Once you’ve created your marketing strategy, it’s time to start crunching the numbers and developing a marketing budget.
We are a digital marketing agency, and our business is helping other companies to market themselves, but we also need to do our own marketing and promotion to build our brand and generate leads. We have had years of experience developing marketing budgets, with plenty of trial and error along the way. We have come up with a way of planning our spending so that it is both carefully researched and structured, and flexible enough to accommodate adjustments further down the line. The onus is on us to practise what we preach, so we decided to offer this sneak peek at our own marketing budget and give you an idea of how we build it.
A sales funnel is “a step-by-step process that allows you to bring a potential customer lead one step closer to your offer and a buying decision through a series of marketing actions.” For you to draw up your budget, you need to be thoroughly familiar with your sales funnel and its various steps and stages – as well as the cost of each of them. Before you start allocating funds to any marketing tactics, you need to go back and analyze your sales funnel carefully.
Having analyzed your sales funnel, you now know what it costs to generate each qualified lead. Now you need to take a look at what it costs you to make your marketing strategy operational. This question can be rather intimidating to answer because there is much to consider. You need to look at your in-house team and think about their aptitudes and capacities. Ask yourself what is more cost-effective if kept in-house and what needs to be outsourced. There is plenty to unpack, but the exercise is well worth it.
In case we didn’t make this point clear in the previous series, we are happy to repeat it: everything in marketing comes back to your business goals. You should have devised your strategy on the basis of these goals, and now you must allow it to inform your budget as well. Never make the mistake of coming up with an arbitrary number and saying that is what you’re prepared to spend on marketing. We explain how to make each individual cost, each line item in your marketing budget, link back to a specific business goal.
Marketing has long been regarded as a grudge purchase by many businesses. However, we always tell our clients that it is a mistake to think of marketing as anything other than an investment that will bring returns in the form of more leads and sales, greater public awareness of your brand and increased market share. The only reason marketing sometimes doesn’t work is that your focus is on tactics instead of coming up with a digital marketing strategy informed by your business goals, and executing a tactical plan in line with that strategy. If you change your approach, you will see the rewards.
As you go about drawing up your budget, stop and think about where you are as a company. Are you in a period of growth, or are you taking a step back to plan your next move? The specific growth stage your company is experiencing must inform your budget. Not only the total but also the amounts allocated to various tools and tactics will all depend on your growth stage. Using examples from our own business and some of our clients, we explain how to adjust your budget based on your growth stage.
Marketing techniques and tactics change frequently, along with the philosophies and moods of the marketing arena as a whole. As you plan your budget, you have to start from a place of being fully aware of the trends as they currently stand. You must also be able to make reasonable projections as to how they might change in the future. You also need to consider the costs involved with capitalizing on the latest trends, because each new tool will require training and time for your team to master it.
If the COVID-19 pandemic has shown us anything, it’s that life and business can take sudden drastic turns that we have no way of anticipating. As a business owner, you need to be ready to shift course when these changes take place. People often think of a budget as something that’s set in stone, but in an unpredictable world, it can’t be. You need to be able to reassess your budget and reallocate funds as necessary. You might have to drop tactics that have been working well for you and start using new ones. Make your budget flexible so you can make these changes when you need to.
Major projects such as new websites or brand new strategies have to be budgeted for separately, but still factored into your overarching long-term budget. As you budget for these large upfront costs, you also need to think about how you’re going to leverage them and amortize them over time. Big projects like this will yield returns over time, but they will also involve maintenance. For example, once a website is up and running, you will need to refresh the content and update the plugins on a regular basis. Your digital agency should always be upfront about both the initial investment and the long-term maintenance costs, all of which you will need to factor into your budget.
Once your marketing strategy is settled, you will decide on what tactics and channels you are going to use to implement it. Your budget should include each of these as separate line items, breaking down your strategy into its components and assigning a value to each of them. This strategic process allows you to hone in on the tactics that really work for your business, and then you can set a tactic-by-tactic budget. Going back to your business and marketing goals will give you an idea of what resources to allocate to each one of the channels you’ve selected.
The story does not once you finalize your strategy, set up your budget and start implementing your chosen tactics. Once your strategy is operational, you need to assess it and see if it’s working. Give it some time – about a quarter or so – and then take a look at the data and decide if you are on the right track. You can never guarantee that your strategy is going to go as planned. You may need to reduce spending in one area and raise it in another. You may have to change tactics halfway through. In order to be flexible and responsive, you also review and assess regularly.
Our final point about marketing budgets is a familiar one to buyers of any products and services: watch out for hidden costs. There are certain marketing costs that people tend to miss and leave out of their budgets – until they’re suddenly hit by them a couple of months down the line. A good marketing agency will always be upfront with you about potential latent and delayed expenses, but it also pays to know what questions to ask. We take a look at some of the costs that companies most often overlook as they are drawing up their budgets.
In this bonus episode, we speak to influencer, Jasmin Shannon of Lemons for Days, about how to include influencers in your campaigns – and set a budget aside for them. Paid media is not a new idea – it has been incorporated into marketing and PR strategies for a long time. Influencers are essentially the latest iteration of paid media and their work should be treated as such. They are an investment well worth making, as they sharpen your focus and allow you to make a significant impact on a niche audience.