If you are in charge of the marketing staff at your company, you need to know how to handle a marketing budget. Your sponsored ads and website improvements aren’t done on a tight budget.
This article will talk about how to make a budget for marketing your business. Even the most thorough marketing plan can only get you so far if your marketing methods aren’t making sales.
What is a budget for marketing?
A marketing budget is a plan that tells you how much money you can spend on marketing and how you’ll split it between different ways to market. In addition to fees for tactics, marketing budgets might also have to pay for things like software or outsourcing services.
Usually, it takes two months to plan a budget from start to finish. But this could be very different depending on the company you work for. To speed up the long process of making your marketing budget, you need to spend some time planning ahead.
Different companies have different ways of making a complete marketing plan, but it usually starts with your boss talking about your marketing budget.
There are four common ways to plan a budget for marketing:
- Revenue Percentage: For each spending period, you get a certain share of the company’s total revenue, which is usually between 5% and 20%.
- Taking Into Account The Race: For each spending period, you are given the money you need to match what your competitors are doing.
- Top-Down: Your boss gives you a sum of money without asking you about it, and you use it as well as you can.
- Bottom-Up: You use a goal-based method to figure out how much money you think you’ll need for that spending period, and your bosses agree.
- Most of the time, marketing teams need more say in the first three options, but they have to work with what they are given. But organizations usually use more than one strategy, mostly both top-down and bottom-up.
For example, your bosses can give you a list of spending goals to keep in mind as you make plans. The final project is then shown to your bosses for approval after you have made a plan for how to spend money within the spending goals.
How to Plan a Budget for Marketing
Once you know what your spending goals are, it’s time to start making plans for how to use the money your bosses have given you for marketing. Don’t start giving the money to different projects or campaigns right away.
Research is necessary.
Spend some time learning about your company before you get to the core parts of the planning process. Make sure you understand:
- How your business is doing right now
- Your adversaries
- Your business
- Your stuff
- You have customer types
To know how to market to your audience better, you also need to know how your buyers’ journey looks. Find out how much you make each month from traffic, leads, sales, and other costs and values. Google Analytics can give you a huge amount of useful information in this area.
Setting goals is an important part of planning your marketing budget ahead of time. Specifically, work on making a list of SMART goals for your marketing team. These are goals that are specific, measurable, attainable, realistic, and timely. By using SMART goals, you can avoid setting vague goals. A goal like “make more money” is too broad to be used to plan a budget. The phrase “improve the return on investment (ROI) for X pay-per-click (PPC) campaign by Y%” might be better. Here are some more examples of SMART goals:
Each month, x% more writing should be done.
- During this budgetary term, get X more people to follow you on Facebook.
- Get at least X backlinks for each piece of content you publish.
- By percentage point Y, bring more people to product page X by the end of this spending period.
- If you need help figuring out what exact numbers to aim for, look at industry standards and budget numbers from the past.
Another longer-term option is to try out different ways to market your business to see which works best. This will help you decide where to put most of your time and energy. Your business may not do well on social media, but PPC has a big effect on how things go. During the goal-setting phase, don’t take short-cuts.
Don’t just write down five goals and call it good. It would be helpful to think about everything you want to do with your marketing resources during the coming spending period.
For the rest of your marketing budget breakdown, you’ll use your SMART goals as a guide. This is because you need to make sure that your budget and your goals for this spending period are the same.
To manage your marketing budget, you need to set goals. A goal-driven approach makes you responsible for how you spend money and puts you in a good position to negotiate with your bosses in the future to keep or get money for your team.
Now that you have your budget amount and list of goals, it’s time to move on to the next part of our marketing budget breakdown: setting up a marketing budget.
List the costs.
The next step is to make a list of tasks and activities that will help you reach your goals. Here are some good examples of how they might look:
- Hire X more marketing writers to increase the amount of writing.
- During this spending period, make X new sponsored Facebook posts.
- Make and manage new PPC ads for X products that send people to the page for Y products.
- Create X YouTube video ads during this time of tight finances.
- These activities should be like SMART goals in that they are clear and doable, but this time they should be things you can budget for.
This is true for any business, but especially for newer ones. As you can see from the above list, some of this has to do with what you have to do and what you’d rather do.
It would be best if you didn’t forget to budget for employee pay when you were managing your marketing bit. You should also be careful to budget for “hidden expenditures,” like monthly subscription fees or purchases you made last spending period that won’t be processed until this spending period.
Go back through your list of projects you could use to your advantage and figure out how much each one will cost.
This step could be hard because figuring out costs seems to be different for each action. Also, prices for goods like PPC can vary a lot. Try to guess how much money you will need for each task.
