Are you struggling to create a marketing budget for your business? Creating a marketing budget may seem daunting, but it doesn't have to be. Budgeting for marketing plans helps keep your strategy on track with your company's overall finances so you can reach your business goals.
Let's look at six easy steps to create a marketing budget for 2024, which will make your next planning session a breeze!
So, keep reading!
What is the Marketing Budget?
Your business incurs expenses to promote its name, goods, or services. These expenses are listed in your marketing budget, which covers each expense you make for your marketing plan over a specific time frame, such as a quarter or a year.
How to Plan a Marketing Budget for 2024 in 6 Steps
Now that you know why a marketing budget is essential, it’s time to consider how to prepare and prioritize it. Check out these six critical points you’ll want to establish to set up your marketing budget:
Set Your Business Goals
Identifying your target market and goals is the first step in developing an effective digital marketing strategy. What are your campaign goals, and who are you hoping to reach? Identifying your objectives and target market allows you to customize your marketing message and ensure a successful and memorable campaign.
Advertisers often have multiple goals per account. A small budget limits the number of campaigns – and the number of goals – that can be pursued.
Some common goals include.
- Brand Awareness,
- Product & Brand Consideration,
- Repeat sales.
Any expert on budgetary creation for marketing will tell you that setting goals for your company is essential. Before creating a budget, you must decide what you want to accomplish. Make thoughtful, targeted goals that center on
- Earning More Sales,
- Increasing Leads,
- Earning More Subscribers,
- Increasing Brand Awareness,
- And More.
Set specific goals, such as "Increase sales by 20% by the end of the year," to help you pinpoint and accomplish your goals.
Establish Your Sales Cycle
Establish your sales funnel as you build your marketing budget strategy breakdown. Your marketing budget depends heavily on your sales funnel since it dictates how you will use your funds. Typically, a sales funnel consists of four stages:
Knowing where in your sales funnel a digital marketing strategy can be necessary to prevent more customers from leaving your company.
For instance, if you observe a noticeable decline in traffic between the stages of consideration and decision, you might need to allocate extra money for tactics like social media advertising, pay-per-click (PPC) advertising, and video marketing.
Related Blog How to Market Your Startup Business on a Budget
Know Your Outside Costs
Before you create a marketing budget strategy, figure out your external costs. Finding out how much your business will cost overall—including employing staff, running costs, and other relevant costs—is essential. Consider these costs as a starting point for your marketing budget approach so that you can calculate your return on investment (ROI).
For example, understanding the production costs of your product can help you determine how much you can spend on marketing while still making a profit.
Recognize Your Market
To build an effective marketing budget plan, you need to know where you fit in your market. Understanding how you stack up against your competition can help you better establish which strategies you need to use to compete with them.
Analyze your competitors to understand how they function online. Social media monitoring or competitor analysis tools are used to obtain information and formulate winning strategies.
Identify the Strategies You Wish to Employ.
Preparing a strong marketing budget for 2024 depends on strategically selecting tactics. Although perfect accuracy may not be mandatory, it is important to understand the most effective techniques that suit your business goals. There are plenty of strategies that deserve attention in digital marketing, including.
- Search engine optimization (SEO),
- PPC advertising,
- Social media marketing,
- Social media advertising,
- Email marketing,
- Content marketing,
- Local SEO,
- And more.
Knowing which techniques to use is essential when drafting your company's marketing budget. After determining which technologies to invest in, you can choose how to include them in your marketing budget plan. This crucial stage will help you stay on course when promoting your brand.
Researching Strategy Costs
Whether you intend to work with a digital marketing firm, hire a freelancing professional, or run your campaigns yourself, it is essential to understand the associated costs. The breakdown of your marketing budget should concentrate on projecting the expenses associated with every tactic your business will use. Initially, you must choose the person in charge of your campaign:
If you utilize your in-house team, costs will be incurred in the form of salaries and materials required for campaign execution. You may still need to seek external assistance or invest in tools facilitating campaign management.
