Marketing budgets are on the rise across the board. In fact, spending is expected to top 9.5% of overall budgets in 2022, up from 6.4% in the previous year. But as marketing budgets continue to grow, so does the pressure to show ROI.
That’s why it’s more important than ever to have a solid plan in place for how you’re going to spend your marketing budget. The worst thing you can do in a recovering economy is to blow your budget on a bunch of random tactics with no real strategy behind them.
Here are a few tips to help you plan a marketing budget you’ll stick to. But first, for those wondering how much to spend on marketing and if a marketing plan is completely necessary, let’s cover some basics.
What Is a Marketing Budget?
A marketing budget is an estimate of the funds a company has available to spend on marketing activities for a specific period of time, typically one year. The goal of any marketing budget should be to support the company’s wider business objectives and help it achieve its desired growth targets.
To do this, the marketing budget needs to be planned and managed carefully. There are a number of factors to consider when putting together a marketing budget, such as the company’s overall financial situation, the size of its target market, the level of competition, and the effectiveness of its current marketing activities.
It’s also important to keep in mind that a marketing budget is not a static document. It should be reviewed and updated on a regular basis to reflect changes in the business, the market, and the wider world.
Why Is Having a Marketing Budget Important?
Having a marketing budget is important for a number of reasons. First and foremost, it ensures that you have the funds available to carry out your marketing activities. Without a budget in place, it’s all too easy to overspend and put your marketing efforts at risk.
A marketing budget also provides a framework for planning and measuring your marketing activities. It can help you to set realistic targets and track your progress over time. This, in turn, can help you to fine-tune your marketing strategy, making it more effective and efficient.
Last but not least, a marketing budget can help you to secure buy-in from senior management and other key stakeholders. By clearly outlining your marketing plans and their associated costs, you’re more likely to get the green light (and the necessary funding) to proceed.
How Much Should You Spend on Marketing?
There’s no easy answer to this question. The amount you should spend on marketing will vary depending on a number of factors, including your industry, business size, and marketing goals.
A good rule of thumb is to allocate around 8% of your overall budget to marketing if you’re a small business, 15% if you’re a medium-sized business, and 20% or more if you’re a large enterprise.
Of course, these are just general guidelines. You may need to spend more or less depending on your unique circumstances.
Is a Marketing Plan Necessary?
Yes! A marketing plan is essential for any business that wants to see results from its marketing efforts. Without a plan, it’s all too easy to waste your marketing budget on tactics that don’t align with your business goals.
A good marketing plan will lay out your goals, strategies, and budget for the year ahead. It will also help you track your progress and adjust your course as needed along the way.
Now that we’ve covered the basics, let’s get into some tips for planning a marketing budget you can stick to.
Know Your Goals
The first step in any good marketing plan is to set clear, measurable goals. What do you want your marketing efforts to achieve? Do you want to increase brand awareness? Drive more traffic to your website? Generate more leads?
Your goals should be specific, measurable, achievable, relevant, and time-bound (SMART). Once you have your goals in place, you can start to develop strategies for how to achieve them.
Identify Your Target Audience
Who is your target audience? This may seem like a no-brainer, but it’s important to get specific. The more you know about your target audience, the better you can tailor your marketing efforts to appeal to them.
Think about things like age, gender, location, interests, and pain points. The more information you have, the easier it will be to create content and campaigns that resonate with your target audience.
Do Your Research
Before you start planning your marketing budget, it’s important to do your research. Look into your industry and find out what other companies are spending on marketing. This will give you a good starting point for how much you should be spending.
You should also research the different marketing channels and tactics that are available to you. This will help you decide which channels are worth investing in and which ones you can afford to skip.
Finally, you want to know where your target audience is hanging out. You need to meet them where they are in order to effectively market to them. If your target audience is on Facebook but you’re not investing in Facebook ads, you’re not going to reach them.
Prioritize Your Tactics
Once you know your goals and have an idea of what’s available to you, it’s time to start prioritizing your tactics. Not every marketing tactic is going to be a good fit for your business. And not every tactic is going to be worth the investment.
You want to focus on the tactics that are most likely to help you achieve your goals and that offer the best return on investment (ROI). For example, if your goal is to increase brand awareness, investing in a billboard might not be the best use of your marketing budget.
Set Out Your Operational Costs
Now that you have a good idea of the tactics you want to invest in, it’s time to start setting out your operational costs. This includes things like salaries, office space, and equipment.
You should also factor in the cost of any external services you’re going to need, like graphic design, copywriting, or video production.
Don’t forget to account for the little things, too, like postage and subscription fees. These might seem like small expenses, but they can quickly add up.
Create a Contingency Fund
No matter how well you plan, there will always be unexpected costs that come up. That’s why it’s important to create a contingency fund in your budget. This way, if something comes up, you can still afford to keep your marketing efforts going.
A good rule of thumb is to set aside 10-20% of your total budget for unexpected costs. This will help you avoid any major financial setbacks if something comes up that you weren’t expecting.
Set a Realistic Budget
Now it’s time to start putting numbers to your plan. The first step is to set a realistic budget for your marketing efforts. This can be a challenge, but it’s important to get it right.
We’ve laid some percentages out previously, but only you know your business best. Consider how much revenue you want to generate and how much you can afford to spend on marketing. You also want to take into account any other factors that might impact your budget, such as the current state of the economy.
Once you have a budget in place, you can start allocating funds to the different tactics you want to pursue. Make sure you’re being realistic about the costs associated with each tactic and don’t overspend in any one area.
Consider Future Trends
When you’re planning your marketing budget, it’s important to think about future trends. You want to make sure you’re investing in tactics that are likely to be effective in the years to come.
For example, if you’re not already investing in digital marketing, now is the time to start. Digital marketing is only going to become more important in the years ahead, so you want to make sure you’re prepared.
Track Your Results
Finally, don’t forget to track your results. It’s important to know how your marketing efforts are performing so you can adjust your budget accordingly. If you’re not happy with the results you’re getting, don’t be afraid to make changes to your budget.
The most important thing is to keep track of your results so you can continue to improve your marketing efforts over time.
Should You Work with a Marketing Agency?
There are a few things to consider before making this decision. First, think about your goals and objectives. Do you need help achieving them? If so, working with a marketing agency is a strategic idea.
Remember that an agency brings years of experience in creating innovative ideas to help you achieve your goals. It would be unwise to skimp on working with a creative team who can help you reach your goals faster.
Second, consider your budget. Do you have the funds to work with an agency? If you’re unable to identify these funds, it’s still a good idea to meet with a few agencies to see how they can create profits you can use for your marketing budget.
Finally, think about your level of expertise. Do you have the knowledge and experience to execute your marketing plan? If not, working with an agency can help you get the results you need.
If you’re not sure if working with an agency is right for you, consider talking to a few different agencies to get their opinion. They’ll be able to give you some insights into whether or not it’s a good fit for your business.
Get Started Right Away
A marketing budget is a key part of any marketing plan. By taking the time to create a budget, you can ensure that your marketing efforts are successful. Use the tips above to create a budget that you can stick to.
Don’t forget to track your results so you can continue to improve your marketing over time!
Keep reading this blog for more innovative ideas to grow your business and connect with your target market.