Once you know how much each thing on your list will cost, add them all up to get your total.
It’s very likely way out of your price range. Don’t worry, you should expect that to happen.
Your first list, which you made during a brainstorming session, has everything you want your marketing team to be able to do. However, you will only be able to do some of these things, which brings us to the next step of making a marketing budget.
Create a list
The next step in our marketing budget breakdown is to cut down on the number of people on your list.
Look over the list to figure out what’s most important. What tasks must be done? Which ones could you do without? Which one of these could save you money? Keep your SMART goals in mind as you do this.
Make sure to leave off the list any tasks that won’t help you reach one or more of your goals. It would be helpful if you came out of these cuts with a basic plan for your whole marketing plan.
You need to be able to come up with a complete marketing plan that fits within your budget goals. If you want to keep more things from your original list, you must either find a way to spend more or find a better way to spend your money.
Approval by a company
Once you have a number for your spending goals, check again to make sure that every item on your list supports your SMART goals before deciding how much money you will spend on each method.
Using our marketing calculator, you can find out how much money you should put into things like social media advertising or pay-per-click (PPC), which cost exactly as much as you put into them.
Once you’re done, make any changes to your list that you think are necessary before sending it to the boss for internal approval.
At this point, there will almost certainly be some back-and-forth. Your bosses will look at how well your budget plan works and if it follows the rules. They will check to see if the total cost fits within their budget and if the different actions will be good for the business.
You might need to change based on what they say. But it will be accepted in the end, and your budget will be done.
How to Handle a Budget for Marketing
After everything is done, you can now start to keep an eye on your marketing budget:
Keep track of things
Before the spending period starts, you should use this marketing budget breakdown to make a spreadsheet so you can keep track of everything. Keeping your spending in line with your budget is easy if you have a good spreadsheet.
Having a lot of spreadsheets could be helpful. You can use one template to track all of your marketing expenses and others to keep a closer eye on certain categories or campaigns.
You might have a different one for content, PPC, and SEO. Update these spreadsheets often as you go through the spending period. Your detailed marketing plan will only help if you use it to keep your costs down. At least once a week, you should review your spending.
Keeping tabs on costs
Consider making a calendar with dates and reminders to help you keep track of any automatic spending or monthly payments, like subscriptions or contract renewals.
Employee spending, on the other hand, is a little harder to keep track of.
Sometimes it means buying software or renewing contracts, and sometimes it means hiring new people. But it might be hard to put together because it involves many people and platforms.
Most likely, a spend management system has a feature that lets you keep track of these payments and update your budget as needed. If not, keep a close eye on how much your employees spend.
List paid or unpaid items
Another way to manage your marketing budget is to put things into groups based on whether or not you’ve already paid for them.
When you know which budget items can change and which ones can’t, it’s much easier to move money or switch one activity for another when you need to. It’s easier for everyone if you just say whether they are paid or not.
Continue to Experiment
Once you’ve found a plan that works for your business, stick to it, but don’t get too set in your ways. Even if 90% of your budget stays the same from month to month, you should always use the last 10% to try out new and different things.
Note Potential Upgrades
You shouldn’t just think about how you spend money right now. Think about what you can do to help yourself when making your next budget. Look at the return on investment (ROI) of different budget items often during the spending period and make suggestions for how to make it better.
Keep any changes from the spending period in the middle. You may need to change your budget in the middle of a spending period, as was already said.
When that happens, you’ll need to get new numbers to replace your old ones. First, make a copy of your original budget. Do not write over it. You can use the difference between your first and most recent budgets to get an idea of what changes you might be able to plan for in the next spending period.
Look at how well you’re doing.
Managing a marketing budget is always hard, but keeping track of how well your marketing is working may make it easier. You should keep an eye on key performance indicators (KPIs), such as the bounce rate, the cost per lead, and the average value of a customer.
Think about putting in place Google Analytics or other
You may be able to get a lot of this information from the technologies you use on your website. To figure out which budget items are really helpful, you need to understand this data.
Putting a stop to spending time
After the spending time is over, you should go back to your SMART goals.
Make sure that all of the money you spent on your well-thought-out marketing plan’s actions helped you reach your goals in the end. Then, look over your next spending period’s goals and budget.
If you still need to reach your goals, you might want to cut some of your current spending from the budget for the next quarter. Around this time, your finance department will ask you to reconcile your actuals or check that the amount you spent and the amount that left the business bank account match.
It might be boring and take a lot of time to go through everything you bought and paid for during the period and add up all the costs. Try to reconcile more than once every spending period, maybe every two weeks, to make things easier for everyone.