Freelancers specialize in specific strategies or dabble in multiple areas. When hiring a freelancer, payment is typically made hourly or per project. Rates may be higher for experienced freelancers or those using specialized software.
Digital Marketing Company
Opting for a digital marketing company provides a comprehensive solution, including tools and personnel. Unless it's a one-off project, payment is generally made monthly to retain the company's services.
Generally speaking, hiring a digital marketing agency is a good idea if you are too busy managing your company. This strategy allows you to profit from a well-organized marketing plan and budget management while concentrating on other business areas.
Prices will vary based on your business needs. Yet, the range offered gives you a ballpark idea of what to anticipate from a digital marketing agency partnership. Understanding these costs enables you to prepare a more effective marketing budget, ensuring you can implement strategies that yield optimal results for your business.
Common Marketing Budget Mistakes
Navigating the intricacies of a marketing budget demands a keen understanding of the industry. Even seasoned pros are susceptible to common errors that undermine their work.
Developing a strategic marketing budget is a crucial task for businesses. It involves balancing several factors, and even minor mistakes can have a lasting impact. Therefore, it's essential to identify and rectify typical errors to maximize the return on investment. These errors usually include misallocating resources or failing to keep up with new market trends.
Here, we highlight common mistakes, describe possible dangers, and advise how to avoid them.
- Allocating Money To Low-Return Channels
It's Important To Focus Your Marketing Budget On The Channels That Bring In The Most Money For Your Company. Track your tactics' return on investment (ROI) and direct your spending toward the campaigns with the best ROI.
- Ignoring Data Usage For Campaign Execution And Improvement
Data plays a vital role in your marketing strategy's efficacy. Ensure your money is spent as efficiently as possible by regularly monitoring and evaluating audience and marketing data to improve your tactics.
- Undervaluing Current Clientele
Getting new clients costs more than keeping the ones you already have. A percentage of your budget should be set out for customer loyalty and retention.
- Using The Marketing Budget From The Previous Year
Every year, the audience's demands and interests change, requiring a change in the amount spent on campaigns. Examine market trends now and ensure your spending is allocated to the channels where your target audience is most active.
How Should Your Marketing Budget Be Calculated?
Now that you know how to create a marketing budget, let's examine the calculation process. Figure out how much money is reasonable when developing a marketing budget. According to the U.S. Small Business Administration, companies with yearly revenue of less than $5 million should budget for their marketing plan at a rate of about 8% of gross income.
But since every firm is different, spending could change depending on its needs. Set your target cost per client and the number of new consumers you hope to bring to your marketing campaigns to create a goals-oriented marketing budget plan. Add any fixed costs to these two values and multiply them.
For example, if your goal is to gain 200 new clients at $300 apiece, and your fixed expenditures come to $10,000, apply the following formula:
(300 × 200) + 10,000 = 70, 000
Therefore, you'd need to allocate $70,000 to marketing to achieve your customer acquisition goal. Track the number of new clients you bring on board and your cost per lead as you manage your marketing initiatives to evaluate their success and pinpoint areas for development.
Tricks to Launch an Online Marketing Campaign on a Limited Budget
- Concentrate on One or Two Channels at a Time
- Collaborate and Share Costs with Partners and Co-Brands
- Stay Informed About New Marketing Trends and Consumer Habits
- Harness the Power of Influencers and Opinion Leaders
- Opt for Cost-Effective Channels
- Cultivate Close Relationships with Interested Customers.
- Utilize PR through Forums and Message Boards.
- Automate Mundane Tasks and Processes
- Leverage the Power of Infographics
- Build Your Social Presence Smartly
- Turn Your Brand into an SME
While digital marketing is essential for effectively reaching various consumer categories like millennials, the cost of utilizing online tools can be substantial, especially for small or medium-sized enterprises. For instance, developing a custom mobile app involves personnel expenses, R&D losses, and funds allocated to its promotion.
Does this mean online marketing becomes completely ineffective if your budget is limited? Absolutely not! Here are valuable strategies to keep you abreast of the latest marketing trends while following your financial projections.
