How To Develop And Track A Marketing Budget

A budget is an important part of your marketing plan. You need to allocate resources to different marketing strategies.
To develop a marketing budget, determine your goals and the best ways to reach your target audience.
Small business marketing costs range from a few thousand dollars a year to thousands of dollars a month.
This article is for entrepreneurs and small business owners who are developing a marketing budget that delivers results without negative results.

Every business marketing plan should have a marketing budget, a certain amount of money that the business allocates to promote its products and services. Determining your marketing budget can be a daunting task, especially if you're new to investing in marketing. And marketing costs can vary widely depending on industry, location and business goals.

A marketing budget sets specific amounts to be allocated to staff salaries, office space, equipment, marketing communications, advertising design, and specific marketing channels. Your budget helps align your marketing strategy with business goals and direct money to marketing campaigns with the highest return on investment (ROI).

We'll go through the steps to creating a marketing budget, what your marketing spend should be, and how to set a marketing budget and measure success.

How to create a marketing budget

Businesses typically set a marketing budget quarterly or annually. It should be comprehensive and cover all the projects your team wants to develop in the short and long term.

Follow these four steps when setting your marketing budget.

1. Define your marketing goals.

Marketing aims to create sales funnels or direct sales to increase overall revenue. To create an effective marketing budget, you need to set short-term and long-term marketing goals and define key performance indicators (KPIs) as part of the big picture of your marketing strategy.

Here are some examples of short-term goals:

Reduce website crawl speed by 5%.
Get 10 quality social media comments per week.
Increase brand awareness by generating 100 new social media followers per month.

Here are some examples of long-term goals.

Get on the first page of Google for your top three keywords.
Create a sales funnel that consistently generates 20% new customers over the next three years.
Create an email marketing automation workflow that saves your team five hours a week.

If you're interested in learning about email marketing, check out our review of the best email marketing software to find the right solution for your business.

2. Understand your target audience (buyers).

Buyer personas are virtual representations of your target customers. You can have more than one buyer, but not more than five; After all, not everyone can be your target audience.

When developing buyers, be specific and let the data guide you. Here are some ways to collect data to develop your buyer personas.

Interview your current customers.
Interview potential people in your target audience.
Use Google Analytics to determine audience demographics.
Use Facebook Insights to track user engagement with your brand.

For each buyer image, include the following information:

Area:
Age
Family status
job title
Estimated income
Education:
Objectives and problems
Sources to visit for information
What makes life easier?
What keeps them up at night?
As a bonus, create a virtual name and photo

3. Analyze your market and competitors.

Market research, especially buyer demographics, can help you better understand your target market.

Explore this information to understand your market.

General demographic data. Where do your customers live? What is their education level and average income?
external factors. What external forces can affect sales? For example, economic trends can affect how you plan your budget, and tech trends can cause shoppers to use different methods to make purchases or payments.
Customer needs and wants. Another way to understand your market is to assess its needs and wants. What are the main needs that your company can fulfill in the market? Considering the wide range of customer needs. For example, your target market's needs may include feeling safe in your neighborhood or saving money.

Marketing budgeting also includes competitive analysis. Consider these questions.

Who did it right?
What advertising and marketing strategies are you using today?
How much budget do they have for their marketing department?

The type of industry can affect transaction costs. In February 2022, according to CMO Research, B2B product companies will spend 9.4 percent of their revenue on marketing; For B2B service companies, the corresponding figure is 10%. B2C companies spend an average of 14.2% of their revenue on marketing. The B2C service fee is 8.7%.

4. Choose a marketing channel.

Shop where your customers shop to get the most bang for your buck. The marketing channels you should consider fall into four main categories:

Digital marketing. Digital marketing channels include social media marketing, online content marketing, automated or manual email marketing, one-click advertising or social media (paid media), and search engine optimization.
Inbound marketing. Several inbound marketing channels overlap with digital marketing, including SEO, business blogs, YouTube and Vimeo videos, e-books, and other elements of your content strategy.
Outbound marketing is best combined with inbound marketing because outbound marketing is hard to track. The most regulated form of outbound marketing is email marketing. Some types of outbound marketing include television and radio advertising, direct mail, printed materials, trade shows, and product promotions.
Brand awareness campaign. These channels may overlap with other channels and may include social media marketing and advertising, content marketing, public relations and video marketing and advertising.

Each marketing channel has its own costs. Social media business platforms can be very profitable.

How much should you budget for your marketing budget?

Companies use a number of strategies to set their marketing budgets, including:

According to income. One way to determine your marketing budget is to look at your annual income statement and allocate a percentage. Some businesses may allocate 6.5% to 8.5% for marketing purposes. The percentage may be higher for new businesses. Companies less than five years old should consider spending 10 to 12 percent on marketing.
It matches the competition. Based on previous research, you can budget based on how much your competitors are spending.
A top-down, top-down budget plan means there's no real estimate of how much you'll spend each quarter or year. Instead, management sets a number and asks the marketing department not to exceed this parameter.
Target: In target marketing, management and marketing first set goals and set budgets to achieve them. For example, a goal might be to get X number of followers on social media. Another goal is to get X conversions online through your business website. Set a monetary value for each goal. For example, you can set social media followers at 50 cents per user, so getting 100 new followers costs $50.

Common Marketing Budget Mistakes

There are so many moving parts when preparing a marketing budget that there is more room for error. Any mistakes made in this process can lead to generally ineffective marketing and possible financial problems for your business.

