Creating a marketing budget is usually the task of a marketing manager or business owner if you’re a smaller brand.
Whilst it’s one of the most important things to have, it can also be a dreaded task as there’s so much to consider.
From events, to digital strategies, to printed brochures and collateral, how do you decide on your marketing budget, and most importantly, how it’s allocated?
We’ve worked with lots of marketing managers across lots of different companies so we know this struggle first hand. We also know the struggle of justifying your marketing budget to your boss as they’ll want to know where the money is being spent and why.
Whether it’s a b2c company or a b2b company, you want to be getting a return.
In this blog, we’re showing you how to create a marketing budget with a clear step-by-step guide. This will help you feel more confident next time you’re given the responsibility, ensuring you’ve included all of the right expenditure.
What Is a Marketing Budget?
A marketing budget is the amount of money you spend on marketing activities. Whether this is digital strategies such as pay-per-click and email marketing or traditional strategies such as print or radio advertising, your marketing budget covers these costs.
The size of a company’s marketing budget depends on several factors as bigger companies (think of Nike, Coca-Cola, Air bnb for example) will have much bigger budgets as they invest a lot in marketing to reach customers globally.
A local bakery for example will have a much smaller budget as they might only use a few channels to attract people in the surrounding area.
So it all depends on what you want to achieve, who you want to target, and how many channels you’re going to invest in to make it happen.
The most important thing about your marketing budget is ensuring it’s being spent in the right places. There are so many different channels for you to choose from, that it can be difficult to know which areas are the most profitable.
This leads us nicely onto our next section.
Why Is Creating a Marketing Budget Important?
At one point, marketing was much simpler; you only had a few channels to choose from.
If we go back in time to the days before the internet, this meant companies had to rely on print methods or word of mouth to get their product or service out there.
Nowadays, the digital world has opened up countless possibilities from the likes of social media advertising, to Google ads, to influencer partnerships .Whilst this is great for marketers, as there are more ways to reach more customers, not every platform is going to generate the best return.
This means it’s important not to spend all of your marketing budget in the wrong place as this will lead to a lot of wasted money. Your marketing budget goes hand-in-hand with your marketing report as this shows you which channels are performing and which ones are falling flat.
You can use this insight to determine your marketing budget, allocating more money in the areas that are generating the most value.
Creating your marketing budget including a plan of where the money is being spent will keep you on track, and avoid you overspending or underspending in the wrong areas.
When Should You Create a Marketing Budget?
Usually the best time to create your marketing budget is at the beginning of your financial year. This allows you to understand how much money you’ve got to spend on marketing for the next 12 months so that you don’t plan anything you can’t fulfil.
For example, perhaps you want to try long-form content but don’t have the resources in-house to do it. You might decide to partner with an external SEO agency to manage it on your behalf, but obviously this comes with a cost. By knowing how much budget you’ve got in this area, you can work out the type of content you can afford which will dictate things such as content length, frequency, and any additional optimisation work.
That said, you don’t have to limit yourself to only creating your marketing budget once a year. Whilst it’s important to know how much money you’ve got for marketing, this might change due to seasonalities or fluctuations. In this scenario, your marketing budget would have to be revisited and tweaked.
For example, you might experience a fantastic summer which gives you more budget to invest in a winter campaign. Instead of being stuck to the marketing budget, you can adjust it and put more money into making the campaign a success. The most important thing is not going off on a tangent and being too enthusiastic as the marketing budget is there for a reason.
Whilst it can be revisited, and should be revisited if you’re experiencing changes or unexpected opportunities, it’s still a good guide and is there to ensure you don’t waste money.
Different Types of Marketing Budget
The type of marketing budget (s) you have will depend on several factors including the size of your company, what you want to achieve, and how much money you have to spend.
Let’s look at this in more detail below:
Digital campaigns marketing budget
This budget is dedicated to online marketing efforts, often chosen by eCommerce businesses or companies that want to focus more on their digital visibility.
It will cover areas such as Pay-per-click advertising, SEO strategies, email campaigns, influencer partnerships, and social media content creation.
Because digital marketing is often more measurable, this allows companies to track ROI easily, so they can allocate more/ less budget in the right places.
Traditional marketing budget
This marketing budget focuses on traditional methods such as print adverts, TV advertising, radio, direct mail, and billboards.
This is often more suitable for businesses targeting older demographics or specific local audiences as they’re more likely to come into contact with the ad.
Whilst there can be a big misconception that ‘print is dead’ this certainly is not the case. This traditional form of advertising works well for lots of audiences and is best executed in tandem with digital campaigns.
In terms of how it’s measured, traditional advertising can be tracked through methods such as customer surveys, and tracking foot traffic or sales spikes after a campaign. While it doesn’t offer the same level of real-time data as digital marketing, it can provide insights into its effectiveness and where the marketing budget should be spent.
Event marketing budget
Moving onto an event marketing budget, this is for businesses that attend or host events, such as exhibitions, product launches, or pop-up shops.
There are lots of costs associated with events from renting booth space, to securing event sponsorships, to travel costs and team expenses. This is without considering the cost of digital promotion leading up to the event as the whole point is making sure people attend it.
There are different ways to measure how successful an event was, such as tracking attendee numbers, lead generation, sales made during or after the event, engagement on social media, and post-event surveys.
With this in mind, you can review your marketing budget ensuring you’ve allocated enough money to making it work. This might involve investing more in certain locations where the event was a real success, and cutting out some locations where foot fall was low.
Mixed marketing budget (overarching marketing budget)
A mixed marketing budget, or an overarching budget encompasses all of your marketing activities whether that’s print or digital.
