With the beginning of the new financial year a few weeks ago, we thought we would explore marketing budgets. A marketing budget is something every business should have. We know what you’re thinking – “What should my marketing budget be?”. Well to put it simply, every business is different. There are many different factors that impact a marketing budget such as the size of your business, your marketing goals and the types of products you’re marketing. In this post, we want to help make things clearer. We will explore what a marketing budget is, what you can spend your budget on, what you should spend your budget on and how much you should spend.
What is a marketing budget?
A marketing budget is the estimated cost of the marketing activities you want to undertake. Some businesses create a budget annually, quarterly or monthly. Your marketing goals can help to guide your marketing budget. For example, what do you want your marketing to achieve? How heavily do you want to promote your product or campaign? Is there a specific KPI you want to achieve? And how often do you want to carry out a marketing activity? By understanding your marketing goals, you can begin to get a good idea of what your budget should be.
What can you spend your budget on?
There is a wide range of activities you can spend your budget on. Some of which include:
- Social media
- Email marketing
- Search engine optimisation (SEO)
- Content marketing (blogging, videos and newsletters)
These are just a few examples of the many marketing activities businesses may consider when creating their marketing budgets.
What should you spend your marketing budget on?
As mentioned previously, each business is different, so it’s not a one-size-fits-all scenario. The best way to work this out is to understand your customers. Undertake some research to find out what activities are most likely going to reach your target audience. Once you know this, it will help to narrow your options down. You need to also make sure that you don’t focus on only one marketing channel, as there are many benefits to diversifying your chosen channels. For example, you’ll have a larger reach, it helps to lower investment risks, you’ll have a better understanding of where your customers are and you’ll develop customer loyalty.
You should ensure that your marketing budget is flexible. Monitoring each channel can help to create a robust budget, as you can adapt it according to their performance. If one activity is not achieving one of your marketing goals, you can reassign more of the budget to a certain activity that is performing well.
How much should you spend on your marketing budget?
There is no one answer to this question. If you’re a small business with big growth ambitions, we’d advise 20-25% of your annual turnover should be redirected to your marketing efforts (yes, we know it’s a lot!). You should research your industry and find out what other businesses spend on their marketing budget. You should also allow yourself to experiment with your budget and see what works for you and your business. One thing that we can say for sure, is that marketing will definitely move your business forward, so spend time perfecting your marketing budget allocation.
If you enjoyed this post and want more juicy marketing tips, here are some more resources for you:
Or if you’re ready to take a fresh approach to finding and retaining clients in your business, book a discovery call to find out more.