Below are some common budget planning mistakes. Keep track of your budget as you create.

Invest less money on an efficient method. Even when new marketing channels are effective, companies often focus resources on popular, long-established processes. The idea that a successful marketing strategy will always be effective is logical but misleading. The consumer market often changes. What works one day may not work the next. Instead, keep investing in new and old successful strategies. So you can adapt to changing market conditions through automation, personalization and other improvements.
Don't fix bad data. Suddenly, finding the right marketing strategy for your target audience can be financially risky. You need to evaluate customer base data to create relevant marketing campaigns, but inaccurate data usually results in less effective marketing. Review your analytics and fix inconsistencies or outliers before they impact your budget.
Discounts for current customers. When creating a marketing campaign, you may feel the need to cast a wider net to reach more consumers through your sales funnel. But adding new customers is often more expensive than keeping existing ones. Only a very small number of people make it to the end of your sales funnel, and they usually have many reasons for doing so. Focus on retaining those people for higher and more consistent revenue growth.
Using last year's marketing budget. A marketing budget that works one year may be ineffective the next because markets change from year to year as consumer preferences change. The budgeting process should always include a review of the company's goals and a fresh analysis of the current market. Knowing how new technologies, political climates, social movements, and other factors affect consumers can open up new marketing opportunities.

How much do small businesses spend on advertising and marketing?

According to the US Small Business Administration, a typical marketing spending recommendation for a profitable business with less than $5 million in annual sales is 8 percent of gross revenue.

However, the actual amount that small businesses spend on advertising and marketing varies widely. To give you a better idea of what to spend, these business owners share their budget and where it goes.

Dennis Wu, CEO and Founder of Ringblaze

“We spend $3,000 a month on marketing. We are a startup in the SaaS industry, specializing in business telephony applications. We sell enterprise phone applications that allow our customers to easily open new lines for customer calls.” said Rinblaze CEO and Founder David Wu.

"Most of the money we spend on marketing goes to SEO and content marketing," he adds. "We understand it's a long game, but given the amount of exposure and leads we've generated, it's made a lot of sense so far."

Within two months, Wu's company doubled its organic traffic, tripled its website's domain authority, built 10 to 20 backlinks to its website, and increased lead generation by nearly 30%.

"We may have been lucky, but our digital marketing results are good," Wu said. “At first, we doubted that the agency we hired would do any work, especially with such a small budget. Most companies I know spend at least five times that amount on marketing every month, so we're very happy with the results.”

If you are considering hiring a marketing firm, check their recommendations and choose one with experience in your field.

Dave Madrid, sole developer

"I'm passionate about running a business, and I still choose to do it as much as possible because it fits my entrepreneurial spirit," says freelance developer Dave Madrid. This means that my outbound marketing costs are very low right now, but are increasing every month. Spending is focused on location-based Facebook ads, Google ads, off-page SEO, and link building.

Madrid noted on the blog that he is increasing his internal investments, increasing his followers on social networks, participating in local and startup Facebook groups, conducting surveys and asking attention-grabbing questions.

"So far, I've found Facebook ads to be an effective way to generate views (more so than Google ads), although engagement is best through Facebook groups, posts about our blog, and answering other people's questions."

Madrid's overseas marketing budget went from an unrealistic $1,000 to $5,000 a year. He continues to assess whether the budget should be increased.

Madrid concluded that 15% or more of a new business's gross revenue that can be allocated to advertising and marketing is a reasonable amount. Established businesses can significantly reduce this. It can even generate 5% of total revenue. You can always start small and work your way up.

Christine Marquette, Creative Director and Owner of Marquette Media

Christine Market says her company spends about $30,000 a year on marketing campaigns, equipment and outsourcing, or about $7,500 a quarter.

Behind this marketing budget are two brands: Market Media, a brand and design consultancy with branding, web design and PR services, and Fame Founder, a media company that publishes entrepreneurial and marketing content for female entrepreneurs. .

Mark also sells digital products on a website based in New York. Pinterest is one of the main ways of marketing. This helped him build an email list for his digital products and courses.

The market is clear about profits, as are all marketers. “For every dollar spent promoting a Pin on Pinterest, I earn about $1.30. I invest in email marketing software for $600 a month. I use software for my landing page that costs $30 a month. And for social media automation, this is it. about $79 a month.”

Like many entrepreneurs and small business owners, Markett was a little nervous about budgeting when he started out, unsure of the return on his marketing investment. He started with a budget of $500 and tried advertising on Google and Facebook, but he realized that these were the platforms where his target customers spent the most time; However, they are very active on Pinterest.

Based on its experience, Market believes that any business should spend at least 10 percent of its total revenue on marketing and advertising, but 12 percent is better.

How to Create Your Marketing Budget

Campaign tracking and lead tracking are part of measuring the success of your marketing efforts.

Campaign monitoring. For each campaign, create a line element with the campaign name and investment amount. Include the salaries of the staff involved and the total time spent on each campaign. Pay attention, campaigns and timely corrections.
Отслеживание лидов Generate leads daily for each need, lead source, campaign, assigned sales representative, post, level and revenue.

When adjusting your budget and marketing strategy, slow down and adjust one key variable at a time. Something as simple as changing your Facebook ad photo and increasing your budget by a few dollars a day can make a big impact.

Track your marketing expenses in Microsoft Excel or use one of the many available expense tracking apps and apps.

Marketing budget template

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