Budgeting: How to define your Marketing Budget?
A budget is a plan that defines how your money will be spent: how much, on what and at what time.
Why is a budget important?
A budget allows you to know exactly what you’re spending and when so that you can plan ahead. Thus, a budget allows you to make sure you have enough money to do what is necessary to be done. It helps you keep your finances on track.
We all want to do a lot of things but we can’t always afford it. A budget helps us set things on track and prioritize so that we can make the most out of the money available.
How much should my marketing budget be?
In general, a business’s marketing budget should roughly be set at 10% of total revenue when you’re just starting up your business or looking to grow your market share for an existing business. When you’re in maintenance mode, the budget can go down to about 5% of total revenue.
This is not set in stone. Remember a budget is all about prioritizing and making the most of what you have. The above percentages help you have a baseline; but at the end of the day, it’s your call.
How to break the budget down?
In the past, it was maybe possible to set budgets for years ahead; in today’s fast world the norm is to go about yearly budgets. Even then, you’ll see your budget often change throughout the year as a response to what is happening around you (in your industry, with your competition, etc.).
You obviously should break the budget down by month and then by channel. You should get as detailed as possible and determine how you’re spending your advertisement budget, for example on online channels (Facebook ads, Google Adwords, Direct Placement, Email Marketing…), offline channels (outdoor, direct mailers, radio…) and on other spending such as contest giveaways, space rentals for activations, participation in industry events and so on...
How do you choose how much goes into each channel and when?
You’ll need a marketing plan. The budget should stem from business objectives and from a clear understanding of your target audience.
Define what you’re trying to accomplish in a year and then determine the proper strategy to reach your goals.
You can’t have it all. It’s key to prioritize. You’d be tempted to advertise on all channels, go to all exhibitions, upgrade your website, increase your social media fan page, launch wide scale contests… but you shouldn’t if you can’t. Maybe you shouldn’t even advertise at all; we help you explore these decisions here.
Don’t spread yourself thin because you’re afraid to miss out. This will negatively affect your return on investment (ROI).
You’re likely to think that you’ve been operating fine without a budget for years. You think of an activation, get an estimate and then decide whether to go with it or not - each time separately. You’re missing out! You could be doing much more with what you have if you plan and take initiative instead of just reacting to situations.
By planning ahead, you can get a lot more mileage for your buck!
We’re here for you if you need us to explore your budget and put a strategy in place. Request a free consultation today.