A marketing budget is your financial plan that you exercise for fulfilling the marketing goals of your company. Allocating your company’s money to the right areas and properly planning the finances for your campaigns and projects is an essential task.
While it might seem like a hectic task, it has a lot of benefits and gives proper direction to your marketing efforts. Just like you create schedules and plans for your personal work and are able to perform more productively, the same goes for your businesses.
And of all plans, the marketing budget planning does not just align your professional efforts; you can also learn better management, financial wellness, systemization, and other useful skills from it. This article gives you a peep into the importance of planning your marketing budget and elaborates upon how to plan it!
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Why Is It Important To Have A Marketing Budget?
A marketing budget is the documentation of how much of a business’s money is going to be allocated to the marketing department for a set time period – weekly, monthly, quarterly, yearly, or even at the interval of specific day counts.
This budget takes into account all costs that are related to your marketing such as hiring costs, marketing tools, paid ads, website management and maintenance costs, and more. Here are some reasons why a marketing budget is important for your business:-
- A marketing budget can help you stay on the right track when it comes to finances. Staying on track financially is very important to ensure that your expenses do not impact the other departments or teams in the business. Staying on track can alert you if you are overspending and help you rectify activities before suffering major losses in the business.
- With a marketing budget, you are likely to allocate the funds where needed. Also, a marketing budget tells you how much you can spend for a given time so you can accordingly allocate different amounts to different strategies. Accordingly, if you are hiring a marketing agency for your company, you would know if it is worth it to allocate your funds in it.
- A marketing budget can help you create long-term schedules and plans. Long-term plans can help you prevent a hunt for additional expenses throughout the year and invest in effective strategies. Furthermore, long-term planning can give you consistency and flexibility.
- A marketing budget is essential for understanding the reality and gravity of your finances and accordingly set goals for your business’s future. You can thus set realistic expectations from the marketing efforts of your team and better understand the revenue earned through marketing.
- Marketing is extremely essential to open your business to the world. Marketing is a necessity, in the absence of which your business can collapse. Therefore a marketing budget is an important investment for a multi-directional growth of your business. It facilitates a planned development of your business and gives long-term benefits.
How To Plan Your Marketing Budget
Here’s how you can effectively plan your marketing budget:-
1. Write Down Your Sales Cycle
Before proceeding with investments, strategies or any other relevant steps, you need to write down and establish the sales cycle. And that happens with the establishment of your sales funnel as it determines where your funds go. A sales funnel can be divided into four stages: Awareness, Interest/Consideration, Decision, and Action. Sales funnel can help you understand which area/stage requires the most investment for implementing marketing strategies.
For example, after designing your funnel or cycle let’s just say that you notice that the majority of leads do not make it beyond the awareness stage. You may realise that you need to focus your strategies more in this stage than the others and for that you would have to allocate more funds in this stage. Brand awareness and visibility strategies would work well for this stage. To be able to understand your budget and plan your investments, you would need an in-depth understanding of your sales funnel.
2. Figure Out The Outside Costs
The next step of creating an ideal budget plan requires you to understand all your outside costs. Understand the sources, nature and exact amount of these external costs. Clarity about what external services would cost how much to your company can help you work out your marketing plan and budget accordingly.
Some essential external costs you need to consider include the costs for employing staff at your firm, costs for maintenance and running your business such as electricity and water, operational costs such as creating goods and services and shipping them. A clear understanding can help you determine a baseline for your ROI as it can provide guidance about which practices and strategies can give the best ROI.
3. Clearly Define Your Business Goals
There is no limit to how much this particular step needs to be emphasized. You need to set the business goals for your company and you need to stand by them. Understanding what you want to achieve helps you plan out a budget that can help you achieve the goals. Your business goals can be focused on increased lead generation, increased brand awareness, increased subscriber, more sales and revenue, etc. and also a mix of all of it.
However, your goals must be smart and practical. Furthermore, your goals must be measurable, well-defined and precise such as “30% increase in sales in the next one year.” Such well-defined goals will help you make your marketing budget concrete and one that will help you add value to your efforts and results.
4. Analyse And Understand The Market
If you do not understand the market you are functioning in, you are likely to come up with an ineffective budget plan that can lead you to incur serious losses. Understanding your position in your market and seeing where you fit in with your competitors can help you establish your brand better. And to do this you need to do a thorough analysis of this market, its demands, your competitors, and study other relevant data.
Competitor analysis is among the most essential practices in this step. However, if you are for any reason unable to understand things on your own, you can always use competitor analysis tools. These tools can provide valuable insights such as which areas do your competitors succeed in the most. Once you have an idea of key areas to focus on and other relevant data, you can plan out your fund allocation accordingly.
5. Explore And Find Suitable Strategies
Next you need to choose your strategies. And do not go just on a word-to-mouth basis or superficial recommendations and suggestions. While it is important to consider what people are saying, you also need to explore your options and do a thorough research on the available strategies and resources at your disposal. Look for suitable and appropriate strategies that would work for you and then see if they can be accommodated in your budget. Accordingly, decide your budget and finalise the best fit.
While there are several strategies at your disposal, some are so effective that they are almost indispensable. These include Search Engine Optimization (SEO), PPC Advertising, Email Marketing, and Social Media marketing and advertising. There are rarely any businesses that do not use the mentioned strategies for marketing purposes. However, depending on your requirements, you again need to see if these work for you well. For example, if we take the example of social media marketing and advertising, you would need to figure out which social media is popular among your target audience and potential leads. You would then need to focus your efforts and investments on that platform more than the rest.q
6. Manage Strategy Costs
Lastly, you need to manage your strategy costs. For any strategy you are using, you need to calculate how much it would cost you. For example if you are using ad campaigns, you would have to understand if you would do it internally or hire a freelancer for the same. Then you need to manage the costs of hiring the freelancer or even a marketing agency and manage their costs for implementing the ad campaign strategy.
Accordingly, in order to manage your strategy costs, you need to be clear about who would handle the marketing campaigns; whether it would be your in-house team, freelancers, or a marketing agency. Then you need to understand the costs and plan the budget. Ideally, the majority of businesses hire marketing agencies because it has been observed that they get professional and a wider range of services for lesser investment. However, this may not be the case. You need to remember that your costs can vary on the basis of your marketing needs and demands.
Some Important Marketing Budget Statistics
- According to reports by the Business 2 Community, on an average, 13% of the company budget accounts for the marketing budget in B2B firms.
- A report by CNBC revealed that Google has been the market leader when it comes to online advertising for over a decade. Furthermore, it is expected to generate 29% of the entire digital as revenue by the end of 2021.
- According to HubSpot, almost 25% of businesses are actively investing in mobile optimization as a part of their SEO strategy.
- Allocating funds of the marketing budget to social media has been one of the most profitable decisions for marketers; research by Animoto has revealed that they have managed to increase their customer base by posting videos on different social media platforms.
- According to Hootsuite, 60% of all marketers intend to increase their marketing budget for Instagram while 30% intend to do so for Facebook by the end of 2021.
We hope this article was helpful for you in understanding the importance of having a well-planned social media marketing budget and how you can create one yourself. This is one of the most essential documents, based on which your business can either get great growth or may have to go through serious repercussions. We therefore advise you not to rush into anything and plan your marketing budget on the basis of current trends and relevant research.
We are Team EMB the voice behind this insightful blog.