How do you work out what to spend your marketing budget on and how to split your marketing budget?
The clock is ticking and the board is already impatiently waiting to see results. Plus they have their own ideas about what marketing activity should be done this year. What will it be this year? The list can be endless (and costly) – managing an ad word campaign, committing to SEO, working with an influencer, creating constant content for Social Media, running a radio ad, creating brochureware, attending an event, sponsoring a football team. So how do you decide how to split your marketing budget to get the best results? Follow the steps below and you’ll find the process much more simple.
1.Set a realistic budget.
Without the right budget, you won’t be able to appropriately execute the marketing strategies and tactics that can attract and retain customers and clients. So how do you work out the size of your marketing budget? As a general rule of thumb, a start-up or a business with serious and ambitious growth plans should be looking to invest 12-20% of overall gross revenue, whereas a more established company may be able to afford to reduce that to 5-12% as they already have an engaged audience vs having to start from the bottom. However, if you have a new product to launch, or a new audience you want to attract then you may need to set aside additional funds.
2. Set clear goals
What does your business need to achieve this year? The direction your company wants to move in, will ultimately affect your marketing strategy and its supporting budget. Your marketing budget can affectively be split into 2 areas:
It’s a good idea to think about where your focus should be this year and split your budget accordingly. Don’t forget that you’ll also need to set aside funds for things like agency or consultancy fees, insight and research costs, CRM or analytical tools.
3. Know who you need to speak to and the channels they use
Once you’re clear on what you are trying to achieve you should then think about who you need to engage with and create Personas for each audience type, alongside a view of their path to purchase through a marketing funnel. This may involve research or data analysis, but this will give you a clear view of the channels and tactics that are important to your audiences.
4. Rank all the channels in cost vs achievable ROI
With a view of the channels that are important to each Persona you can now rank them all according to how much they cost vs the expected ROI you could achieve. Some channels may cost a lot but can provide a high ROI. Equally be aware that not all channels will see an immediate calculatable ROI. Social media content can be hard to track but can still be a vital part of a plan. Depending on your budget you can start to make decisions about what you can or cannot afford.
5. Set aside budget (that you are prepared to lose)
The whole point of marketing is to test a variety of tactics, creative routes, channels, messages, targeting and timings to see what works best. Inevitably – your plans may not all come up trumps. So, be prepared to set aside budget for testing and learning, and accept that in some instances you may not get a return on your investment. On the up side, you will have learnt some valuable lessons, which will help you refine your future marketing plans.
6. Sometimes you’ve just got to say no
Previously I’ve been asked to sponsor the local rugby team because the MD liked having a private box to use at weekends. I’ve also been asked to produce 1000 branded pens and badges to support an event, or I’ve run ads to go in a press title because “that’s what we’ve always done”. It’s tricky when you inherit legacy tactics or have to stand up to someone senior, but sometimes you just have to say no. If you follow these tips you’ll be able to demonstrate where you’re spending the budget, and the benefits and ROI you expect.
7. Now to splitting that budget
So far we have:
Now it’s time to split the budget. Be careful at this point not to put little bits of budget into everything. To help you decide on how much budget to allocate, refer to previous experience and establish a minimum spend required to make a difference. At this point it’s also a good idea to identify when you will spend the budget. Do you want to go big in the first half of the year, or are there specific events or campaigns that you are looking to support? By creating a marketing calendar, you can identify the projected spend vs returns.
8. Monitor and adjust
Keep a tally on what you are spending, set up a budget tracker to monitor how your plans are performing and be prepared to change direction if need be. If one channel is working really well for you, then see how you can maximise effectiveness by moving budget from less well performing areas.
If you need help in identifying the right things to focus on in 2020 the GingerTree MOT may just be what you need. It’s a review of your marketing activity in line with your objectives, to help you understand what’s working well vs where you could focus more attention.
Call Tricia today on 07958 258 137 to find out more.