How To Develop And Track A Marketing Budget

• Budget is an important element of your marketing plan. You have to allocate resources for different marketing strategies.
• To develop a marketing budget, define your goals and the best way to reach your target audience.
• Small business marketing costs range from a few thousand dollars per year to thousands of dollars per month.
• This article is for entrepreneurs and small business owners who want to create a marketing budget that delivers results without negative impact.

Every business marketing plan must include a marketing budget, a specific amount of money that the business will allocate to promote its products and services. Determining your marketing budget can be difficult, especially if you are new to investing in marketing. Marketing costs can vary widely depending on your industry, location, and business goals.

The marketing budget identifies specific amounts allocated to specific employee salaries, office space, equipment, marketing communications, advertising design, and marketing channels. Your budget helps align your marketing strategy with your business goals and directs your money into marketing campaigns with the highest return on investment (ROI).

We'll cover the steps for creating a marketing budget, what your marketing spend looks like, and how to track a marketing budget and measure success.

How to develop a marketing budget

Companies usually prepare quarterly or annual marketing budgets. They should be complete and cover all the projects your team wants to develop in the short and long term.

Follow these four steps when creating your marketing budget.

1. Define your marketing goals.

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

This is an example of a short term goal.

• Reduce site bounce rate by 5%.
• Get 10 quality comments per week on social media posts.
• Increase brand awareness by generating 100 new followers on social media channels every month.

This is an example of a long term goal.

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

If you are interested in exploring email marketing, visit our best email marketing software reviews to find the right solution for your business.

2. Understand your target audience (buyer personas).

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

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

• Survey your existing customers.
• Interview people who may be your target audience.
• Use Google Analytics to determine audience demographics.
• Use Facebook Insights to track how users interact with your brand.

Enter the following information for each recipient ID:

• position
• age
• citizenship status
• Job title:
• It comes to approx
• Education:
• Motivation and goals
• The source they turn to for information
• What makes life easier for them?
• What keeps them up at night?
• As a bonus, provide a fictional name and photo

3. Understand your market and competitors.

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

Consider the following information to understand your market:

• General demographics Where do your customers live? What is their education level and average income?
• Influencing external factors. What external forces can and do affect sales? For example, economic trends can affect how you plan your budget, and technology trends can force shoppers to use a different shopping or payment method.
• Customer wants and needs. Another way to understand your market is to assess their wants and needs. What are the main needs that your company can fulfill in the market? Consider the customer's overall needs. For example, your target market's needs might include feeling safer in their neighborhood or saving money.

The marketing budget also includes researching your competitors. Consider these questions:

• Who's all right?
• What types of advertising and marketing strategies are they currently using?
• How much budget do they have for their marketing department?

The type of industry can affect marketing costs. According to a February 2022 CMO survey, B2B product companies typically spend 9.4% of their revenue on marketing; For B2B service companies, the appropriate amount is 10%. B2C product companies spend an average of 14.2% of their revenue on marketing; B2C service indicator is 8.7%.

4. Choose your marketing channel.

Market where your customers go to get the best return on your purchase. Marketing channels to consider fall into four main categories:

• Digital marketing. Digital marketing channels include social media marketing, online content marketing, automated or manual email marketing, pay-per-click online advertising or social media advertising (paid media), and search engine optimization.
• Inbound marketing. Several inbound marketing channels overlap with digital marketing, including SEO, company blogs, YouTube and Vimeo videos, e-books, and other elements of your content strategy.
• Outbound Marketing Outbound marketing can be difficult to track, so it's a good idea to combine it with inbound marketing. The most widely followed form of outbound marketing is email marketing. Other types of outdoor marketing include television and radio advertising, direct mail marketing, press releases, 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, video marketing and advertising.

Every marketing channel has a cost. Social media business platforms are considered the most profitable.

How much should you budget for your marketing budget?

Companies use a variety of strategies to prepare their marketing budgets, including:

• According to his income. One way to determine your marketing budget is to review your annual income statement and express it as a percentage. Some companies may set aside 6.5% to 8.5% for marketing purposes. In a new company, the interest may be higher. Companies less than five years old should consider spending 10% to 12% on marketing.
• Adapted to the competition. Based on previous research, you can also set a budget based on what your competitors are spending.
• Top-down A top-down budget plan means you don't have a fixed estimate of how much you need to spend each quarter or year. Instead, management sets benchmarks and requires the marketing department to stay within those parameters.
• Objective. With target marketing, management and marketing first determine the goals and then set the budget to achieve them. For example, the goal might be to get X number of followers on social media. Another goal might be to get X number of online conversions through your business website. Set a monetary value for each goal. For example, you can value social media followers at 50 cents per user, so it will cost you $50 to get 100 new followers.

Common Marketing Budget Mistakes

Because there are so many moving parts to setting a marketing budget, there is more room for error. Any wrong step in the process can result in overall marketing and potential financial problems for your business.

Below are some common budget planning mistakes. Consider this when creating your budget.

