Having a marketing budget enables small and medium-sized businesses to compete with industry leaders, but keeping track of your marketing dollars is crucial for success.
What is a Marketing Budget Plan?
Your marketing budget is the amount of money and additional resources you’re investing in your promoting efforts over a specific period of time.
This includes expenditures for setting up, managing and running your ads, as well as any additional maintenance work that’s required.
Your quarterly marketing budget accounts for all the associated marketing costs. This includes, but not be limited to things like.
- Website design and development
- PPC campaigns
- Content marketing (including blogging)
- Social media marketing
- Search engine optimization (SEO)
- Marketing staff and contractors
- Marketing automation software
- Press releases (public relations)
- Event marketing
- Radio advertising
- Television advertising
- Awards and recognition
- Direct mail
A wholesome budgeting plan will also detail a business’s marketing strategy, goals, and other associated themes. These things ensure that the budget is being spent on marketing channels that boost your bottom line.
How to Build a Digital Marketing Budget
Your digital marketing strategy should include more than social media.
Online tools now allow you to track the money you spend on your online marketing. So, you need to re-evaluate your setup and analyze its results periodically as part of your budgeting plan.
Ready to fine-tune your marketing budget and success in the coming months?
Here are 3 steps you can take to create a marketing plan that achieves results to determine how much you should be spending on marketing.
Analyze, Analyze, Analyze
It doesn’t matter how big your marketing budget is; you won’t grow your business if you’re shooting all those dollars in the wrong direction.
This is why every successful marketing budget begins with analysis.
Here are some steps you can follow to build a better budget for a marketing plan.
Review your past marketing trends, expenses, and results
Before creating your marketing budget, ask the following questions:
- What are your marketing results from last year?
- How much traffic did your website get?
- How many customers did your marketing campaigns generate?
- Did certain blog posts or ad campaigns perform better than others?
Analyzing all this information will ensure that you capitalize on the lessons learned in the previous year and carry your successes forward into the next 12 months.
Review your competition to determine where their marketing dollars are going
Now that you know HOW your marketing efforts paid off over the last year, it’s time to analyze your competitors.
This can include reviewing competitor profiles on LinkedIn and Facebook (Did they report any big accomplishments or news this year?) and doing an SEO audit of their website (Did their traffic increase? What are their top-performing blog or social media posts from 2019?).
We typically ask four questions when analyzing our clients’ competitors.
- What are they doing well with their marketing?
- What are they NOT doing well with their marketing?
- What is their core marketing message?
- What can we learn from them?
Update your Unique Selling Proposition
Armed with your research, it’s time to sit down and compare your company to theirs.
Are you clear on what sets you apart from the competition?
Defining your unique selling points or key differentiators is crucial. But the only way to do so is to get to know your company and what you can offer that others currently don’t.
Update your Buyer Personas
Your marketing results are only as good as your demographic research. After all, you won’t find success promoting festival apps to senior citizens!
Review who your best customers were last year and update your buyer personas with this data.
By taking these steps and nailing down your strategy, you can ensure that your marketing budget is aimed in the right direction.
Define Your Annual Goals & Marketing Strategies
What are your goals for this coming quarter and year?
You need to align your growth and sales goals with your marketing goals in order to create a successful budgeting plan for your marketing efforts.
Need help defining your company’s goals? Your marketing leaders need to be actively involved in choosing the budget and setting up expectations for the company’s revenue.
Here are some questions to answer with your leadership team:
- What is our business vision?
- What are our sales targets for the next quarter? What about next year?
- What are some of the obstacles we need to overcome
- What trends in our industry and market are we facing?
- What are the long-term changes we’d like to see in our company over the next 5 years? How about in 10 years?
Qualitative vs. Quantitative Goals
Answering these questions will help you set your goals for this year. When Fannit helps plan for marketing performance, we look at qualitative and quantitative goals.
An example of a qualitative goal could be improving the way our website converts visitors so they have a better experience.
An example of a quantitative goal is improving lead conversion on your website by a certain percentage and producing a certain number of leads each month.
Looking at your marketing goals from both qualitative and quantitative angles will serve as your compass.
In addition, if you are unable to quantify your goals, it will provide an indication of the work needed in order to track your numbers.
Research Marketing Spend for Your Industry and Business Size
Your marketing budget plan will, of course, be unique and tailored to your business strategy and goals.