This allows you to see all of your strategies in one place rather than dipping in and out of different spreadsheets. Whilst these can be helpful to see, when you’re planning your budget for the year, it’s useful to see a complete overview of where the money is being spent.
This allows you to make sure you’re capturing your audience across a range of channels regardless of whether that’s local TV ads, email campaigns, or SEO strategies.
How to Create a Marketing Budget
If you’ve never created a marketing budget before, then it can be difficult to know where to start. Especially if you’ve got lots of different campaigns, across lots of different channels, you want to be sure you’ve invested the right amount of money in each.
Follow the steps below to learn how to create a marketing budget.
Step 1: Identify your goals
It all starts with your marketing goals. Without knowing what you want to achieve, you won;t know what you’re working towards.
This differs from one company to the next, as one brand might want to increase brand awareness whereas another company might be focussed on increasing sales.
Knowing this information from the get-go is important as this helps you understand where to allocate more of your marketing budget.
So first things first. Ask yourself whether you want to:
- Increase brand awareness
- Generate leads
- Boost sales
- Retain customers
Step 2: Analyse previous performance data (if it’s available)
If you’ve run marketing campaigns in the past, you’ll have some data on what’s worked and what’s not.
This is a fantastic insight moving forward as it allows you to see what type of strategies work best with your audience.
The type of metrics you analyse will differ depending on the campaign, for example:
- Email marketing: In this case, you’ll be looking at things such as open rates, click through rates, and increases in subscribers.
- Social media marketing: Metrics to analyse will be likes, shares, comments to see which posts resonated and which fell flat.
- Events / exhibitions – Completed forms, number of attendees, leads generated, and post-event follow-ups can help you gauge success.
- Paid advertising: Metrics include cost per click (CPC), conversion rates, return on ad spend (ROAS), and impressions to understand which ads delivered the best ROI.
- Content marketing: For this strategy, looking at page views, time on page, bounce rate, and lead conversions can help determine which content drove the best results.
By looking back, it helps you project forward. Whilst this isn’t always a guarantee of what’s going to work as there are external factors to consider (think of cost of living, COVID etc) it gives you a good idea.
Step 3: Know who you’re speaking to
Everyone consumes content differently.
Some people prefer to read print publications, whereas other people get their information from social media. That’s why knowing who your audience is, and where they spend their time, is key.
This helps you put the budget in the right places otherwise you could be spending it on a campaign that no one actually sees.
For example:
If you identify your target audience as Genz Z, and their main form of consuming content is social media, it’s pretty pointless allocating a lot of the marketing budget to printed leaflets.
The likelihood of your target audience taking any action after seeing these, or paying attention to them at all, is slim.
Work out who your target audience is first so that you can prioritise the right channels and make the most return on your marketing budget.
Step 4: Choose your marketing channels
Once you’ve nailed your audience and reviewed past performance data, you need to decide on which marketing channels you’re going to use.
Whether that’s PPC, social media, email, TV, billboards or a combination, it’s about understanding:
- Which channels your audience will interact with
- Which channels will likely generate the best return
A good tip is finding a balance between engaging with your audience across various channels, and not diluting your marketing budget too much.
That’s why reviewing data is so important as this is your best chance of identifying which are the most profitable channels for your business.
Step 5: Break costs down by channel
Once you know which channels you’re going to use, it’s time to work out how much money you want to allocate each one.
Again this could be done by looking at previous campaigns to see how much you spent vs how much return you generated.
This gives you an idea of whether you need to:
- Spend the same amount again
- Increase the spend if it was a successful campaign
- Decrease the cost if it could be better spent elsewhere
Another good tip is to include some wiggle room in your budget for experimentation and testing.
For example when it comes to Google Ads, don’t just allocate the base amount. Give yourself a bit of extra budget in case something really works and you want to do more of it.
Step 6: Track performance
You want to be sure your marketing budget is being used effectively so define some KPIs for each channel.
This keeps you on track so that you know you’re not just throwing money away without seeing any results in return. This is helpful for any marketer who has to justify the marketing budget to their boss as it gives you solid proof of what’s working and what’s not.
You should use analytics tools to track performance as this gives you tangible data to present. There’s so many different tools available (and again it depends on which channels you’re using) but by identifying your KPI’s you can make sure you’re paying attention to the most important numbers. After all, you can’t monitor everything and it doesn’t make sense either.
There are plenty of tools available, depending on the channels you’re using, but focusing on your KPIs ensures you’re tracking the numbers that matter most. You can’t monitor everything – and there’s no need to either.
With this insight, you can adjust spending accordingly.
Step 7: Review & adjust
Your marketing budget shouldn’t be set and left.
As things change, your marketing budget needs to keep up by considering things such as market trends, audience behaviour, and business goals.
It’s wise to conduct quarterly or monthly budget reviews to ensure your marketing spend remains aligned with your goals. It might be small tweaks to the budget or a complete reallocation if something really isn’t performing the way you expected it to.
Whilst things can fluctuate, you don’t want to be investing money in an area that clearly isn’t working.
The key takeaway: Stay agile when it comes to your marketing budget and know when to pull the plug on a strategy that isn’t performing.
How to Create A Marketing Budget In 7 Steps
You should feel more confident about creating your own marketing budget after following the steps in this blog.
Whilst it can seem like a daunting task (anything related to budgets in a business can be tricky!) the most important things are:
- Identifying your goals
- Knowing your audience
- Choosing your marketing channels
- Reviewing and adjusting when needed
By keeping these points in mind, you can be sure you’re investing money in the right areas rather than playing a guessing game of what you think might work.
We work with lots of marketers, helping them maximise their marketing budget by providing reports and updates on what’s performing vs what’s nott. If you need any help with your marketing, just get in touch with our team!
