In today’s blog, we cover the importance of budgeting for marketing…
Don’t worry, you aren’t the first and you won’t be the last. On many occasions we’ve sat in a meeting with a new customer talking through what they want to achieve for their business moving forward. Dreams, goals and ideas have been exchanged with enthusiasm, with the anticipation of collaborating on some exciting projects clearly palpable. “What is your annual marketing budget?” we’ll ask, as a million ideas whizz through our minds as to how we can help elevate this business to the next level.
“We don’t know. We haven’t really considered it”.
Ah, right. Of course, it’s not really through any fault of their own. Many of our customers have thousands of things to concentrate on when running their business, whether it’s operations, sales, customer service or finance. Marketing takes up 100% of our day. It takes up 5% of theirs. Even then, it’s usually an afterthought. Perhaps it should take more. Why?
We all want our businesses to be successful. Our staff want to be part of a thriving company. Whisper it quietly, but we all want to be profitable (is it taboo to say that?) as it’s ultimately how we all remain in a job. To do this, a company needs to be able to clearly take it’s products and services to market, communicating with it’s customers exactly why they should purchase from them. This needs to be through the right channels that can open up doors to the right audience. Therefore, it’s critical to have a comprehensive marketing strategy that is fully budgeted for. Let us explain.
Why is a marketing budget important?
Before we go into any more detail, let’s look into what a marketing budget is and why it’s even important. Naturally, we want to get our products and services out to our customers. We want to drive brand awareness, build user engagement and increase our reach introducing our company to more and more prospects. As with anything in life this costs money and, as with all businesses, it needs to be spent wisely.
Budgeting for marketing should be of importance to any business. It forms the basis of any marketing strategy, informing your company of the amount of money it has to use and how it should be spent. It is essential in helping any business to plan a comprehensive, profitable strategy moving forward, enabling them to monitor performance and return on investment (ROI). Of course, it also informs effective decision-making to get to that stage. Without one, you’re frankly up the creek without a paddle (saying it politely). This runs the real risk of not knowing whether you’re getting a good return on investment and costs quickly escalating out of control. Not to mention a poorly executed marketing strategy of little value to the business. All avoidable with a well-planned marketing budget.
How much should you budget for marketing?
As a general rule, you should allocate between 5-10% of your revenue on your marketing budget, assuming your business is in a steady state. For those seeing these figures for the first time, we can appreciate that probably sounds like quite a lot. Yet it must be seen in the wider context that marketing isn’t a quick fix solution that can be adopted and shelved at any time, yielding results whenever you want it to. It’s a long-term investment in multiple strategic disciplines that, with the right level of care and application, will pay off over time. Of course, in some areas such as content creation, you may strike gold with a viral hit that quickly drives website traffic and sales. Other areas, such as SEO, will take longer to mature and come to fruition.
A pre-Covid CMO survey in February 2020 showed that on average, marketing departments worldwide anticipated 8.6% of their company’s revenue would be allocated as their marketing spend. The global pandemic then hit and you’d be forgiven for thinking marketing would naturally take a back seat as companies juggled falling budgets and plunging revenues. Surprisingly not. By June 2020, this had in fact risen to 12.6%, indicating an increased drive to maintain brand awareness and customer retention. It is tempting to cut back on marketing in such conditions. However, it is also evident that if you become less visible on the market, your competitors will take advantage.
What should you include in your marketing budget?
The best marketing strategies are the ones that consist of an all-encompassing approach to market, utilising different methods to reach their target audience. It’s important to identify who your prospective customers are and the best channels through which to reach them. Decision-makers and stakeholders will also want to know the associated costs, therefore it’s important to have identified these early on.
Of course, however you plan to reach your buyers, you’ll want any marketing activity to be clear, effective and engaging. To do this, you’ll need to bear in mind a number of factors including design, creation, analysis and the time invested. The following disciplines are areas to focus on:
- Website Development
- Search Engine Optimisation (SEO)
- Content Marketing
- Email Marketing
- Social Media Advertising
- Print Media Advertising
- Printed Literature
With any well-devised marketing strategy, you’ll be able to identify and prioritise the areas that increase exposure, brand awareness and customer reach. The importance of a marketing budget is that it simply allows you to plan how to fund these activities and measure your return on investment.
Dynamize Marketing can help
As you can see, effectively budgeting for marketing activities is of the utmost importance. Of course, no marketing agency can expect a client to approach them with an exact marketing budget accurately researched and allocated to a pre-devised marketing strategy. After all, we’re the marketing experts and that is why many come to us in the first place. Our qualified professionals at Dynamize Marketing are on-hand to carry out a full, comprehensive market analysis and tactical plan for our customers, helping them to identify areas where they can excel and propel their business to the next level. More often than not, this also helps them to develop a greater understanding of their budget and where it can be applied most effectively.
If you can come to the table with a rough figure, then of course that would be useful. However, we’re available to work with our customers in close collaboration to help them identify their budget and what activities they’re able to implement.
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