Concentrate on One or Two Channels at a Time
When considering digital marketing, the initial challenge is the multitude of platforms available for connecting with customers. Integrating Facebook, Twitter, Instagram, Email, YouTube, and other tools into a unified strategy can be expensive in terms of finances and time. However, it is not necessary to maintain a presence on all these platforms.
Focusing efforts on a few channels minimizes the risk of losing the opportunity to build deep connections with users on a particular platform. Concentrating on one or two channels to reduce costs and establish a loyal following within a robust customer base is beneficial. Many social media platforms offer features for distributing diverse content while staying within the confines of a single platform.
For example, Facebook's recent introduction of Facebook Live for live-streaming provides an opportunity to leverage such solutions and remain competitive in marketing efforts.
Collaborate and Share Costs with Partners and Co-Brands
Focusing solely on one's brand is common when executing a digital marketing campaign. However, this approach may overlook valuable opportunities for promotion and customer engagement.
Since most businesses have partners, such as intermediaries or co-brands, adjusting the strategy to share digital marketing costs is prudent. Running contests or online events is one way to benefit from increased audience reach through collaboration.
Another approach is strategically distributing marketing channels among partners. While your brand may excel on Twitter, co-brands might have a well-established Instagram following, creating a mutually beneficial situation. Building relationships with new firms may seem challenging. Still, the potential benefits of cost reduction and increased consumer awareness make it worthwhile.
Stay Informed About New Marketing Trends and Consumer Habits
The digital environment constantly evolves, providing users with opportunities. Organizations that do not stay ahead of major trends and shifts in consumer habits risk investing time and money in actions that may prove ineffective in attracting or retaining customers.
For instance, the rise of voice-driven search queries (almost 20% of all searches) due to technologies like Siri, Cortana, Amazon Alexa, and Google Home has rendered traditional SEO techniques obsolete. Adapting to new developments is essential for any business's long-term online success.
Harness the Power of Influencers and Opinion Leaders
Every social media platform has influencers and opinion leaders, often celebrities, with follower counts reaching the thousands or millions. Their ability to quickly reach a wide audience makes them invaluable for digital marketing.
Instagram, for example, demonstrates how businesses can benefit from partnering with popular accounts. Paid posts have become integral to Instagram marketing, providing users with valuable promotional information and companies with the ability to generate consumer interest swiftly. Negotiating with well-known celebrities on a tight budget may be challenging, but finding niche opinion leaders can be a viable alternative.
For example, partnering with popular artists who share their work on Instagram could benefit a business manufacturing art supplies. It is crucial to consider the alignment between a specific account's audience and the target customers to ensure that messages resonate within the community.
Opt for Cost-Effective Channels
When formulating a digital marketing strategy, assessing the inherent costs associated with each potential marketing channel is advantageous. Due to differences in content and audience between platforms, some may significantly strain your budget. In contrast, others may be more effective regarding expenses and reaching the intended audience.
For example, the resources spent on ordering advertisements from Google are significantly higher than the costs of crafting a humorous and engaging caption for a creative photo posted on Instagram. Similarly, holding a brief live stream on Facebook Live is less expensive than placing advertisements in popular apps or marketplaces. Constantly seeking new techniques and instruments that offer additional budgetary benefits is necessary.
Cultivate Close Relationships with Interested Customers.
Acquiring new customers involves significant costs, not only in traditional marketing but also in the digital environment. Statistics indicate that achieving interest from even 15% of visitors to your website is a considerable accomplishment.
The vastness of the internet as a playground for alternative evaluation allows consumers to compare your value offering with that of competitors immediately. Instead of allocating most of the budget to acquiring new clients, building stronger relationships with existing customers to encourage repeat purchasing may prove advantageous. Email marketing, despite its past negative associations, has experienced a resurgence in recent years.
To avoid common pitfalls associated with this channel, you can use personalized newsletters to communicate directly with clients or offer tailored recommendations based on their shopping history. Implementing an online loyalty program with points and rewards for specific actions, such as posting a review of your company’s products or services, is also a valid tactic.
