How to Plan Your Marketing Budget
Every business must utilize marketing to sustain itself and make revenue. Your marketing budget becomes most effective when it is planned and tracked. One of the most important planning exercises youâ€™ll do is developing a marketing calendar and budget.
By developing a strategic marketing budget, youâ€™ll find yourself relying less on your business credit card to cover your expenses. And, when you do pull that card out of your wallet, youâ€™ll know how much you can afford to charge to the card.
Here are some easy steps and tips to follow to when planning your marketing budget for the year.
- Start early-Â Planning a budget takes time. Start off on the right foot by starting the planning process at the beginning of the fourth quarter. This gives you a couple of months to fine-tune your plans to ensure that you start the year off right.
- Begin with your marketing goals – Before you can determine how much to spend, you need to establish your marketing goals. These goals will drive your marketing activities and help you understand what you want to achieve for the year.Keep your goals SMART (Specific, Measurable, Achievable, Results-Oriented, Timely) to ensure they are realistic and paint an accurate picture of where your company is heading. This will help you see which areas to focus your marketing efforts and help place a peg on the overall amount to budget toward marketing.
- Develop a marketing calendar – Creating a calculated marketing calendar will help you determine how much money to allocate toward each marketing category (advertising, promotions, annual report, technology, market research, etc.).A great starting point with your marketing calendar is to review what marketing activities were completed by your company in the past two years. What efforts were successful and what were less successful. Were the unsuccessful efforts ones that could have garnered more results if some more money had been funneled into those projects?Plug in the various tactics you plan to implement each month and you will begin to see the areas where your marketing dollars will be put to work.When planning marketing activities, you should keep in mind the projected Return on Marketing Investment (ROMI). If you have an exciting marketing idea that you know will be a big financial investment but wonâ€™t necessary garner the biggest results, you may want to put it on hold until youâ€™ve determined a way to make it more profitable.
- Calculate the costs – Once you are comfortable with your tentative marketing calendar, itâ€™s time to create the marketing budget. According to Inc.com, a general rule of marketing budgeting is that companies should look to spend anywhere from 1 to 10 percent of their annual sales on marketing costs. This percentage changes depending upon how long the company has been established (do people know about you?), the industry, and what you can afford.To determine industry averages, you can look toward trade journals, websites and blogs for some answers. This will help you create a ballpark overall figure that you can use to cut up into the various marketing needs.Another way to calculate your costs is to look at your past marketing efforts. Ideally, youâ€™ve been tracking the expenses over time so you know how much these efforts have cost in the past. If you havenâ€™t, youâ€™ll need to start from scratch by making educated estimates on how much each activity will cost. You can always reach out to your vendors for assistance with this exercise.Many business owners and marketing managers forget to include technology and employee costs in their marketing budget. They are then surprised when their marketing expenses exceed the budgeted amounts by the end of the year. Be sure to calculate these costs from the start so that youâ€™re not in the same boat.
- Make it easier for next year – Prior to implementing your budget, create a tracking spreadsheet where you can plug-in your costs throughout the year. If you breakdown the workbook into separate worksheets for each marketing category it will help you group the expenses. This will make budgeting significantly easier and cut down on the hours needed to create your marketing budget in years to come.Tracking your expenses throughout the year will also help keep you accountable and keep your expenses down. And, if you find that you havenâ€™t been spending as much as you had predicted, you may find room in your budget to implement additional marketing activities to boost your revenue.
Sarabeth is a social media advocate at CreditDonkey, where entrepreneurs can compare business credit offers to find the right credit card for their needs.
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