Like a marketing strategy, a marketing budget is one of those unseen factors that is an absolute essential. Without one, your campaigns have very little chance of getting off the ground. Despite this, it’s something that even seasoned marketers struggle to allocate, track, and stick to.
So, how can you work out how to put the right amount of budget behind your work? We’ll show you how to do that, with great tips and a free marketing budget template for you to fill in below.
- Analysing your current marketing spend
- Defining your marketing goals
- What you’ll need to budget for
- How to calculate your suggested marketing budget
- How to allocate your marketing budget
- Tracking your marketing spend vs. budget
- Download your marketing budget template
Analysing your current marketing spend
If you want to start getting serious about your digital marketing budgets, then looking at what you’re currently spending is essential.
What to look for
So, what falls under your current marketing spend? Anything you put money towards promoting your business is fair game, which might include:
- Digital ads and PR
- In-house or external marketing personnel
- Digital assets such as your website, social media, and any content produced
- Marketing management tools
- Events and related marketing collateral
Of course, some kinds of marketing activities will be easier to measure than others. A paid ad, for instance, can easily show you how much you spent against the value of the generated sales. The success of an event, on the other hand, can be harder to quantify.
Either way, when you’re evaluating your current marketing spend, make a note of:
- The cost of each marketing activity
- The influence that each activity might have had on your customers’ attitudes and behaviours
- Whether any sales were the result of particular marketing activities
- The return-on-investment from these marketing activities
The data you gather from past performances here can help to inform what you’ll spend your budget on.
Defining your marketing goals
Once you can identify and define your marketing goals, you’ll have a better idea of where your money needs to go.
Whatever you want to achieve, keep your goals SMART: Specific, Measurable, Attainable, Relevant and Timely. These five qualities let you stay focused on the end result, can sync up to your company’s wider goals and can be adjusted if you aren’t happy with the progress you’re making.
What you’ll need to budget for
There’s a lot of moving parts when it comes to your marketing activity; you’ll need everything in place so you can sell, promote, develop and, of course, market your brand, product and services. As such, you’ll want to keep the following in mind when planning your budget.
Your marketing team
When it comes to personnel, there are a few different options available to you. You can rely on the skills and experience of your existing team, bring in short-term freelancers, or hire new people to join the team. Remember, freelancers usually charge an hourly rate, while hiring full-time employees will involve the likes of training and onboarding – which takes time and money. Make sure you consider both of these factors in your budget before either route.
To bring your campaigns to life and carry out certain everyday processes, you’ll probably want a suite of software to make things easier. Depending on what you want to do with your campaigns, you may need to budget for things like customer relationship management, design, automation, lead capture and generation and digital assessment management.
And since these tools will come at a cost, it’s well worth trying out free options first. Once you and your team know what they want to work with, you can fork out for the real thing.
Everything from your website to your social media to the creation of content can be grouped into digital assets. And all these things cost money. Once you’ve budgeted for these things, you can have more of a tinker with the amounts based on the returns they bring in.
Whether it’s things like physical ads, paid ads, social media promotions, or anything similar, you’ll have to budget for these too.
How to calculate your suggested marketing budget
Calculating and allocating budget isn’t simply a case of plucking a figure out of thin air and flinging it at a campaign. You’ll have to break out the calculator and get number crunching so you can work out your total revenue first, including gross and estimated revenues.
- Gross revenue – Revenue you receive before deductions or allowances (such as rent, cost of goods sold, taxes)
- Estimated revenue – The amount of earnings projected for a given accounting period
How established your company is will also play a factor in your marketing budget investment. For the most part, it’s new, fledgling companies who’ll need to put more into getting their name out there.
That’s not to say an established brand doesn’t need to market themselves, they just won’t have to do as much in comparison.
A new brand should aim to allocate around 12 – 20% of its gross revenue to marketing. And we know, we know, that sounds like a lot, but even if your product or service has the potential to shake up its market, it’s going to struggle to do so if people don’t know about it. Word of mouth is only going to get you so far.