Utilize PR through Forums and Message Boards.
The public relations (PR) concept can become blurred in digital marketing. Almost every message is available to the general public, blurring the line between PR and dedicated promotion. Complications arise as online magazines or news outlets scrutinize every decision made by firms in the digital realm.
Many companies may abandon their online PR efforts to minimize costs. However, PR can still be a valuable strategic tool without demanding a significant portion of your budget. The popularity of websites like Reddit or Pinterest indicates that companies can successfully reach their audiences beyond traditionally established social media.
Relying on forums and message boards can boost your company’s image, as these outlets demand frequent direct communication with customers, providing more control over how your messages are perceived.
Moreover, your client's concerns and feedback on these platforms can be a valuable source of new marketing directions.
Automate Mundane Tasks and Processes
Digital marketing can be demanding regarding workplace processes and the time needed to establish online strategies. This includes creating messages, selecting relevant platforms, and regularly distributing content to customers.
Even basic tasks, such as posting on Instagram, require creative effort and introduce ambiguity into project and budget management. However, you and your employees do not need to handle everything independently.
Powerful software can schedule social media posts, automate email newsletters, and track audience reactions. Implementing these solutions is generally low-cost, with many service providers offering discount plans for business owners or even feature-limited free options.
Leverage the Power of Infographics
Expanding on the previous point, if you have compelling data, consider presenting it visually through the creation of infographics. Infographics pique viewers' curiosity in addition to drawing backlinks. They are a powerful tool for improving your search engine ranks, which raises organic traffic.
You should hire a designer to put this plan into action. Alternatively, your team can use more affordable tools like Venngage, Infogram, or Canva to turn data into eye-catching infographics that increase traffic and engagement.
A noteworthy example of a brand successfully employing infographics is SocialPilot. The brand converts research into compelling data stories and presents them through infographics.
Build Your Social Presence Smartly
When operating on a limited budget, it is crucial to allocate resources wisely. By now, you should have identified your target audience and the specific social platforms where they are most active.
Rather than attempting to maintain a presence across all platforms, focus on mastering two to three key social platforms where your target users are highly engaged.
For instance, platforms like Snapchat, Instagram, and TikTok may be most effective if your target audience includes youth or college students. On the other hand, for targeting millennials, concentrate on Twitter and YouTube.
LinkedIn would be the ideal platform to prioritize if your business is in the B2B sector with the C-suite as the target audience (CEOs, CFOs, etc.).
Turn Your Brand into an SME
Become a Subject Matter Expert (SME) to establish your brand as an authority. Instead of solely marketing your products or services, position yourself as a knowledgeable brand that clients or customers can trust for advice and expertise.
For example, if you own a restaurant, contribute columns, articles, or reviews to lifestyle magazines. If you specialize in web design and development, conduct free workshops in relevant colleges and universities.
LinkedIn is an excellent platform for establishing SME status. Over the years, LinkedIn has evolved into a space where professionals engage with insights and contribute their perspectives.
Sharing your expertise can build trust and generate favorable attention for your brand. This approach can also increase conversion rates in your inbound marketing campaign compared to conventional techniques like email or telemarketing. Furthermore, you will gradually become a leader and influencer in your niche.
In short, digital marketing can be challenging for businesses operating on a tight budget. One of the biggest challenges in this industry is the multitude of platforms and features, which can make it difficult to establish a strong online presence.
Nevertheless, these tactics are sufficient to reduce marketing expenses and provide new options for distributing messages among target customers. Applying these tips allows you to transform digital marketing from a costly necessity into a valuable strategic instrument.
Why It's Crucial to Monitor Marketing Expenses
Regardless of its industry, niche, or long-term goals, every business requires a well-established marketing budget. A marketing budget not only aids in planning an effective advertising strategy but also facilitates the measurement of overall return on investment.
However, creating a marketing budget from scratch or making significant changes to an existing one can be challenging when uncertain where to start. This discussion will cover essential marketing budget management aspects, providing insights to set your company up for ongoing success.
