How to Write a Marketing Plan, Part 6
Your marketing budget is where you will decide how much money and time you can allot to marketing over a set period.
Putting this budget together will help you assess if you have more money or more time, which will help determine what type of marketing you can do: paid (costs money), organic (costs time), or both.
Before creating your budget, you’ll want to:
- Clearly define your marketing goals
- Establish who your target audience is
- Put together your competition analysis
- Perform an asset assessment
Why You Should Create a Marketing Budget
Your marketing budget will help you plan where you will spend your advertising dollars and your staff’s time so you can ensure your resources are being used wisely, rather than placing blind trust in marketing campaigns. Knowing what you can set aside for growth and how and when to prioritize different marketing channels will help you optimize your marketing calendar and efforts. By documenting your actions, what you hope to achieve, and how much you plan to spend or invest, you will have an easier time establishing your return on investment.
How to Establish a Marketing Budget
Begin by reviewing how your budgetary goals matched actual spending over the past year so you can identify opportunities for improvement. If you do not yet have an existing method of measuring your ROI, look at other ways to track your marketing progress, such as website visits, video views, comments, or increased sales. If you’ve already performed an asset assessment, you’ll have these numbers ready in advance of planning your budget.
Next, review your competition analysis to consider how other companies in your industry spend their marketing dollars.
When you’re considering your marketing budget, it’s essential to keep in mind your customer demographics, their pain points, where they spend time online and in the physical world, and the types of offers they’re most likely to respond to. This will help you more accurately target the appropriate channels for your marketing dollars. If you have already defined your target audience, this information will be readily available.
Some channels will be more expensive than others, so you’ll have to account for how much time and money you have available as you are planning. A good rule of thumb is to allocate 80% of your time on your most successful channels and 20% towards new ones. Remember, if you have more time than money, free channels, such as organic search traffic and non-sponsored social media posts, are available. When doing paid advertising, plan for this to be an ongoing investment with recurring billing; also, budget for ramping up phases when you are starting new pay-per-click campaigns.
What Areas Should You Include in Your Marketing Budget?
When creating your budget, you’ll want to ensure you cover all the relevant areas you plan on spending. Some of these areas might include:
A marketing firm. For many, this is a one-stop-shop solution. They handle everything for you. If you choose this route, be sure to vet many firms, ideally ones you’ve learned about by way of referral from people who have had previous success with the firms.
If you’d like to keep things in-house, you’ll need to plan for many different expenses, such as:
- Marketing software subscription fees for services like HubSpot, Semrush, Salesforce, and Marketo.
- Marketing training costs. This includes the time for you and your employees as well as the cost of the education.
- Marketing consultant fees. If you are going to do things in-house, consider hiring a marketing consultant to get your company started and trained to execute and analyze the campaign.
- Advertising campaign costs. The costs for the campaigns can vary greatly. So consider what you can afford to spend first. Next, based on your budget for ad spend, you’ll be able to find a platform and strategy that fits what you have planned to invest.
- Graphic design, video production, and copywriting costs. If you have an in-house production team, producing content will probably be less expensive and faster. To get an idea of freelance contract pricing, visit Upwork.com, and search for contractors who create content for the platforms you wish to target.
How Much Should You Spend on Marketing?
There are many approaches to determining how much money you should use for marketing. If you use Salesforce or similar software, you will have data that will tell you how much each sales acquisition cost and the resulting profit. If you have this information, you can then forecast how much it will cost to generate the desired sales amount for the upcoming period. Once you have this number, you can adjust the existing budget up or down depending on the company’s sales goals and their available budget.
If you don’t have historical information or if you are promoting something new, you will likely meet with your finance manager to decide how much money you have available to invest in marketing.
Once you have the total amount of money you can spend, you can decide where you will specifically allocate the available funds. For instance, you might invest most of your budget into a marketing firm. Or, you might decide to keep doing certain activities that brought in sales previously, such as paid ad campaigns, and then invest a portion of your budget into new marketing efforts.
Moving forward, track all activities related to marketing and the sales generated from your marketing efforts. Evaluate your actions and results quarterly to determine if campaigns need to be optimized, left alone, stopped entirely, or if you should launch new ideas.
Here are a couple of step-by-step processes to try if you would like additional guidance for setting the spending on your marketing:
- How to Calculate Your Marketing Budget from Wordstream.com. This article will ask you to consider various factors, such as the company size and stage of business.
- Hubspot’s marketing budget planning templates include a master template, product marketing, content marketing, paid advertising template, and more.
- LinkedIn Learning’s video course, Setting a Marketing Budget. This material requires a paid membership; however, a one-month free trial of the LinkedIn Learning service is typically available to new subscribers.
Coming Up Next
Our next article will discuss different platforms to market your business and why you might choose some over others.
More Marketing Plan Articles
This article is part of a series to help you create a robust marketing plan:
- Part 1: How to Write a Marketing Plan
- Part 2: How to Define Your Marketing Goals
- Part 3: How to Define Your Target Audience
- Part 4: How to Analyze Your Competitors and Their Marketing Plans
- Part 5: How to Conduct a Marketing Asset Assessment
- Part 6: Creating a Marketing Budget for Your Business
- Part 7: How to Choose the Best Marketing Platforms for Your Business
- Part 8: How to Create a Content Marketing Calendar
- Part 9: Defining Your Marketing Metrics