• Invest less money in an effective method. Even when new marketing channels are effective, companies often focus their funding on long-standing favorite processes. The idea that successful marketing methods will always be effective is sound, but it's wrong. The consumer market changes frequently. a working day is a non-working day. Instead, keep investing in new and old success tactics. So you can keep up with changing market conditions through automation, customization and other high-quality enhancements.
• Don't correct misinformation. Blindly pushing marketing methods that work with your target audience can be a financial risk. You need to evaluate your customer base data to create relevant marketing campaigns, but inaccurate data can lead to less effective marketing overall. Review your analytics and remove inconsistencies or outliers before they impact your budget.
• Discounts for existing customers. When creating a marketing campaign, you may feel pressure to cast a wider net to move more consumers through the sales funnel. But adding new customers is more expensive than retaining existing customers. Only so many people will reach the end of your sales funnel, and often they have many reasons for doing so. Focus on retaining those people for higher and more consistent profit growth.
• Using last year's marketing budget. Markets change from year to year as consumer preferences change, so a marketing budget that works one year will be less effective the next. The budgeting process should always include a review of new business goals and analysis of the current market. Understanding how new technology, political climate, social movements and other factors affect consumers can create new marketing opportunities.

How much do small businesses spend on advertising and marketing?

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

However, the exact amount small businesses spend on advertising and marketing varies widely. To give you a better idea of ​​what to spend, the following business owners have shared their budget numbers and where they're going.

Dennis Wu, CEO and Founder of Ringblaze

“We spend $3,000 a month on marketing. We are a start-up company in the SaaS segment, a niche for business telephony applications. We sell business phone software that makes it easy for our customers to open up new channels to call customers,” said David Wu, CEO and founder of Ringblaze.

"In terms of the money we spend on marketing, most of it goes to SEO and content marketing," he says. "We understand it's a long game, but so far it makes a lot of sense because of the amount of exposure and the number of leads we're generating."

Within two months, the Vu company doubled its organic traffic, tripled the domain authority of its website, generated 10-20 backlinks to its website, and increased the number of leads generated by almost 30%.

“We may be lucky, but the results we get from digital marketing are very good,” said Wu. “Our initial suspicion was that the agency we hired would not deliver results, especially with a small budget. "Most of the companies I know spend at least five times a month on marketing, so we are very pleased with the results we are getting."

If you are considering hiring a marketing company, take a look at their links and choose a company with expertise in your field.

Dave Madrid, sole proprietor of the developer

"I hope to get into marketing, and my priority is to do that while I still can because it's the nature of my business," said independent developer Dave Madrid. “This means that my outbound marketing costs are currently very low, but increasing every month. Outbound spend is focused on Facebook ads, Google ads, off-page SEO and link building.

Madrid added that it was increasing internal investment in bloggers, developing social media, participating in local Facebook groups, conducting surveys and asking questions to build connections.

"So far, I think Facebook ads are an effective approach to generating views (more so than Google Ads), although engagement is best achieved through engaging with Facebook Groups, our blog posts, and other people's questions." "

Madrid's outdoor marketing budget, he says, has grown from an unrealistic $1,000 to $5,000 a year. Continue to evaluate whether a budget increase is needed.

Madrid concluded that 15% or more of revenue is a reasonable amount for a new business to invest in advertising and marketing. Established companies can significantly reduce it. Only 5% of gross income can be used. You can always start small and work your way up.

Christine Marquet, Creative Director and Owner of Marquet Media

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

Two brands are behind this marketing budget: Marquet Media, a brand and design consultancy offering branding, web design, and PR services, and Fem Founder, a media company that publishes entrepreneurial and marketing content.

Marquet also sells digital products on its New York-based website. Pinterest is one of his main marketing channels. This helped him build an email list for his digital products and courses.

The market is clear about profit margins, as all marketers should be. "For every dollar invested [on Pinterest] in deferred links, I make about $1.30. I also invest about $600 per month in email marketing software. I use Leadpages for my lead capture landing page software so that's about $30 per month , and about $79 per month for social media automation.

Like many entrepreneurs and small business owners, Markett wasn't sure about the profitability of marketing when he started his business, so he was a little nervous about budgeting. He started with a $500 budget and experimented with Google and Facebook ads, but found those platforms were not where his target customers spent most of their time; but very active on Pinterest.

Based on his experience, Markete believes that any business should spend at least 10% of its gross revenue on marketing and advertising, but if you can invest that much, 12% is best.

How to make your marketing budget

Campaign tracking and lead tracking are integral to measuring the success of your marketing initiatives.

• Create a campaign item behind the campaign that includes the Campaign name and contribution amount. Enter the salaries of the employees involved and the total time spent on each campaign. Indicate where campaign and timing adjustments are needed:
• Behind the Lead: Create a lead line item by specifying date, lead source, campaign, sales rep assigned, record, status, and earned revenue:

Take your time adjusting your budget and marketing strategy, adjusting one key variable at a time: Something as simple as changing the image in your Facebook ad and increasing your budget a few dollars per day can make a big difference:

Track your marketing expenses in Microsoft Excel or use one of the many expense tracking software and programs available:

Marketing budget template

For more help, a marketing budget template can help: Here are some resources that offer marketing budget templates.

Get the most out of your marketing budget

Effective marketing is critical to the success of your business: Here's how you can attract new customers and keep your existing ones longer: Of course, there are usually only so many resources you can devote to your marketing efforts: Creating a budget can increase your costs. the most successful way and save enough money for your other needs:

Isaiah Atkins contributed to the writing and writing of this article: Source interviews were conducted for earlier versions of this article:

How to determine the perfect marketing budget