When dealing with finances, being cautious is paramount. Overspending is easier than one might think, especially with certain marketing expenses. A structured plan ensures you don't unnecessarily erode your profits and allocate funds wisely. Establishing a proper marketing budget also:
- Eliminates guesswork in planning ongoing marketing campaigns.
- Provides marketing departments with an efficient financial tracking mechanism.
- Assists marketing professionals in better tracking ROI.
- Encourages marketing teams to refine their strategies.
- Ensures unprofitable approaches are swiftly discarded in favor of effective marketing tactics.
While it takes money to make money, without a marketing budget, it's impossible to gauge how much is too much to spend. A general guideline is to allocate around 10% of your revenue to marketing.
Setting and tracking a marketing budget enables businesses to decide how much of that budget should be allocated to various aspects of a marketing campaign, such as pay-per-click advertising versus content marketing.
Related Blog How to Create a Content Marketing Strategy
4 Tools for Marketing Budget Management
In the digital age, numerous tools eliminate the guesswork in managing a marketing budget. Explore these options:
- Proof: A comprehensive tool suitable for marketing managers, covering analytics to campaign planning based on budget.
- Uptempo: Formerly Allocadia, Uptempo is an all-in-one tool for budget planners. It offers oversight on financials, workflow management, predictive insights, and more.
- Planful: It is Ideal for streamlining marketing department planning, finalization, analysis, and reporting, saving time, effort, and money.
- WriterAccess: An elite content production platform facilitating effective, budget-friendly content production at scale. Assemble a team of expert writers and content producers for compelling marketing content.
Ensure the use of these tools ethically and within the bounds of their respective terms of service.
Over to You!
A tight budget shouldn't hinder the creation of an effective marketing strategy. Despite having a small marketing budget, campaign execution is still very important. Lack of demand for your goods or services or the small size of your company necessitating increased demand from ongoing operations are two common causes of tight budgets.
The main objective of a marketing campaign is to increase brand and business awareness. A successful marketing campaign increases income, deals, and customer base. If your company has more leads in its sales funnel, its budget for future campaigns will increase.
However, the above points must be considered when managing a marketing campaign on a modest budget.
Creating a prosperous marketing campaign with a limited budget is feasible through creativity and thinking outside the box. Establishing clear goals and optimizing your efforts can maximize your budget and attain your marketing objectives. Remember, flexibility is key! Learn from your data and continuously iterate for maximum impact.
Launch your advertising campaigns right today! A marketing strategy does not require large sums of money to be successful. All that's needed is creativity, an understanding of the audience, and the appropriate tools!
Frequently Asked Questions
What is the appropriate marketing budget for a small business?
It depends on your revenue. As a general guideline, B2B companies typically allocate 2 to 5% of their revenue to marketing. For B2C companies, a prudent range is around 5 to 10% of the revenue.
What is the most cost-effective form of marketing?
Explore these cost-effective or free marketing strategies to promote your business:
- Organic social media marketing
- Social media paid ads
- User-generated content
- Google My Business listings
- Maintaining an informative company website
- Email marketing
- SMS marketing
- PPC advertising
- Referral marketing
What marketing approach works best for small businesses?
There’s no one-size-fits-all answer. The effectiveness depends on your target audience. Understand your audience’s behavior and research your competitors to identify your business’s most suitable marketing approach.
What are the key marketing strategies?
Consider these four fundamental marketing strategies:
- Relationship Marketing: Focuses on customer retention and satisfaction.
- Scarcity Marketing: Creates a perception of shortage, such as limited offers.
- Cause Marketing: Celebrates company values through a social cause.
- Stealth Marketing: An unconventional, subtle form not easily visible to the audience.
What are some effective marketing ideas for small businesses?
Explore these top marketing ideas tailored for small businesses:
- Utilizing engaging content to promote your business
- Employing visual marketing to attract attention
- Leveraging infographics for clearer communication
- Actively participating in relevant social media groups
- Building a robust social media presence
- Focusing on becoming a subject matter expert in your field
- Creating exclusive offers for your audience
- Organizing engaging social media contests