In the past few years, businesses and marketers have seen a barrage of channels and platforms to promote their products and services. Traditional marketing, still at large, coupled with the accessibility and visibility that digital marketing provides allows businesses to have unlimited opportunities to increase brand awareness and sales.
However, having so many platforms doesn’t always equate to marketing success. Most of the time, businesses struggle with throwing marketing ideas out in the open—hoping one of them sticks. As a result, businesses often spend an unnecessary amount of money because of the lack of proper planning and budgeting.
A successful marketing strategy is not only one that works—but one that works with the most efficient cost. In this article, we will discuss different strategies to make the most effective and efficient marketing budget for any business.
Why an effective marketing budget is important
You’ve probably heard countless times why effective marketing strategies are important, but has anyone told you why a marketing budget is just as important as the strategies you make?
According to Tim White, Founder of milepro,
“True to all things, creating a budget helps you look at your marketing strategies in the short term and long term. What marketing efforts are my priority, and which one can I put off in the near future? Which marketing strategies are bringing the most returns to my business?”
Creating a marketing budget allows you to do and assess the following:
- Create short-term and long-term marketing goals
- Prioritize marketing efforts
- Avoid wasting money on ineffective marketing
- Managing scarce resources by sticking to allotted budgets
- Determine the return on investment (ROI) of marketing strategies
What you need to do when building a marketing budget
Now that you know why a marketing budget is imperative for your marketing success, here are some things you need to remember when starting to build your budget:
Define your goals and objectives
A marketing budget helps you achieve your goals and objectives for your business. Having no clear business goals means that your priorities are not aligned and you lack the vision for the future of your business—either short-term or long-term—which will most likely put you all over the place during your operations.
So what factors do you need to take into account when determining your business goals?
- Target sales or profit
- Brand value and identity
- Vision and mission
- Target market
At the same time, remember that goals and objectives should be SMART (Specific, Measurable, Attainable, Realistic, and Timely).
Andrew Pierce, CEO at LLC Attorney, says,
“Business owners must carefully assess and align their goals with their overall outlook for their business. When SMART business goals are created, it becomes much easier to plot marketing strategies that best suit the business and allot a realistic budget for them.”
Determine your current marketing costs and its effectiveness
If you are currently operating on an existing marketing strategy, try monitoring the amount you spend and carefully classify your expenses per the type of marketing strategy. Doing so will help you better understand which expenses go where, and how much of your current sales can be attributed to each specific marketing campaign.
You may want to lump marketing campaigns by channel, either by digital marketing platforms like Facebook, Instagram, TikTok, or X (formerly Twitter), traditional physical methods like billboards, pamphlets, and posters, paid advertising or SEO content, and many more.
Consider the fees you spend for sponsorships, commissions, influencer fees, booths, freebies, and promotional items that also count as a form of marketing campaign. Some may also consider app development costs a marketing expense as many businesses have turned to applications to offer promos and vouchers to their customers.
Once you’ve effectively segregated your costs, compute your return on investment (ROI) from these campaigns by dividing your sales for that campaign by the corresponding cost.
Anthony Martin, Founder and CEO of Choice Mutual,
“Determining your ROI will give you a clearer picture of which campaign does best and which does not, and properly allocate or reallocate your marketing budget, or scrap those campaigns that don’t yield any returns at all.”
Understand your sales funnel
A sales funnel is a tool used to track how your leads go from prospects to customers while going through levels of awareness, interest, desire, and action—action being the time these leads turn into buying customers.
According to Linda Shaffer, Chief People Operations Officer at Checkr,
“Businesses who know how to understand how their leads traverse through their sales funnel will learn at which stage their leads tend to fall out, and eventually address these issues to prevent more losses.”
For example, if your lead made it past the awareness and interest stage, but failed to make it out of the decision stage, this may tell you that you lost a customer by a hair—either by a competitor’s better counteroffer or promos. In this situation, you may need to establish countermeasures, like allocating more budget, to prevent losing more leads in the process.
Choose the most effective marketing channels and strategies
Alex Milligan, Co-founder & CMO of NuggMD, says,
“Different types of organizations require different marketing strategies and focus on different channels. What may work for one business may not work for another, and there’s no hard and fast rule in choosing which marketing channel may be most effective for your business.”
Choosing the right marketing strategies ultimately boils down to the kind of products and services you offer, and your target market.
For example, a Gen Z-focused clothing online shop may want to focus marketing efforts and budget on social media branding strategies like Instagram and Tiktok affiliate or influencer marketing, while those who offer services may want to steer away from visual marketing strategies and target email marketing, SEO or PPC advertising.
The ability to assess the right type of marketing strategy that works best for your business saves you the time, effort, and money spent on non-value-adding activities. Writing a marketing plan will help you think of each campaign‘s mission, budget, deliverables, tactics, and buyer personas.
Monitor your marketing budget spending thoroughly
The work in building a marketing budget does not end when you’ve set an amount for specific marketing strategies. Monitoring your budget is just as important as making it to make sure that all activities related to marketing strategies:
- Are well within the scope of the project
- Are the most effective and efficient use of the budget for maximum ROI
- Do not exceed the set budget
- Are justifiable and extremely necessary, in case extra costs not within the budget are needed.
Jim Pendergast, Senior Vice President at altLINE Sobanco, says,
“Marketing team leaders or business owners need to be thorough in monitoring marketing budget, regularly evaluate the effectiveness of activities, and assess whether adjustments may be necessary for these budgets.” He adds, “A budget serves as an estimate and guidance, not a definite limit. Budgets, as long as they are justifiable and thoroughly studied, can be adjusted by upper management at certain points of the business.”
The basics of building a marketing budget ultimately boil down to business owners having a clear vision of their goals and objectives for their business. Your goals and objectives pave the way for the success of your marketing campaigns, and creating the right budget waters the flowers along the way.
Building a marketing budget that fuels your business to success requires a thorough understanding of your internal processes and external stakeholders to properly allocate scarce resources most effectively and efficiently.