Can a company live without a marketing budget? Yes, it is possible. But not for long if you are a small company, and a little longer if you are a large company.
What is this budget for? To understand how much money you spend on attracting and retaining a client, how much it costs you to contact one client, how much profit this client brings and what is the difference between costs and revenues. Ideally, the marketing budget describes it all. Yes, not all marketing and advertising costs are explained in terms of cost-effectiveness in attracting a client. But the fact that everything that happens obeys this goal is beyond doubt.So, you are the person making the marketing budget. And we will help identify key and sore points, as well as do everything right in practice.
Assess the Financial Capabilities of the Company
Before making a forecast of the advertising budget, it is necessary to evaluate the maximum investment opportunities of the company. For this:
- Estimate the level of income in each month throughout the year. The assessment is similar to a “rough” sales forecast based on the available statistics. In other words, based on the company's historical sales data, plan how much sales the company will bring next month each month.
Important: do not exaggerate, try to evaluate the most reliable, but rather the minimum level of income. For example, if the sales volume varies from $20,000 to $50,000, it is better to take the minimum value of $20,000 for budget planning.
- The next step is to determine the expenses in each month of the year. This may be the cost of buying materials, paying employees, renting space, tax payments, etc.
The result of the first two actions is to obtain an indicative amount of the company's future profit, which can be invested in future growth.
- The last point is to identify all the priority areas of your business for the next year, in other words, key sources of growth and business opportunities.
However, remember that marketing is only one of the directions for future investments. It may turn out that it is more important to upgrade the equipment at the moment or to direct all resources to the development of new technologies, or to staff training.
Start by Defining Targets
Make sure you understand what your goals are. Without goals, you cannot appreciate what you are trying to do. The result is the foundation of any budget.
- What do you want to achieve in terms of money spent?
- Will the projected revenue be sufficient to cover the company's current expenses?
- What level of return on marketing investments do you plan to reach by year?
As a simple example, you can use common goals for most companies:
- The increase in website traffic measured by unique visitors per month
- Increase targeted traffic from geographic coverage
- Affiliate marketing leads increase with the Leads Market.
Choose the Most Reasonable Focus Point Based on Your Metrics
Below we provide a list of the most effective areas where you can direct your marketing efforts.
✓Search engine optimization (SEO) is an ongoing process that is vital for any business that wants to reach customers in the organic (unpaid) search of Google and other search engines. However, remember that firstly, high-quality SEO cannot exist without the same quality content, and you will see the first result in at least three to four months, secondly.
✓Social Media Marketing. One of the best things about social media marketing is that you can use them for free unless you run ads. Time spent will be the biggest investment you can make. Marketing actions include the creation of social profiles, the publication of new content, the creation of an audience and regular interaction with it. It looks quite simple, but for a real result, you still need an intelligent copywriter, graphic designer, as well as a separate strategy.
✓Contextual advertising. Both search engines and social networks offer PPC (pay per click) advertising options. PPC allows you to reach new customers by paying for the space on search engine results pages, in social media feeds, and on sites and applications that are part of their advertising system.
✓Content marketing. This is a key point that you will always need, regardless of whether you focus on SEO or on social networks. All these features are in one bundle, and the quality of the content is crucial here.
✓Email marketing is an unmistakable way to reach current and potential customers who share their email address. A well-built personalized chain of letters makes it possible to steeply and efficiently lead a customer through a sales funnel. And yes, content solves everything here as well.
Determine How Much Money to Provide for the Budget
At the same time, it is possible to build on a specific task, determining exactly what the company wants to achieve. To do this, come from the goal of the company, as well as assessing the quantity and quality of potential customers who need to be attracted to achieve these goals.
Most often, the budget is formed as a percentage of the company's turnover. This percentage includes spending on key marketing campaigns over a given period. Usually, media is the most expensive part of the budget.
Provide a Budget Reserve for Performance Analysis
No marketing strategy makes sense if you don’t analyze your results. In practice, it’s called draining the budget down the drain. Therefore, your document regulating the marketing budget must necessarily contain the cost of analyzing your marketing efforts. Even if you plan to do it yourself, without planning to rent an analyst in the office or on a freelance, this item should still be provided as a backup. Since we repeat again, any action loses its meaning without proper analysis of the results.
Conclusion - Your Budget Should Be Balanced
Mistakes and distortions in the distribution of funds, even with a properly planned budget, happen very, very often. In addition, sometimes the budget is made from the point of view of the leader and the marketer, when the channels that they choose, and not the target audience, are taken into account. Thus, speaking of a harmonious budget, this should be an optimal budget in terms of the amount developed based on the conditions of the competitive environment and the chosen marketing strategy.
About the Author
Luke is a writer and editor based out of Los Angeles. He specializes in finance, as well as health and wellness. In his free time, he enjoys watching Astros baseball. You can find him on LinkedIn.