9 min read
Marketing budgets are incredibly useful. After all, by setting a budget for your marketing activities, you’ll find it much easier to stay on track financially, allocate funds into the right areas, and generate a high level of ROI.
With a marketing budget in place, you’ll be able to set benchmarks and goals for your marketing activities. You’ll also be able to see exactly how much you’re investing in the growth of your business. But how do you estimate your marketing budget, and how can you make sure you don’t exceed it? In this guide, we reveal all.
How to estimate your marketing budget
Your marketing budget should accurately document how much your business plans to spend on marketing activities over a specific time period. Although most marketing budgets are allocated yearly, some businesses prefer to work on a monthly or quarterly basis instead.
Marketing budgets provide businesses with a great number of benefits. However, if you’ve never created a budget for your marketing activities before, then you may feel a little daunted by the prospect.
Thankfully, you can create a marketing budget in six simple steps.
1. Establish your sales cycle
Before you start to allocate funds to specific marketing functions, you first need to ensure you fully understand your sales funnel. Only when this task is complete, you can determine where you’ll spend your money.
Typically speaking, sales funnels have four stages:
- Awareness: Your audience is aware they have a problem and they’re searching for a solution
- Consideration: Your audience is looking at different solutions
- Decision: An audience member narrows their focus on companies that provide the best product or option for their needs
- Action: They choose the business they believe has the best product and become a customer
As a marketer, it’s your job to understand how your customers move through the sales funnel. In doing so, you can identify where customers are falling out of the funnel or why they’re choosing other businesses. Using this information, you can put a marketing strategy in place that will help you keep more people in the funnel.
2. Establish how much you have to spend
At this early stage of the process, you should start to get an idea of how much you can spend on your marketing activities.
To discover this information, you’ll need to hold discussions with other stakeholders. At this point in the process, you don’t need to have a final figure. Instead, a ballpark figure will suffice. Using this information, you can create a more accurate plan and strategy before the final budget is signed off. You can also set a baseline for your ROI.
Remember, the amount of money you have available will determine which marketing activities you can invest in. For example, if you only have £1,000 a month to spend, then you’ll be unable to launch a national TV advertising campaign.
3. Determine your goals
Before you set a budget for marketing activities, you must establish your goals. By knowing exactly what your business wants to achieve, you can then put the right money in the right areas.
The goals your business has will be unique to your organisation. However, popular marketing goals include:
- Generating more sales
- Increasing leads
- Gaining more subscribers
- Increasing brand awareness
- Improving your social media following
However, specific goals like these are ineffective and imprecise. Due to this, you need to expand on your goals in order to make them SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). This way, you will create precise goals that all of your activities can contribute towards.
Plus, setting achievable SMART goals will also give you a concrete reference point when budgeting. This is because you will know how much you want to increase a specific metric by, and the timescale for achieving that goal.
4. Understand the wider market
To build an effective marketing plan and allocate the correct budget, you need to know where your business fits in the wider market. This is because, when you understand how your business and product compare to competitor offerings, you can gain a deeper understanding of the strategies you can use to get ahead.
To carry out this process, you should conduct a competitor analysis, to see how your competitors are performing. This can show you the tactics they’re using that are successful, and the ones that aren’t providing a return on investment. With this insight, you can determine which marketing strategies will help drive your success and help you achieve your goals.
5. Highlight the strategies you’d like to use
When it comes to marketing your product or service, you have a wealth of options available. Before you assign your marketing budget, you must first decide which strategies you’d like to employ.
Of course, you don’t need to be 100% sure about exactly which strategies you’ll use at this stage of the process, but you should look to get a general idea of how each strategy could help you achieve your goals.
When it comes to digital marketing, popular options include:
- Search engine optimisation (SEO)
- Local SEO
- Pay-per-click advertising (PPC)
- Social media marketing
- Social media advertising
- Email marketing
- Content marketing
However, although a number of companies now focus their efforts online, you should not forget that traditional offline strategies can also be incredibly helpful. Options include:
- Direct sales
- Direct mail (postcards, brochures, letters, and fliers)
- Trade shows
- Print advertising (magazines, newspapers, coupon books, and billboards)
- Referral (also known as word-of-mouth marketing)
- Radio advertising
- Television advertising
Before you decide which strategies you’d like to employ, you must first ensure that you understand your audience. When carrying out this step, you need to make sure that you understand where they are online, where they will receive your message, and how they like to receive marketing communications.
By taking this step, you can make sure that all your marketing communications are likely to reach your target customers. You’ll also be able to improve your ROI and ensure your budget is used in a targeted manner.
6. Research prices
All of the above strategies have positives and negatives associated with them. Crucially, each strategy will have an associated cost that you’ll need to consider. For example, creating and running a television advertising campaign at prime time on television will cost you a lot more than setting up and tracking an email marketing campaign.
