Budgeting may be the least exciting and most dreaded aspect of running a business, but it’s also one of the most essential. Budgeting can range from anything to employee budget to office supplies budgeting, but today we’re going to look at marketing budgets. More specifically, the top four things to consider when putting together a marketing budget.
1) There’s No One-Size-Fits-All Approach
A marketing budget for one business will not resemble that of another business’s. It doesn’t come down to revenue; varying industries, the current state of the business and business goals all factor into how much money should be allocated to marketing.
A baseline average in regards to marketing budgets is to spend 5-6% of revenue on marketing efforts. A business could be experiencing a high growth period and is expanding its customer base. As a result, this business would probably need to spend a higher percentage of its revenue to achieve desired marketing goals.
A business that has a solid customer base at its core may spend less percentage-wise on marketing and will focus on sustaining and building upon existing relationships.
2) Should be as Detailed as Possible
Good budgets are broken down into specific categories. For marketing, this could be breaking it down into distinct marketing channels.
For example, there could be a digital media section. Within this category is an amount set aside for Pay-Per-Click ads, a monthly amount set for Facebook promotions, etc. A branding section could also exist and may include having money allocated for new business cards for company employees and other promotional material.
Having a detailed budget broken down into categories helps to visualize and identify where your money is going.
3) Analyze Past Efforts and What You Want to Accomplish Now
Looking back at previous years will help determine what worked, what didn’t, and the direction you want the business to go.
Maybe last year your business redid the website and it led to a lot of new online sales. Now, you can include regular content and SEO updates to the website to ensure ongoing success.
Acknowledging what didn’t work is equally, if not more, important. If you ran a direct mail campaign and spent hundreds of dollars on stamps, but didn’t receive a single inquiry, incorporating direct mail into your marketing budget may not be a good idea.
What do you want to accomplish? Going back to our previous example, perhaps you want to increase your online sales. Your budget would need to reflect the adequate amount needed to have a website that’s fully optimized for conversions and user experience.
4) Tracking Your Spending
Having a system in place to track where your dollars are being spent is vital when putting together a budget. Making sure it’s clear and simple to comprehend lets you understand where your dollars are going.
Tracking spending allows for a review to see which areas of your marketing were most effective. It also helps plan for the future of your marketing efforts and business goals.
Numbers is the second part of the ENDREA Method, and it’s something we really love helping businesses with! If you’re wondering how we help your business achieve success, or have a budget-related question, please contact us.