Have you invented the best widget that ever existed? Is your consulting game on point? Are your specialty chocolates the best the world will ever taste? If you're not marketing your work, nobody will ever know about your goods, services, and talents.
Marketing is a crucial component for any business, whether it's a start-up or an established brick-and-mortar company. Create a budget to put towards a well-planned strategy, and you'll stay on track and focused. If you haven't created a budget in the past, chances are you've already overspent on marketing.
Think about establishing goals for the year. Define how much, realistically, you want to increase your business in the next quarter, and build on top of those goal posts. These will become markers in your marketing budget. They will guide the distribution of funds into the budget to achieve your goals.
A marketing budget is a rundown of estimated expenses toward the promotion of your business. The budget is the detailed roadmap of your marketing plan. It will usually include these costs, among others:
Before the age of the internet, marketing plans were very traditional and predictable, making budgeting a simpler task. Audiences were easier to reach, and attention typically surrounded the family television with a limited number of channels. Thus, traditional (now referred to as 'offline') marketing relied heavily on TV, radio, and printed mailers such as catalogs and brochures. Remember the Sears Catalogue? That's traditional marketing!
For those of the Mad Men era, the focus was on these predictable mediums, allocating budgets for all business sizes accordingly. Television and print advertising received the majority of a business' marketing spend.
While this method might seem like a simpler time, it was not. It is nearly impossible to measure the success of these advertising campaigns outside polling and surveys. Reporting any metrics was prone to inaccuracies, which made budgeting for a marketing plan a stressful task.
21st Century marketing budgets focus mainly on the online world. This change is a huge boon for small businesses because offline advertising can be cost-prohibitive. Expensive television slots are not a realistic option for most business budgets, and the results are difficult to measure. It's important to note that online marketing is not limited to online businesses. Brick-and-mortar businesses must consider online marketing into their budget, or get lost in the shuffle of competition.
Internet marketing involves a new set of skills, and mostly less of a budget than traditional methods. Website creation, SEO, pay-per-click ads, and email marketing are all part of the line items you'll want to consider when creating your marketing budget.
When creating your marketing budget, consider a mix of traditional and online methods, depending on the type of product you're selling. A mix and match can be a good strategy, but ultimately it will depend on the amount of money you have to spend, and where your customers are looking.
Begin the process by determining your overall budget. Organize your financial status by taking a look back on how your company has spent its budget over the last year. Take into account steady profits, and adjust for any losses that may have incurred throughout the year.
Take a few easy-to-follow steps to get the ball rolling:
When completed, the remaining money can be considered for marketing and other goals. Be careful to consider all different needs in addition to marketing before setting up a budget if you aim to hire more employees or open another franchise, set that money aside, and reconsider your marketing budget allocations. Don't be afraid to allocate surplus cash into a marketing plan. Investing in growth, smartly, is a wise choice.
After determining the overall fiscal health of the company, the marketing budget can start to take shape. A real-world budget can be easily constructed by understanding realistically how much money is available each month.
The best way to get started on figuring your marketing expenses is with a template. Enter line items of money spent on various items related to your business, then ask yourself if those things have anything to do with advertising and outreach. If they don't, remove them from your list.
Budget costs for the basics of 'keeping the lights on' are mainstays that are immovable from a business expense. Items such as purchasing of online advertising space, or stock photography for use in promotional materials are valid marketing expenses.
A key metric for creating a budget is calculating something called the Customer Acquisition Cost (CAC). This differs from the commonly used Cost Per Acquisition (CPA) in that a CAC is a measurement of attaining an actual paying customer.
A great calculation to measure CAC:
CAC = Total Marketing + Sales Expenses / # of New Customers Acquired
Calculating the CAC metric will help you track your marketing strategy's effectiveness over time and allow you to make informed decisions on adjustments and alterations to the plan. Geckoboard offers a great visualization of this equation.
Take the guesswork out of your marketing budget with some well-established online calculators. By entering your information on expenses, paid advertising, and overhead, you can easily figure out the best place to spend your money.
Here are some handy online calculators can help you get started:
After using the calculators to figure out the numbers, take a look at various budget templates online. They will organize your spending and break it down into categories where advertising costs belong. Here are templates that offer budgeting assistance:
Using these templates will take the mystery work out of creating an accurate marketing budget as they guide you through the steps and line items to include.
The first step is creating a marketing plan that fits the overall strategy to grow your business. This will become your roadmap for keeping existing customers and gaining new ones. It is not a static document, but rather a flexible plan and guideline that will grow and change depending on your industry trends.
If there are strategies that have worked in the past, like email marketing, include those. If something is working to help you get new customers, don't pivot to an entirely new strategy, but rather incorporate a trusted technique with new ideas.
An essential step in this process is to be unattached to methods that haven't yielded desirable results. If a tagline, special offer, or featured product hasn't grabbed customers in the past, it's time to move on and work on a different marketing approach.
To reach your targeted growth, the plan must answer these questions:
There are many free marketing plan templates online that can help make your process run smoothly:
Smart Insight has Excel spreadsheets and Word templates that offer key pointers to consider in the planning stages and budget models and projected analysis tools.
One of the biggest questions online marketing agencies field is 'How much should I spend on social media?'. Because social media ROI (return on investment) can be challenging to track, small businesses can find themselves spending too little or too much.
According to The Content Factory, spending between $200 - 350 per day is the 'industry standard, somewhere between $4000 and 7000 per month. While that can seem daunting to any small business, the takeaway from this 2016 CMO survey is about 11% of one's budget. Add a little to that to factor a few years into the future, and you're looking at closer to 12.5% of your marketing budget to start.
If you're serious about maximizing social media, consider hiring a Social Media Manager. Leaving your branding presence online up to an unpaid intern, or your best friend's niece in her freshman year of college is not a good idea. When you're giving the passwords and ability to engage with customers in a public forum such as Twitter, you want someone with the experience and ability to communicate effectively and carefully. For small businesses looking to increase their audience on social media, the best options, budget-wise, are hiring a freelancer or outsourcing to a boutique marketing firm.
Items to consider for a Social Media Marketing Budget include:
Measuring ROI for social media is a very complicated issue. Many times your investment into social media will bring about intangible results instead of an absolute monetary value. Tracking the process from adding a new follower to that follower becoming a customer is something marketing agencies are still struggling to define.
The fact that ROI is difficult to pin down doesn't mean that investing in social media is useless. Quite the contrary, having an active presence on social media is expected. Customers appreciate an active voice online where they can ask questions and receive real-time updates on your products and services.
Hootsuite offers a free ROI calculator to estimate exactly how effective your social media campaign is working out.
After creating your marketing budget, and once you've launched your plan into action, it's time to measure metrics. You must monitor how well your strategy is working. Be able to pivot into a new method or lean in heavily on what's working for your business.
It's important to use a metric tool that shows detailed information beyond likes and click-throughs. You'll need to make data-driven decisions throughout the marketing plan cycle. Some popular marketing analytical tools include:
Organized planning is the best way forward to succeed in business. When it comes to reaching new customers and generating new business leads, a structured marketing plan is your new best friend. Once you've created your plan and outlined your budget, you can say goodbye to the stress of guesswork.
The mystery of effective marketing is solved by following best practices and closely watching your spending and allocation of funds to your business's right portals. Get strategic by optimizing your goals via a clear and easy-to-follow budget tailored to your products and services.