and vetted differentiators, you may research what marketing channels best communicate your differentiators to your customer. For example, if you’re marketing a professional service to other businesses, you might consider LinkedIn or a robust SEM strategy. If you’re marketing a product to millennials, you might consider Facebook or remarketing.
Set Your Goals
Set expectations and benchmarks to measure your progress, but be realistic. If your target audience is small, can you really achieve $5 million in new sales over the year? Can you truly convert 50% of leads when the industry average is 10%? This is not to say your goals shouldn’t be challenging, but make them achievable for the sake of your employee’s morale, your sanity and your bottom line – this is your opportunity to define what your success looks like.
Just having goals is not enough. You must establish tools and a process for tracking your success and making changes. Facebook provides HTML pixels to help you attribute website conversions to a specific Facebook ad. Landing pages or unique URL’s on your website will help you identify campaign related traffic and leads. Promotion or QR codes will help track the success of promotional offers. The key being, if you can’t measure it, don’t do it.
What’s Your Budget?
Traditionally, your marketing budget should be around 10% of your gross revenue. If you are a newer business with less brand awareness, that number could reach as much as 40%. If you are an established brand, that number may drop as low as 5%. No matter the case, your marketing budget should be built to meet the goals you previously set, and focused on reaching your target audience through the marketing channels you researched.
Luckily for businesses today, the digital age has made marketing much more cost effective. A Facebook ad can reach just as many customers as a newspaper ad for a fraction of the cost. A YouTube video can drive website traffic better than any ad buy for television or radio, and an optimized e-commerce website can move product faster than most high-traffic storefronts.
That being said, digital and social media marketing relies on your understanding of your target audience. If your target audience research is off the mark, your well crafted marketing will fall on deaf ears.