Brands with name recognition, on the other hand, should allocate around 6 – 12% of their gross revenue to their marketing. They have the loyalty and big-name reputation, so they won’t need to allocate as many resources compared to a small company.
How to allocate your marketing budget
Know your company’s overall objectives
Your company’s overall objectives can play a big part in the allocation of your marketing budget, so it’s important to get to know them well. The same goals for any top priorities they may have for the upcoming period. This way, you’ll be able to balance the more time-limited initiatives with things that’ll need ongoing financing to carry out. Of course, you might also need to set aside a little extra to take care of anything that the company didn’t plan for.
Look at the strategies that’ll achieve your goals
Every one of your goals will have its own methods, approaches, and strategies to get you closer to them. Let’s say you want to build your brand, you might look at increasing your engagement on social media. Or if it’s leads you want to generate, then you can do this by increasing the number of subscriptions to your email newsletter.
The strategies you identify here will help inform how much budget you allocate to them.
Decide on the right channels
The channels you use will also determine the amount you’ll be spending too. Depending on the industry you’re in, these channels will vary – see which ones are the right ones for you by asking yourself the following:
- Do we need to carry out outreach?
- Do we want to target specific audience groups based on things like age and job title?
- Should we target audience groups based on intent and behaviours?
- Are we increasing awareness, and tracking views and traffic?
- Are we aiming to increase conversions, and track qualifying activities in the process?
- Does our strategy involve inbound marketing?
Don’t forget to think about things like creating buyer personas, conducting customer and stakeholder interviews, and analysing which channels are bringing in the most traffic. The insights from these can highlight which channels you should be focusing on.
Tracking your marketing spend vs. budget
With everything in place, you’re ready to move ahead with your marketing strategy. But hold up – your work is far from over. Tracking your budget is a massive part of managing your marketing activities.
Keeping track of your spend
To keep track of how much you’re spending, you should aim to create a baseline or benchmark for your marketing budget. This gives you something to compare against once you’re marketing strategy is in motion, and lets you make any adjustments to, say, a campaign or a certain schedule if you need to make up for unexpected changes.
ROI: spend vs. goals
As well as your spend, you should also be measuring any return your activities create with regards to your goals. Things can get a little murky here; what’s considered “good” ROI can vary according to your type of marketing strategy, your distribution channels, and your industry. Creating an ROI benchmark is just as challenging since all your marketing tactics will be different.
Take something like PPC. Since ROI data is tracked automatically, it’s easy to compare an ad’s return when you can compare it to similar campaigns. But how do you do this for something like a social media campaign? It’s hard to tell whether your blog posts, podcasts or videos are leading to purchases, for instance.
Nevertheless, there’s a simple formula which you can use to calculate your marketing ROI:
[((number of leads x lead-to-customer rate x average sales price) – cost or ad spend) / cost or ad spend] x 100
Confused? Let’s break things down a bit:
- Number of leads: The number of people who showed an interest in your product or service
- Lead-to-customer rate: The percentage of leads who became a customer. If 32 out of 100 leads became a customer, you’d have a lead-to-customer rate of 32%
- Average sales price: Your product’s average price – a helpful figure to know if you happen to apply discounts or alter pricing every so often
- Cost or ad spend: Anything that you spent money on to create or promote the marketing campaign falls under this, whether that was ad spend, hourly wages of people working on the project or costs that relate to creating content
Remember, ROI doesn’t necessarily mean a financial return. There are other measures of a campaign’s success too, ones that don’t involve money. Things like follows and likes on social media, increases in web traffic and positive customer reviews can show whether or not your campaigns have been a success too.
Download your marketing budget template
Ready to get to work on creating your next marketing budget? With the help of our free downloadable marketing budget template, you can detail your itemised budget costs per month, along with your actual spend, so you can track your budgets over the course of your campaigns.
Struggling to put your money where your marketing is? Get in touch with our team of digital marketing experts and we’ll come up with a strategy that’ll get the best out of your budget, whatever your goals are. Head to our homepage or give us a call on 0345 459 0558 and let’s get talking!