For this reason, once you’ve decided which strategies will help you achieve the goals you set out, you then need to find out an approximate cost for each. This way, you can discover what’s possible within the budget you have and which strategy may provide the highest ROI.
Once you’ve decided which strategies you’d like to try, you then need to decide how you will run the campaigns. Generally speaking, you have three options:
- Running the campaigns on your own
- Using freelancers
- Hiring a marketing or advertising company
Again, each of these options has an associated cost. For example, if you use your in-house team, then the cost will come in terms of salary and time. Plus, you may still need some outside help from experts, or to invest in tools so you can execute your campaign effectively.
If you enlist the help of freelancers, you will get help from an expert in a particular field. Depending on the campaign you’re running, most freelancers will either charge an hourly rate or a fixed rate for the entire project. The cost of hiring a freelancer varies. For example, a skilled and experienced freelancer who has their own software will charge a lot more than a junior freelancer who has just finished university.
Finally, hiring a digital marketing agency or advertising company to run your marketing activities is the most expensive option. However, the company will provide you with everything you need, from tools and expertise to people and resources.
So, ask for quotes and calculate the costs associated with each of these options. Once you have your quotes, you can then decide who will run the campaigns and the type of campaigns they will run.
At this point, you can select the strategies and assign portions of your budget to each. You should then get this signed off by senior members of management. They should be aware of:
- How much money you’re using
- What you’re using the money on
- Who will be delivering each campaign and why
- What level of ROI they should expect to receive and by when
Should there be flexibility in your marketing budget?
At this stage of the process, you’ve agreed on an overall marketing budget with key stakeholders. You've also done research into the best ways to spend that money and allocated a portion of the overall budget to each.
This is a great start to the process, but when your marketing campaigns are live, you need to be flexible and adaptable. This may mean reallocating some budgets and, in some instances, stopping spend on a campaign altogether if it isn’t working.
For this reason, you should revise your marketing budget on a monthly basis and analyse your performance on each channel. You should also take this opportunity to evaluate the channels you’re using and whether any new channels are emerging that may be worth investing in.
By keeping your marketing budget flexible you can achieve two things. Firstly, you can maximise your ROI. By continually re-evaluating performance and diverting your budget towards campaigns that are really delivering, you can maximise any benefits you’re experiencing. You can also direct money away from ineffective channels and ensure no budget is being wasted.
Secondly, by adopting a process where you continually review your efforts, you can get ahead of the curve and try new channels. When opportunities arise on a new channel (such as when Facebook first introduced ads in the News Feed), costs are low and potential returns are high. By spotting these opportunities early and being flexible with your resources, you can get ahead of your competitors.
How do you keep to your marketing budget?
If you fail to actively monitor your marketing budget and your projects, then your marketing budget can quickly spiral out of control. To avoid this happening, you should create individual budget templates for specific marketing departments and activities.
On top of this, if you’re managing a yearly budget, you should also schedule regular meetings with those involved in handling specific projects. As well as asking them how their campaign as a whole is progressing, you should also ask them how they’re handling their budget and why they’ve spent the money they have. This way, you can create lines of accountability and you can continually measure ROI.
Finally, if you’re concerned about monitoring costs, then look at whether you can set physical spending limits on your campaigns. Some forms of marketing, such as PPC advertising, allow you to add a daily spend limit to your account that you cannot exceed.
Common budgeting pitfalls to avoid
As you can see, the process of creating a marketing budget and implementing it as planned is complex. As a result, a number of budgeting pitfalls may catch you out.
These budgeting pitfalls include:
- Failing to set clear objectives
- Failing to get buy-in and sign-off from key stakeholders
- A lack of knowledge or expertise within a team
- Using data of bad quality?
- Failing to evaluate a strategy and learn
Thankfully, now you know that these common pitfalls exist, you can guard against them when creating your budget and strategy.
How Apteco products can help
If you’re looking to create a marketing strategy that delivers the maximum-possible ROI, then our solutions can help.
With our solutions, you can receive all of your multi-channel marketing insights from all of your data sources in one easy-to-use platform. With our powerful customer analytics and audience targeting software, you can convert raw data into actionable insights that will power high-performing marketing campaigns.
Our state-of-the-art marketing data analysis software helps you understand your customers better than ever before. This means you can ensure that every piece of marketing is relevant, targeted, and personal. Plus, depending on your needs, we can also help you automate your campaigns, build an audience, analyse the customer journey, and personalise your campaigns.
Whether you run a small business or an international enterprise, our range of packages and prices are designed to be cost-effective. So, why not create the perfect mix of bundles, features, and users to suit your requirements and budget today? Book a demo with the team to learn more about how we can help you meet your goals and improve your ROI.