Let’s say your company decided to invest in a website redesign to improve lead generation, and you’re responsible for managing the project.
Naturally, one of the first questions you ask is, “How much is this website redesign going to cost?”
The answer, of course, is “it depends.” Are you simply switching to a new template and adding some new CTAs, or are you migrating your entire website to a new platform?
If only there were a way to organize your answers to all of these questions — a place where you could enter in estimated costs for all of your line items, and then compare your projected marketing budget to what you actually end up spending.Good news: Marketing budget templates can help.
Additionally, in this guide, we discuss how to manage your entire marketing budget from start to finish.
A marketing budget outlines all the money a business intends to spend on marketing-related projects over the quarter or year. Marketing budgets can include expenses such as paid advertising, sponsored web content, new marketing staff, a registered blog domain, and marketing automation software.
Marketing Budget for Small Business
Marketing budgets are especially important for small businesses. Small business owners may lack the experience drawing up budgets; moreover, it’s critical that these companies keep costs as low and lean as possible as they scale.
Ironically, you need marketing to scale. Without it, it’s hard to sell your products and services.
Yet marketing budgets can be difficult to establish for companies of all sizes. How much should a company spend on marketing?
Well, digital media makes up more than half of both U.S. and global advertising spend. This includes initiatives that cater to audiences on desktop computers, search engines, video streaming platforms, social media, and mobile devices.
Given the success marketers have seen in it, you might consider planning to spend at least half of your marketing budget on some of these digital channels.
Let’s talk about other ways to allocate your marketing budget.
As you build a budget, here are a few items you’ll want to keep in mind when planning your marketing budget allocation:
- Software: When it comes to digital and even print media, you may need software to create your marketing campaigns, or handle your daily processes.
- Freelancers: If you have a temporary campaign or want to test out a new marketing strategy, you might want to hire a short term freelancer before bringing on a full-timer.
- New personnel: When you do hire full-time employees, you’ll want to budget costs including their computer, technology, benefits, and onboarding-related needs.
- Advertising: Budget how much money you’ll spend on paid opportunities such as physical ads, native ads, sponsored content, search engine ads, and social media promotions.
- Content creation: When you create content such as videos, photos, or even blog posts, you’ll need to put paid time into it. Budget how much money will go into creating this content so you can adjust accordingly based on its return on investment.
How to Create a Marketing Budget
- Know your buyer’s journey.
- Align your budget with your marketing goals.
- Beware of hidden costs.
- Remember where your priorities lie.
- Spend your budget smartly.
- Prepare to measure ROI.
Spreadsheet knowledge alone won’t help you understand how you’ll spend your marketing money this year. Creating a sound marketing budget starts with knowing what purpose this budget will serve and which marketing teams it will represent.
1. Know your buyer’s journey.
Your buyer’s journey is the steps your audience takes as they ‘journey’ from prospect to paying customer. Knowing your buyer’s journey allows you to understand how your audience interacts with your marketing — and where to set your goals and budget to better reach your customers.
Ask yourself these questions as you define your buyer’s journey:
- How do your leads and customers typically discover your products?
- What do they need to know before they make a purchase?
- How many site visits do you see per month?
- How many leads are you generating per month, and how many of these convert to paying customers?
- What is the cost of generating new leads and then converting them to customers?
- What’s the typical value/revenue of each lead?
This process should point out what marketing tactics are (and aren’t working), where you should alter your marketing goals, and where you can focus your marketing budget.
2. Align your budget with your marketing goals.
What you spend and where you spend it will depend on what you’re trying to accomplish.
So, when starting to create your marketing budget, make sure you’re only spending money on the things required by your current marketing goals — goals set based on your audience and their journey from prospect to customer. These could include:
- Display ads to promote a new product you’re launching this year.
- Sponsored social media posts to generate followers on your new Facebook page.
- Paid search engine ads to drive traffic (and purchases) to a specific product page.
- Contract bloggers to get more organic search traffic to your company’s website.
Former Demand Generation Marketer at HubSpot and current Senior Product Marketer at Atlassian, Jessica Webb, says this about how your costs can change when focusing on lead generation vs. lead conversion: “The majority of the money you spend on paid efforts is usually calculated based on volume of clicks or impressions. Because of this, you’ll often want to put more budget toward campaigns with higher-volume offers and audiences.”
“For example, a tweet or Facebook ad promoting a lead generation offer that leans more top of the funnel will likely receive more clicks than something that falls more toward the middle or bottom of the funnel,” she explains.
Your paid advertising costs will also change depending on how wide of an audience you are attempting to reach.
“You can look at Twitter advertising as an example,” Webb says. “You have to option to target your campaigns based on users’ interests or keywords searched for. Interests are a much broader category, whereas smaller pockets of users are searching for any given keyword, therefore your interests-based audience is going to be much larger and require a larger budget.”
3. Beware of hidden marketing costs.
One of the great advantages to having and maintaining a budget spreadsheet is that it helps you avoid those end-of-the-quarter or end-of-the-year freak-outs when you realize, “Whoa … what did I spend all that money on?”
In many cases, unanticipated costs can force marketers to fork over cash that they didn’t plan on spending. Product marketing offers a perfect example. According HubSpot’s VP of Marketing Meghan Keaney Anderson, it’s easy to forget that successfully marketing your products and services requires more than just promotion.
“When people allocate budget for product marketing, they tend to think in terms of product launches and promotional activities,” Anderson explains.
“That’s certainly an important part of it, but another area of focus to remember is setting aside resources to conduct research and message testing long before the product ever goes to market. Having conversations with customers about the pain points your product will ultimately address is critical to shaping the messaging and having a successful launch.”
4. Remember where your priorities lie.
Marketing is overflowing with add-ons and extras, upsells, and “premium” versions. One of the best ways to assess what’s nice to have versus what’s absolutely necessary is to (you guessed it) organize all of your expenses.
By keeping tabs on where your budget is being allocated, and cross-checking that spending with the results you’re getting, it will be much easier to figure out what should keep getting budget and what should get kicked to the curb.
For example, let’s look to the world of public relations. In PR, there are countless tools to which you can allocate budget, which could leave you overspending where it doesn’t matter — and underspending where it does.
“Tools abound to help PR practitioners not only create and distribute great content and find and target key stakeholders, but to ultimately measure reach and effectiveness,” says Nathaniel Eberle, HubSpot’s former Director of PR & Brand and LogMeIn’s current Director of Global Brand Management.
“The key is making sure you’re laser-focused on who you’re setting out to reach and influence, then ensuring that your budget supports how they’ll most likely want to receive (and share) your key messages.
“As the media and digital landscape evolves at breakneck speed, continually reassessing the tools, services, and programs you’re employing is a great way to determine real-time ROI of your overall spend. Today’s measurement tool may be worthless to you tomorrow.”
5. Spend your budget smartly.
When you open up these budget templates and check out all the various expenses detailed in them, don’t fret if you can’t tick every box. I’m not advocating for an “always spend more” approach to marketing.
I’m advocating for an “always spend smart” approach. The expenses listed out aren’t mandatory — they’re just meant to guide your thinking and to help ensure that you haven’t overlooked any hidden costs.
6. Prepare to measure ROI.
When you put a certain amount of money into a certain area, you’ll want to determine if your budgeting helped you or hurt you as you plan out future budgets. The best way to do this is by measuring ROI — or return on investment.
If you’re the money you spend on one item results in your company making more in return, you may want to increase budget in the next year. If your money went nowhere, you should examine your budget.
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