5 Fundamental Factors of a Marketing Budget
How do small to medium sized businesses set an effective marketing budget plan for their company? That’s a question we get asked quite a lot. Unfortunately, there is no magic answer.
The truth is that marketing budgets vary greatly based on many factors. It’s not a good idea to just find a percentage that worked for someone else and roll with your marketing plan. This is why many sources of advice that toss out flat budget percentages often hurt businesses more than help them. These kinds of flat percentages fail to take the business’s needs into consideration. We’re an advocate for adjusted percentages-adjusted for your needs. No two businesses are alike, and what works for one business is often a recipe for failure for another.
That’s why we wrote this article. We want you to know exactly what you need to consider to make the most effective marketing budget plan for your company. We don’t claim that this article will give you the perfect budget; we think that it will put you on the right track to one. Read on to see the five essentials!
Want one-on-one help in figuring out your marketing budget? Contact us here.
Step 1: Consider Your Company’s Goals & Remember Your Audience
First, we need to consider the mission statement of your company. This may sound cheesy, but remembering the “heartbeat” of your company can greatly aid in your budget planning.
For example, are you a small charity organization looking to serve the local community? Or are you a mid-size clothing store focused on making high fashion available to the middle class?
Identifying your company’s goals aids in two things:
- It reminds you of the reason you need a budget in the first place
- It gives you an audience focus
In the case of the charity organization, they may decide to target their marketing on middle to upper class business people for donations, but the clothing store may decide to target their clothing line to young adults.
Identifying the audience is half of the process! Using that information, identify what avenues of marketing are most likely to reach them. Now we can see if we need to focus our efforts on professional platforms like Linkedin and networking (for the charity organization) or Instagram and Pinterest marketing (for the clothing store).
To sum: Identify your audience and get a general idea of where your demographic usually “hangs out”.
Step 2: Think About Your Industry’s Specifications.
What are the specifics of your industry? This is the second thing you must consider when creating a marketing budget plan.
Are you in a niche industry whose biggest customer is a specific branch of government? Or a pharmaceutical company that targets doctors? Or a pet shop for the average family?
Each of these industries have specifications which greatly affect the marketing plan style and spend.
Niche Industry: You can get away with less spend on marketing since your business caters to customers who already know and use your services.
Pharmaceutical: This industry has some of the highest spend on marketing. You may need to raise the budget to keep up.
Local Pet Shop: You should make sure that you are allocating more money on marketing to nearby locations.
There are many more variables that are unique to your industry; think about the way they translate to marketing and how they can affect your budget.
Step 3: Find Marketing Activities to Target
Now that we’ve established some of the important guidelines to keep in mind for your business, it’s time to apply that to the budget.
The problem is that there are so many marketing tasks out there, and it’s hard to know which will be most effective for your business.
According to MarketingSherpa, these are the most productive marketing activities:
- Email marketing and lead nurturing (to get your message directly in front of your customers’ eyes)
- Online Google PPC (Pay Per Click) & remarketing advertising to well targeted keywords.
- Organic SEO and keyword strategies (help customers find you online based on your content and how it fits customers’ needs)
- Content and social marketing (establish yourself as a thought leader in your industry and build your brand’s credibility)
- Trade shows and event marketing (meet your clients and customers face-to-face)
- Public relations (old-school, but still effective for reaching large audiences)
Based on what we discussed in Steps 1 & 2, you should be able to choose a few of these tasks that are best suited for your business. Get quotes from agencies on how much those tasks will cost and you are almost there! ImageWorks Creative does it all. If you’re interested in working with us, contact us here.
When you are starting out, your marketing activities should be a percentage of revenue after determining all of the above and also considering what your competitors are spending. The normal range will be 3-10% of gross revenue. As you discover which activities work well and which don’t, you will be able to adjust your marketing strategy, adjusting the budget along with it.
Step 4: Consider Your Branding Needs
Now that you have a general idea of what to focus on, you can think about branding strategy. Branding is a part of marketing, and we’ll learn about how much of your marketing budget to allocate to branding.
Branding is one of the most important elements in the marketing project. It is the art of defining who you are while creating value, trust, and credibility. This is the face of your business, and normally includes services like: logo and website design, business cards and stationery, custom apps and videos. You really don’t want to hire your employee’s friend’s sister’s twice-removed cousin who is taking a class in Photoshop.
Design is only one aspect of branding, however. Branding costs also vary based on what your company needs at that moment. If you are a startup looking to build your website from scratch, your expenses will be greater than a company needing a small logo tweak. From our experience, a custom designed website can cost anywhere from 7,000-65,000 dollars and much more pending the sites advanced functionality. (Such as Amazon or Google-Remember, they were also once startups.)
Businesses are constantly evolving, and so must their professional image, messaging, and customer experience.
After a company launches its website, the company moves into maintenance mode, ensuring that the brand is not only supported but also regularly enhanced. Most companies need 100-200 hours per year of creative support to keep their brand fresh. You should plan to spend $75-175 per hour on it, depending on the quality and size of the agency you hire.
Considering the information above, your small/midsize business should set aside about a third of their total marketing budget strictly to improve your brand’s image. Remember, this number is not fixed. If your brand image is well-established, you can lower this. If you are just starting out, you should increase it. Adjust it to your business needs.
Step 5: Consider Your Advertising Opportunities
This is the last step to consider when figuring out your budget needs. Advertising is strategically finding the best places to display or introduce your product. Advertising, like branding, is a part of marketing.
Here are a few different advertising venues:
- Google AdWords search & display advertising
- Google remarketing (targets just site visitors at a surprisingly affordable cost)
- Email blasts to purchased lists.
- Facebook & LinkedIn advertising
- Print media & direct mail advertising.
- Radio & TV Ads
- Magazine & Newspaper Ads
You should set a monthly or daily budget that is in alignments with your total marketing spend. Then you can test each type and determine a ROI and invest in the best performing media. To start, we also recommend experimenting with about a third of your marketing budget devoted to advertising.
To sum, here are the 5 steps again:
- Consider Your Company’s Goals & Remember Your Audience
- Think About Your Industry’s Specifications
- Find Marketing Activities to Target
- Consider Your Branding Needs
- Consider Your Advertising Opportunities
Do this, and we guarantee that you will be better off than using the flat percentages we mentioned earlier. Your brand is unique, and your budget should be too.
We hope that this article helped you on your way to creating a marketing budget that works for you. If you liked it, please let us know in the comments!
ImageWorks Creative offers everything you need to establish a good presence online. We can help you develop a marketing plan that fits into your budget and brings real results! Call us today at (703) 782-8529 or fill out our quick contact form here.