What should be your marketing budget for the next year?
A Marketing Budget is a detailed roadmap of the total cost which is required to promote your products or services and outlines your marketing strategies, costs and projected results over a period of time. It includes all branding & promotional from advertising and public relations, employing staff, office costs, travelling to other miscellaneous expenses incurred on marketing. How do you go about planning your marketing budgets?
Old rules of thumb say have your marketing budget per year should range anywhere from 1 percent to 10 percent of sales, or possibly more, depending on several factors, including:
- How established is your business? (If no one has heard of your business yet, you should probably spend more.)
- What industry are you in? (You should have a sense of how much your competitors are spending.)
- How much can you really afford? (Don’t spend yourself into a hole, especially today, when there are so many cheap and highly effective Web options to help you promote your business.)
Some statistics have shown that up to 85% of small to midsize companies operate from a budget only. They keep figuring out how to spend a defined budget, instead of thinking about goals and strategies.
These are some pointers will help you to set your marketing budget.
- Objective – Base of your marketing budget should be your objective. Objectives you want to achieve through marketing and design your strategy to achieve the objectives. These are some broad objectives taken into consideration while crafting a marketing budget –
- Creative Presence
- Market Penetration
- Lead generation
- Decide a marketing budget – Many companies set their marketing budgets by simply allocating between 1- 10% of their revenues to marketing. It totally depends on type of industry, type of product/service. Generally, products industries keep their marketing budget at 5-10 % of their revenue budget whereas for service industries that ratio is 3-5% of revenue budget.
- Where and how – You don’t need to list every campaign that you want to carry out but outline where do you want to be seen and at what frequency. Options can include traditional options like print, Radio/TV, direct mail, Trade show booths or modern digital platforms like online advertising, social media, PPC, SEO etc.Once you have your practical wish list ready it will be easier for you to set your budget too.
- Marketing tool and Data – At some point of time it becomes necessary to automate your processes. There are many marketing tools, CRM systems available which help you carry out you marketing efforts more efficiently and also help track the results and ROI. Decide a tool and amount that you can spend on such marketing automation tool, CRM, campaign tool, any automation tool.
- Track your ROI – Regardless of how you decide to allocate resources in this year, once you start shelling out the dollars, it’s critical to follow the performance of your marketing efforts closely.Your sales and marketing data from the past year will provide a valuable insight into what will work. So carefully track the ROI you’ve gained this year and identify the activities that have created the best results.Put a plan in place for tracking your ROI. You can also use inbound marketing technology to closely assess and analyses the exact ROI of your marketing plan and feed this knowledge letting you adapt and refresh your marketing activities accordingly.
- Competitor Analysis – Matching what your competitors are spending is another way of establishing your marketing budget. The assumption here is that if you want to remain competitive you have spent as much as them.
So then, How do you go about planning your marketing budgets? I hope you have some pointers to get started. You might also want to read 5 simple ways to use content marketing in your demand gen programs