How to Budget For Marketing
If we had to come up with one word to describe how to budget for marketing, that word might be “balance.” Of course, that word can be applied to any area of a business, but it might be most critical for marketing because it is such a fluid aspect of a successful organization. Unlike many areas of a business that operate within a set of fixed costs and a predictable return on investment, successfully budgeting for marketing is like standing in a rowboat in a rapidly-moving river while trying to hit the bullseye of a constantly moving target on shore. Balance is obviously essential for success in such a situation.
For example, the Director of Operations for a manufacturer knows that producing a product requires specific amounts of materials, machines, energy, floor-space, and human resources. But the Director of Marketing for that same manufacturer cannot say for sure that a specific amount of any form of advertising or promotional activity will lead to a predictable amount of qualified leads and sales. There is a set formula for producing a good widget, but that can’t be said about producing effective marketing.
The Problem with Marketing
The lack of a set formula for successful marketing is what makes it so difficult to find the right balance for a marketing budget. How many trade show do you need to attend—and what size booth do you need? Do you need radio or TV ads—and should they be broadcast locally, regionally, or nationally? How many different pieces of printed collateral material does your sales team really need? What size website is appropriate for your business—and how much should you spend to optimize it sufficiently for high search engine rankings? How many social networking sites do you need to have a presence on—this month compared to next month? Should you establish pay-per-click ad campaigns on Google? Or Facebook? Or Twitter? Or all of them? What about direct mail versus email marketing? Or in-person sales calls versus telemarketing versus webinars? And how much time should you spend analyzing all of the data that each campaign generates?
The Solution for Marketing
The general rule of thumb for creating a marketing budget is to allocate between 5% and 7% of expected sales revenue to your marketing efforts. But how do you properly divide that budget between all of the necessary sales tools and marketing campaigns you’ll need? If you hire a Director of Marketing and support staff with all of the necessary creative and technical skills, you may not have any budget left to disseminate the materials and campaigns they create. So, what’s the solution?
The solution for successful marketing is to invest first in creating an overall strategic plan. Then, allocate funds to the specific tactics that fit your marketing strategy, based on their expected ROI. In other words, instead of buying an expensive big house and immediately filling every room in it with costly furniture and lavish decorations, start with a blueprint of the house you want to construct and then methodically build it room by room and tastefully furnish it as needed, piece by piece.
This solution does not require a huge upfront investment and it lets you quickly make cost-effective adjustments as you evaluate the results of the ongoing plan implementation process. For example, if you’re ready to add a Facebook “room” (page) to your “house,” but you discover that your target audience now prefers Instagram or Snapchat, you can build a room on those platforms instead.
Maximizing Your Budget for Marketing
One key to getting the most out of your marketing budget is to make sure your strategic marketing plan has been created according to a proven process. Our proven process of helping clients create their profitable strategic marketing plans is based on four common-sense steps:
- Set Your Vision of Success: If you know the specific and reasonable goals you are striving to reach, you have a much better chance of obtaining success. Do you want to increase sales revenue by a specific dollar amount per quarter? Or acquire a specific number of new clients per month? Be sure you know what you really need to be bottom-line successful.
- Create Your Unique Selling Proposition (USP): Your USP should be the sweet spot intersection of your problem-solving passion, your problem-solving abilities, and your most profitable problem-solving activity.
- Identify Your Target Prospect: After you’ve determined your USP, identify a target market that actually needs and wants and can afford your solution.
- Document Your Process for Success: Create the marketing campaigns and tactics that match the lifestyle of your targeted audience. Develop a written month-by-month schedule to be where your prospects will be. Speak their language in your communications, so they fully understand—at the right time—how you can solve their problems better than the competition.
Another key to successfully spending your budget for marketing is to avoid constantly paying for services you only use occasionally. Don’t pay for a full-time graphic designer when you only need design services periodically. Don’t pay a large monthly subscription fee for an expensive email marketing service if you only send out a quarterly e-newsletter. Don’t hire a full-time copywriter if you only need a few hours of writing per week. Don’t build a website on a proprietary platform that only one company can manage and update for astronomical hourly rates when an open-source WordPress website on a public server will sufficiently meet your needs. In other words, keep your budget for marketing balanced by only paying out for the marketing tools you actually need to bring in.
Match Your Marketing Department with Your Marketing Objectives
With our outsourced marketing model, you only invest in the services you use. The creative experts who develop the tools you need are hand-picked from our extensive roster of experienced freelance marketers, based on the projects and campaigns on your marketing calendar. We choose each contributor to your marketing efforts by matching their skill-set with your specific needs. That way, you receive maximum quality for minimal cost.
If our outsourced marketing model aligns with your concept of setting a results-oriented budget for marketing, let’s talk. Just fill out our contact form and we’ll be in touch![contact-form-7 404 "Not Found"]