Marketing is a key part of your business strategy and long-term success, so it should receive proportionate attention in your overall budget. But it’s so much more than just assigning a lump sum of money to be spent on ads.
A great budget should be informed by strategy, carefully outlined, and totally actionable. We’ll show you how to create a marketing budget that helps you meet your small business goals—whatever they may be—in 8 steps.
How to create a marketing budget
1. Start with an audit
It’s easy to just look forward, excited about the future, but if you want a truly successful marketing budget, what you need is perspective. Before you do any adjusting of your marketing spend or submitting budget proposals to your executive team, you need to lay out your baseline.
Take a deep dive into your existing budget, marketing plan, and marketing spend. Consider the following questions:
- What are you currently spending in your marketing budget?
- Do you have existing marketing software subscriptions?
- What are your fixed costs in marketing?
- What are your variable costs in marketing?
- Have we outlined discretionary expense examples?
- Who are our regular or authorized marketing department spenders?
- Have we stayed within marketing spend goals or budgets?
- What are our current goals in marketing?
- Do we have an emergency fund?
As part of this audit you might also do some research to see what other companies or marketing departments that are a similar size are spending on an annual or monthly basis.
2. Run analytics
Good analytics help to drive marketing strategy, so start with gathering the data about each of your marketing efforts and platforms. Even if you feel like you already know this information, record it in a database or chart of some type so you can track your progress.
The performance of a particular campaign or platform will help you to identify successful strategies for your business moving forward and will help you calculate ROI on different marketing tools you’re employing. Don’t forget to use non-marketing data, such as current customer demographics and sales statistics.
3. Determine strategy
Now that you know what you’re doing and how you’re doing it, you can begin outlining your marketing strategy. Take direction from your company mission and overall company goals or OKRs, and then grow more specific as you get down to a granular level for your marketing plan.
For example, if one of your company missions is to provide your premium at an affordable price point. With this guidance you might make goals surrounding the way you reach customers on a budget. As you get deeper into your marketing strategy, you might create a goal to expand your customer-generated marketing on social media.
A key part of your marketing strategy will be defining your target audience. You may have completed this exercise as part of your original business plan, but you should approach it again with fresh eyes. This will help you drill down the most important characteristics to look for, which will guide marketing strategy.
4. Create goals
A good marketing strategy will automatically provide a rough outline of your goals. As we mentioned above, you might decide that your business strategy is largely focused on cyclists on a budget, which means your marketing plan will target those looking for deals and discounts on quality products. You’re probably already coming up with ideas for at least one marketing goal in that vein.
As you create goals for your marketing team, be sure to consider annual, quarterly, monthly, weekly, and daily goals, where relevant. Your goals might also include firm metrics, such as conversions, or revenue targets.
5. Choose distribution
We’re almost there, but we still need to narrow our focus to create a truly powerful marketing budget. When you’re clear on your marketing strategy and goals, you’ll need to make decisions to prioritize distribution in your marketing channels. The fastest way to burn through an ineffective marketing budget is to throw all of your money across every channel and social media platform indiscriminately.
Instead, you should choose a few channels that will be the most effective for your target audience and marketing goals. Take note of your analytics—what’s been working most successfully so far? Then you can choose which distribution models will help you meet your goals.
Hint: Organic social media is a free and important option that can help maximize your digital marketing budget.
6. Calculate annual budget
The starting line for marketing budgets can be determined in a variety of ways. For some businesses, the marketing budget is handed down by the executive team with little to no discussion. Other executive teams may request budget proposals from department chairs, and if you come armed with the work you’ve done in steps 1-5, you can request a specific budget with measurable outcomes.
No matter what your annual marketing budget may be, we recommend keeping your eye on the global market. The Gartner CMO Spend Survey found that 63% of CMOs expected marketing budgets to increase in coming years. Track your budget and revenue so that you can request the appropriate increases in coming years.
7. Identify free resources
You have your strategy and goals, and now you have your annual marketing budget. Now what? We are huge cheerleaders for free finance tools, so at this juncture we recommend looking into the free resources that you can use to keep more cash in your small business marketing budget.
Some popular free marketing tools include:
- Google Analytics
- Google Trends
- And more
If you can stick with free tools, or find free options to replace your paid subscriptions, you can maximize your marketing budget.
8. Break down your budget by tool & timeframes
Operating from an annual budget is a recipe for overspending and mismanagement. To create an actionable budget, you need to break down marketing activity by quarter, by month, and possibly even by week.
You may need to front-load your budget to accommodate large annual purchases, such as yearly subscriptions or license renewals. Other subscriptions might be on a monthly recurring cycle, so you’ll factor that in. Depending on the distribution you use, you may need to break down your marketing budget into various digital marketing, content marketing, channel marketing, website, event, and other sub-budgets within your overall budget. Here’s a favorite marketing budget template you can use to get started.
As part of this budget breakdown, you might also consider assigning budget owners, approved spenders, and a cadence for reviewing marketing team spend against budgets. The last thing you want to do is to adopt a set-it-and-forget-it mentality, so be sure your expense reporting is clear and effective.
Your marketing budget made better
In our digital age we need marketing that is strong, effective, and catered to your target audience. You can make it happen with an actionable marketing budget and strategic goals that will take your business to the next level.
See how CrewTracks got a hold of their marketing budget with a free expense management solution. Read the story.