Just as every business should have a marketing strategy to promote their products and services, they should have a marketing budget. Having a marketing budget will help you understand how to spend money on campaigns and where your greatest return on investment lies.
However, when it comes to determining a marketing budget, things aren't so clear. There's no one-size-fits-all answer to what constitutes a "realistic" marketing budget. While your overall budget will depend greatly on the size of your business and its unique objectives, there are some general guidelines that you can follow.
Here are some tips from Mid-West Family Northern Illinois on how to create a realistic marketing budget:
Set Clear Marketing Objectives
The first step of creating a marketing budget is to define your marketing goals and objectives. You should take some time to figure out what you are hoping to achieve through your campaigns. Having clear objectives and goals will help you to set a realistic budget.
When outlining this budget, consider whether you are hoping to create brand awareness, increase lead generation, improve customer acquisition, or build stronger connections with existing customers. Also, consider the frequency or length of any marketing campaigns since this will affect your budget too.
Analyze Past Performance
To know what is working well or what might not be clicking, you should review your previous marketing activities and the outcomes. Performing regular analysis of your marketing campaigns and activities will offer valuable insights into the resources that you have to work with and give you guidance into how you should allocate your budget going forward.
If you do not have any previous marketing performance to analyze, establish an initial benchmark and consider running several smaller campaigns to see what works well.
Know Your Target Audience
Developing deep connections with your target audience can help your budget stretch further as well as increase revenue. Consider conducting market research to identify the channels and platforms that your audience uses.
This will also give you insight into how this audience engages with the marketing messages you disseminate. Reviewing industry blogs and resources can also help you understand how to connect with your target audience, along with deep market research that highlights trends in social media and search engine results.
Research Industry Benchmarks
Being aware of trends in your industry can help you create a more targeted and efficient marketing budget. Resources specific to your industry, including blogs and market research, will give you a better idea of what customers want and how they prefer to connect with businesses. These benchmarks can also provide a starting point for developing a realistic marketing budget.
Consider the Customer Acquisition Cost (CAC)
Acquiring a new customer can be an expensive undertaking. When crafting your marketing budget, consider the expenses related to attracting and converting leads into paying customers.
This factor, known as Customer Acquisition Cost (CAC) can take up a large part of your marketing budget, and understanding this will assist you in allocating an appropriate amount to attracting and converting new customers all while remaining within your target ROI.
Set Percentage Revenue
While every business has its own approach to creating a marketing budget that works for them, a widespread practice for determining a budget is to allocate a specific percentage of your expected revenue to it. This range varies depending on your industry, your growth stage, the number of employees you have, and how much cash flow you work with. A range of 5-15% is considered reasonable for your set percentage revenue.
Prioritize Marketing Channels
Not every marketing channel is right for every business. Figuring out which channels and avenues are right for you will go a long way toward determining a reasonable marketing budget.
Consider channels like content marketing, social media marketing, email marketing, event marketing, and digital advertising - all of these have a place in a marketing strategy. You should focus on allocating a portion of your budget to the channels that are more likely to reach your target audience or have provided satisfactory results in the past.
Consider Seasonality and Industry Trends
Every business has highs and lows, and with the changing seasons come ebbs and flows in your marketing journey. Your budget should be a fluid thing, able to adjust based on marketing trends and peak seasons.
Market shifts will occur in any industry, and businesses that are able to go with the flow and react based on data will see the best results.
Monitor and Measure Results
Tracking and monitoring your results will help you understand what is working and what is not. Make a plan to regularly review your marketing campaigns and their results, so that you can adjust your budget as needed.
Savvy marketers will understand the importance of letting the data speak. This means not changing things too quickly in response to one campaign, rather than analyzing results over a set period.
Flexibility For Experimentation
Finally, understand the importance of flexibility when crafting a marketing budget. Even as you honor time-honored channels and strategies, be open to trying new things and testing innovative ideas. Innovation and adaptation are key to staying on top in an ever-changing market landscape.
Still, don't sacrifice your overall campaign for the sake of being bold. Balance is especially important when creating a strong marketing budget.
Contact Mid-West Family for Help with Your Marketing Budget
Planning, testing, and adjusting are all part of the process of creating a strong marketing budget.
If you need help creating a marketing budget that works for you, Mid-West Family can assist. Our dedicated team of experts can analyze your business and industry trends to help you build the appropriate budget that yields strong results. Contact us today to learn more about our service!