That said, it can be helpful to understand marketing budget trends in your industry. For example, maybe you don’t need to be spending 10% on marketing when all your competition only have a marketing spend average of 3%.
Some marketing budget trends from the past couple of years include:
- B2C companies spend twice as much on marketing than B2B companies
- CMOs report that they spend an average of 9.5% of overall company revenues on marketing.
- According to CMOs, companies that make more than 10% of their sales online spend more than 13% of their total budget on marketing.
- Businesses that lack internet sales only allocate 10.6% of their budget to marketing.
- Since 2023, B2B and B2C businesses have all consistently increased their budgeting.
- Marketing budgets are consistently shifting to digital channels — a trend that is projected to continue for the foreseeable future. Studies predict that digital marketing budgets will increase from 44% to 54% by 2024.
- The majority of B2B marketers spend 40% of their total marketing budget on creating content.
Remember that these percentages are guidelines.
Many companies spend over or under the industry average marketing budget depending on their unique business goals and strategy. Your business will likely do the same. Need a full plan rather than just a marketing budget?
You may benefit from reading our ultimate marketing guide.
The Ultimate Guide – How to Create Marketing Budgets
Many small-to-medium-sized companies lose thousands of dollars every year by not optimizing their marketing budget periodically.
Ideally, a marketing budget analysis should be performed every quarter or at the very least on an annual basis.
If this doesn’t occur, it can result in dollars spent targeting the wrong demographic, investment in the wrong kind of ads, and lower productivity.
On the other hand, this may lead to your marketing staff trying to implement a recycled version of your last plan.
If this isn’t part of your marketing goals and strategies yet, it’s never too late to implement them.
What is the best place to start? Your digital marketing budget.
Aspects that Impact Your Marketing Budget
Creating a customized marketing budget requires an in-depth analysis of your company’s requirements.
One of the biggest factors that impact how much you spend on marketing is the age of your company. In other words, how long you’d had your business open.
Here are some tips to help create a digital advertising budget based on the age of your company.
Marketing Budget Recommendations for Young Companies
If you own a new company, say, 1 to 5 years old, then you need to be more energetic and competitive in your budgeting plan for marketing.
You are competing with older, more established businesses. By investing more in marketing you increase your chances of funneling clients away from the competition and to your business.
For young businesses, you should invest 12 – 20% of your gross revenue into your marketing budget.
This should be spread out across PPC, SEO, social media, email campaigns, and other measurable forms of content marketing.
Marketing Budget Suggestions for Established Companies
Businesses that have been around for 5 or more years should invest less on branding and similar aspects because they already have an established brand presence.
The marketing spend of these businesses should be distributed differently.
For older companies, it’s important to invest in improving conversion rate optimization. Again, this should be applied to multiple channels, which is part of what your marketing budget will help determine.
Our team of digital marketing experts can help you create a sustainable marketing budget that includes high-impact elements to help jumpstart your small company’s finances.
Benefits of Setting a Budget for Your Marketing Campaigns
Creating a budgeting plan for your marketing strategy can bring many benefits to your business. These include:
Creating a Sustainable and Predictable Business Model
Business owners struggle with a huge number of challenges, but uncertainty may be the worst one of them all.
By creating a budget for marketing, you’ll be able to track expenses and make projections based on the performance of your marketing machine.
This allows you to focus on the areas that provide sustainable growth and develop a predictive model that gives you accurate projections of your finances.
By knowing an accurate projection of your performance, you’ll also be able to make adjustments to your strategy based on how well your campaign performed early on.
Guides Your Business Decisions
Increasing order sizes, changing marketing approaches, and developing additional services are all decisions usually taken on a reactive basis.
By developing an effective budget for marketing, you can make smart decisions ahead of time. It will help prevent issues like stock shortages and losing competitive advantages.
As part of your marketing budget creation process, you should analyze past performance and learn about your potential customers to determine the type of results your strategy may yield.
Here are some of the types of ads you may include in your budget and different strategies to help generate leads:
- Facebook Ads and other social media ads
- Google Ads
- Other forms of paid online advertising
- Influencer marketing
- Video Marketing
In addition to logistics, the information you get will also help improve your marketing and sales mechanisms as well as the interaction between the two.
