The Importance of a Marketing Budget
This is the time of year when budgets are being finalized and the importance of a marketing budget needs to be understood by the marketing and finance department while writing budgets. Many companies ignore the importance of having a marketing budget. Your team creating budgets for the year 2023 must keep in mind that a marketing budget is crucial for the overall success of your business as it takes into consideration, branding, communication, and lead generation that indirectly affect your bottom line in a positive manner.
Marketing is a platform or activity that indirectly drives sales for your business. It helps in building awareness and supports your sales team. In the long run, helps in increasing revenues resulting in profitability for your business.
Marketing is a fundamental ingredient for business growth and profitability. Therefore, whether you have a marketing team, a marketing budget is a must. Many companies fail simply because they do not allocate enough money for marketing. Rest assured, marketing as a business activity if budgeted right, will bring back solid returns
Is marketing an expense?
Your brand is an asset and marketing helps you increase brand value. Choosing to cut down on marketing and treating it more as an expense will affect your brand and of course your top line. It is said, “You need to spend money to make money” Saving on a marketing budget is more an expense as it affects your business in the long run.
Roger, the financial controller took a business decision to cut down his marketing budget and use the same for other expenses. In the bargain, he ended up spending more. The lack of budget in marketing had a direct effect on revenues.
What does a marketing budget include?
A marketing budget needs to focus on
- Branding and building awareness
- Marketing communication
- Marketing tools and software that ensure efficiency in communication and engagement
- CRM tools
- Promotions – both Digital and Traditions
- Website development, upgrade,
- Search Engine Optimization
- Content development
- Social media management
- Incentives to the marketing team
- Reputation management
- Events Participation
You can choose from any of the above activities that are relevant to you and add other that is related to your business.
How much would you budget for marketing
While you are the best judge to decide on your marketing budget which depends on whom you wish to reach, and what platforms you wish to use, and the timelines, you need to also keep in mind that your top line is directly propositional to your marketing investment and activity. Having said this, marketing is not a magic wand for your business to enjoy immediate returns. You need to be consistent with your marketing activity, monitor, measure, and manage for success.
It is generally said that a B2B company must provide a minimum of 3% to 6% of their revenue while B2C needs to budget 6% to 10% of their revenue for marketing.
How to Budget
Set Clear Goals
Your goals need to be SMART: Specific, Measurable, Achievable, Relevant, and Timebound.
- Is your aim to increase website traffic, build your brand, increase online sales, or any other?
- What is your target audience and what percentage of the target audience do you wish to reach
- What message do you wish to convey?
- What results are you expecting from your marketing activity
- What is the timeline to achieve the desired result?
- Your investment and expected ROI?
- Check marketing spending vs results in the past 3 years.
- Analyze what went right and what went wrong in the past.
- Look at your current spending for each line item and ask whether you need to change the amount to match your growth plan.
- Get input from your sales team on how to better target marketing spending.
- Benchmark your spending against industry averages to see how you compare with similar businesses.
- Speak regularly with customers to ask them how you’re doing in your product offerings pricing and value you bring them.
Consider your potential costs
Plan your cost for each marketing activity
- Website development, upgrade
- Social media
- 3rd party Software and CRM
- Photography, Videos
What gets measured gets done
Every marketing activity needs to be SMART and supported with analytical reports that can be tracked to gauge the effectiveness of the marketing spend. Some examples are – Audience reach numbers, website traffic, leads generated, campaign reports, and more.
Have you as a marketing specialist been tracking and analyzing reports? If not, start now. We at Nuance Digital can work with you and provide different types of reports that can be generated to ensure your campaigns are running efficiently.
All digital marketing campaigns should be provided with “Key Performance Indicators” (KPI)that help you understand your spending vs returns or results. We provide KPIs to all our customers who use our expertise to promote their products or services.
For ex: if you wish to generate leads through Google Ads, you need to know how many people would see your ad, what is the click-through rate, what keywords to be used, and if it can get you the required results so that you know where you are betting your marketing rial.
Revisit your marketing budgets, follow-up, and guide:
Regularly monitor your metrics and results vs actual spending. Make needed adjustments based on the effectiveness of various activities. It is very important that you frequently revisit your marketing budgets. Find how your activities are faring and measure ROI. If some of your goals are achieved, use the excess investment for other marketing activities. The analytics will help you with a real-time check and ensure you are placing your marketing Rial in the right place and for the right activity that generates returns.
Your marketing plan is less unlikely to hit its goals if you don’t give your team active guidance. You will need to micromanage the team when it comes to specific tasks. Talk to your sale team for feedback and market intelligence. Debrief with the management. Your marketing team needs share your vision, understand the objective for a successful marketing activity through the year.
At Nuance Digital, we understand marketing well and have an experienced team that can support you in your marketing efforts. Nuance Digital is a Qatar-based digital marketing agency that helps grow businesses through marketing. You can call us on 00974 66881424 to know more.