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This piece is presented by Click Rain.
By Paige Ratzloff, account executive
Are you overspending on marketing? Are you underspending with key audiences? Do you even know? You can’t answer these questions without a well-designed marketing budget. It helps you clearly align with your marketing strategy, assign funding appropriately and track success. Here are some steps to get started.
Spending too much in the wrong areas and not enough in the right ones is all too easy. Setting specific objectives is a critical step. Objectives lead to meaningful strategy — the foundation of a strong, successful business. Once you’ve defined measurable objectives and defined your marketing strategy, you’re ready to start the budgeting process.
Look at last year’s plan and metrics if you have them. What were they? How effective were they? Effective channels will reach prospects at each stage in the buyer’s journey. Were you missing any? Be honest with yourself in identifying what parts of the budget underperformed or went over budget. You’ll know these areas need work, and that will help you allocate funding to something better.
How aggressive are your business objectives next year? What about those of your competitors? You’ll want to consider both of these when settling on a number. If you are a challenger brand looking to grow quickly or planning a significant product launch, you may need a greater investment, especially in tactics with a quick return. More-established brands could plan to invest more in a longer-term marketing play, such as earned media or content marketing. But even established brands should be aware of how aggressive their competitors are and plan accordingly.
Then comes the real question: How much should you spend? After setting your business objectives, reviewing past activity and considering your market position, you likely should have a sense for where your number will fall. Most businesses allocate 3 percent to 8 percent of overall sales to the marketing budget, with the norm cited as 5 percent. Each business is unique, but this can serve as a good point of reference as you move through the process.
Assess your team’s capacity to implement your marketing strategy — otherwise, the work easily can be neglected. Take a staff inventory, and consider this resource availability in your planning. Be transparent with executives, staff and yourself about the anticipated amount of work. And know how much it will cost you to cut back or do nothing, so you can be prepared for these conversations.
If there are any gaps in your workforce, plan for hiring. Consider whether this should be a full-time employee with related benefits costs. If you don’t have the in-house resources to execute your strategy, consider bringing in the expertise of agencies or consultants. The best-laid plans go nowhere if you don’t have a team to do the work.
Finally, make sure you clearly document your marketing plan and budget. Break it into sections that show how funds are allocated for each component. Create a monthly spending schedule, so you can more easily track spending against your goal. Having a record of what these efforts cost over time can help you refine your budget next year.
What worked last year might not work this year when the industry shifts. Budget planning is the perfect time to consider new technologies. Verify the usefulness of each tool in your kit, and look for new tools that can increase your efficiency. The cost-savings of adding a new software or web app could pay for itself, leaving you free to devote more marketing budget to what really matters.
Marketing should be an investment — not a cost. Over time, it can bring a quantifiable return on investment, as long as it is properly cared for. A defined strategy, success metrics and budget can help you achieve the vision you have set for your organization.
Are you overspending on marketing? Are you underspending with key audiences? Do you even know? You can’t answer these questions without a well-designed marketing budget.