Allocates Resources to High-Impact Areas
Visualizing how your resources are spent will help ensure that they are invested in marketing channels that have the most impact.
If you notice most of your marketing resources are going into outdated methods, you can make changes and ensure that you allocate these to inbound strategies and other trackable mechanisms instead.
This means that your marketing dollars will be spent on areas that increase your revenue.
Tracks Your Marketing Budgets
One of the most obvious benefits of any budgeting plan is that it allows you to track where you spend your money.
In addition, online marketing provides the ability to further trace your resources. This determines, in part, how well your company performs from a financial and efficiency perspective.
Unfortunately, many business owners see marketing as the most expendable part of their operation.
The reality can’t be more different.
After all, companies need clients to stay in business. If done properly, your marketing should consistently reel in more customers.
Instead of tracking your finances and looking at marketing as an expendable practice, include it in your core operating costs and watch it lift the rest of your company.
Promotes the Development of Structured Departments
The only way to successfully craft a budgeting plan for your marketing is to have structured departments in your business.
Even if they are only made up of one or two individuals, it’s important to establish units in your company.
This will help you understand how these affect your marketing spend and what you can do to keep marketing costs at a minimum without compromising performance.
Allows You to Accurately Calculate ROI
Calculating the real ROI of your company’s marketing efforts is impossible without creating a budgeting plan.
To determine the return on your investment, you have to take into account all of the expenses related to your marketing.
This means that you have to keep track of how much you spend on every activity.
With a marketing budget, you’ll already have most of the information you need. So, you simply have to adjust for any changes you made and use the final number to determine your ROI.
Keeps You Focused on Your Goals
It’s easy to get distracted by last-minute ideas and new marketing gimmicks, but the results are rarely as good as your original plan.
If you have a budget to help hold you accountable for your actions, there’s a much lower chance you’ll be willing to invest in activities that have a low chance of yielding positive results.
Compartmentalizes Your Expenses, Income, and Savings
All companies have to keep track of their finances, regardless of size or industry.
Your marketing budget will help maintain close tabs on expenses, income, profits, and savings by working on each one of these separately.
A well-thought-out budget should include short and long-term milestones for income measurement as well as near-exact expense projections. This gives you the data you need to make accurate projections for the future.
Works as a Thermometer for Your Business
When creating a budgeting plan for your business, you’ll get a real feel for how well it’s performing.
This is the reason why many business owners use this practice as a thermometer for their company.
If you’re able to easily afford all of the marketing tactics you need to implement, it’s usually a sign that your company is doing well enough to think about expanding.
Gives Your Company the Ability to Make Extra Money
By taking the time to develop a budget, you’ll be able to figure out which parts of your marketing are worth investing in and which ones should be discontinued.
For instance, you can decide to invest in website forms and other tools that help collect names, emails, and other pieces of information from your clients.
This will help you invest marketing money into areas of higher impact. Which, in turn, gives you the ability to make more money through your marketing.
Then, you can decide whether to adhere to the average marketing budget for a small business in your industry or take a more personalized approach.
Budget for SEO and Other Digital Strategy
Content and SEO marketing work exceptionally well because both of them aim to attract higher volumes of organic traffic through engaging written pieces.
With this in mind, inbound marketing is a more holistic approach that leverages SEO, content, and additional channels to boost site performance.
Working on your overall content plan along with your SEO content writing strategy can help ensure that all of your efforts complement each other and contribute to your long-term success.
But how should you budget for SEO and inbound marketing?
With companies requiring a unique mix of marketing channels, most small business owners need to analyze their distinct requirements. This will help them build a better plan for actual spending and adhere to it in the long run.
If you feel like you need help figuring out your ideal marketing spend, schedule a Discovery Call with us. We’ll be glad to help.
Get a Custom Marketing Strategy for Your Business
Creating a digital marketing budget is a necessary step if you want to get more from your advertising dollars.
You can use a marketing budget template or work out your investment plan from scratch, but make sure to create a blueprint that includes every marketing tactic.
Are you still a little confused about how to make a marketing budget plan?
Contact our team of professionals today, and we’ll create a custom marketing plan that boosts your advertising ROI and increases sales.
Our marketing team has been helping large and small businesses for over 10 years and has the expertise and resources necessary to fine-tune a marketing strategy for your business.
For even more details check out Fannit’s B2B Sales and Marketing Playbook