Your marketing budget document is a marketing plan (usually in spreadsheet format) that is written in terms of costs. Creating this document accurately is a crucial part of your marketing strategy process. It will help you understand all the costs associated with your marketing plan, so you can plan for the costs that will arise from growing your business. It will also provide that valuable data you need to determine a return on investment from your campaigns. Most importantly, it stops you spending money on expensive ad-hoc campaigns that are not fully thought through.
Failure to properly cost your budget could mean your strategy is spot on but you can’t afford to pay for it. Or that you’re building a strategy that could be so much more powerful but you can’t invest enough to execute it. Your marketing budget will be the cornerstone of how you execute your campaigns. It will legislate:
It ensures your marketing strategy is realistic from the outset. There’s no point devising a fantastic strategy that’s based on a £500,000 a year marketing spend if all you can afford to invest is £50,000.
What Your Marketing Budget Includes
Here are just some of the costs associated with marketing:
- Salaries
- Agency cost or freelancer spend
- Assets
- Software
- Advertising spend
- Collateral production
- Collateral distribution
- Event spend
- Website and hosting costs
- Networking
- Print costs
Before you build your marketing strategy, understand how much money you need to invest to turn it into a reality. There’s no point planning for a Rolls Royce when a Ford Escort is more realistic.
However, if you can confidently forecast a positive return from a particular marketing channel, this will give you the basis to justify a bigger investment.
This is where your strategy, (and the research and forecasting that comes before it) is worth its weight in gold. It forms the basis to influence those with the purse strings and push your business forward based on sound planning and due diligence.
To maintain accuracy, base your cost and ROI estimations on as much data as possible:
- Previous campaign spend
- Knowledge of industry and market factors
- Realistic conversion rates and cost per acquisition
- Competitor analysis
Also, your annual marketing budget and strategy should be focused on helping your business reach your next objectives
That objective could be:
1. Financial: revenue, profit
2. Numerical: number of customers, units sold
3. Strategic: break into a new market, build customer loyalty
Your budget will help you plan for major campaigns. So you can achieve these objectives and afford the day-to-day costs that are likely to come with them.
Give Yourself the Freedom to Fail
Be cautious about what you spend your marketing budget on. Do you have a new idea? Start small, test, learn and grow from there.
This is a far more effective way to evolve your campaigns than throwing money at the latest trend, leaving yourself with little for the rest of the year. That’s a sure fire way to lose trust from those in control of your budget too.
To illustrate, a previous client had products that were designed specifically for company secretaries. We found a source of opted-in data for all the company secretaries in the country. We first devised our strategy and messaging for this vertical and bought just 10% of the data available as a test exercise. We tested our strategies on this group, learned what worked and eventually ended up
buying the data of every company secretary in the UK, resulting in over £100k revenue for the client.
Imagine if we’d bought the whole lot and sent them ineffective campaigns! We’d have wasted all their budget on ill-thought ideas leaving a bad impression with the firm’s target market.
Final Takeaway
Create space for testing and opportunities! A strategy and budget that is too rigid and doesn’t allow you to deviate is a recipe for disaster.
Of course, if you have researched effectively, in a perfect world, your marketing plan won’t need to evolve or change. But that’s not realistic. Perhaps you decide to launch a new product or one channel might be significantly out-performing another. You may even receive investment or lose a key client. There are so many factors that could affect your strategy and budget.
Make sure your budget and strategy is agile enough to evolve. You need to allocate some spend for contingency or to test new ideas. So you can capitalise on opportunities as they arise throughout the year.
