If you've found yourself in the whirlwind of marketing budgets and are wondering where to start, you're in the right place. We get it; it's like trying to find your way through a maze with too many twists and turns. But fear not! In this short and sweet guide, we'll break down the essentials of marketing budgets, sprinkled with a dash of flair.
So, what exactly goes into a marketing budget? How should they be structured? What do you need to do to ensure they aren’t just built and then forgotten. Here we share some thoughts about navigating the maze and getting the most out of whatever budgets you find yourself with.
Where to start
Before you can work out how best to spend the money, you’ll need to fully know the audience you’re trying to reach. Where do they “hang out”, what’s going to attract them to you, what does their buying journey look like. These elements are going to impact on how you use funds to reach opportunity. If you’re new to the job or are building budgets for the first time, make sure you conduct enough research to understand some basics. Build from there and be sure to revise thinking and approach as you go.
What's a good amount for your budget?
Now, the million-pound question: how much should you chuck into the marketing pot? Well, it's not a one-size-fits-all scenario, but here's a nifty starting point, especially for you B2B players.
Look at your annual revenue and use around 2-5% in your marketing activity. If you're a sprightly start-up or aiming to conquer the market then perhaps you'll go far higher (especially if pre-revenue).
Align budgets with marketing goals
Once you have the budget you’ll need to clearly define your marketing goals before allocating. Whether it's brand awareness, lead generation, or sales conversion, each goal requires a unique strategy and budget distribution. Aligning your budget with specific objectives ensures that every dollar spent contributes directly to your desired outcomes.
How to allocate the money
A good rule of thumb is to use the 70-20-10 split. In this approach, the allocation of your marketing budget is structured as follows: 70% is dedicated to established strategies (the stuff that just works), 20% is earmarked for innovative approaches (expanding on the established and pushing boundaries), and the remaining 10% is designated for experimental strategies, helping to uncover opportunities for future growth. This is just a ballpark so feel free to experiment and find your levels.
The channel matrix
Think about the business objectives and how each of the channel play their part to deliver the outcomes you need. If more leads for sales is key, then fund the pipeline building activity. Perhaps you want to support new product launches, then creative and video production might take up a high percentage of spend. Looking to raise your brand awareness, the bust open the piggy bank and get spending. Whichever your objectives are the channel mix will be vital in hitting the goals.
Budgeting resource - internal vs. external costs
Often teams might lack a specific skill set, or you need support for a project or campaign, so this is where you’ll need budget to fund additional help. You might decide that there’s a role to fill within the business and use budget to bring new talent, alternatively using specialist third parties, such as freelancers or agencies, might be the way to go. Either way these will require planning and budget allocation so be prepared to include a line to cover.
The right tools for the job
The marketing department have become more and more powerful when it comes to the traditional held IT role of software purchase. From a CRM system to communication tools the marketing tech stack will need paying for and it’ll most likely come from any budget you’re given.
Be sure to building knowledge
Research, events, training should all have places in the budget. It might seem obvious to ensure you truly understand the audience, but you’ll be surprised how many budgets fail to acknowledge the need for research and continued learning when it comes to the customer. Perhaps equally as important is the allocation of time and funds to help your teams develop and grow. A little can go a long way so you won’t need to break the bank to help teams, but they will love you for it.
Review, revise and repeat
The marketing budget isn't a one-time deal. Regularly review your performance, learn from the past, and refine your strategies for future conquests. How often you do this is partly up to you and the business. As the owner of the budget, you should be on top of the numbers, activity and success so this might mean weekly reviews. At a minimum the team needs to be asking are things ok monthly. This gives you a close ish view of progress and allows you to assess and, if needed, reforecast to align with then vs. now.
A thing to note - make sure you spend the money
There’s an oddity within marketing, budgets, and finance. If, come the end of the budgetary year, there is unspent money the finance team will most likely take it back. What’s more, when they come to allocate next year’s budget, they may well assume you need less and therefore reduce what they give you. For many this means spending on project that might not give you a good return become more attractive. To avoid this happening make sure you effectively track and measure the difference between planned vs. actual. This will help ensure you don’t have too much of a surplus come the end of the year and have to make “odd” decisions.
Become friends with the finance team
The best finance teams work with marketing to help build, set objectives and manage spend to ensure they have full visibility on decisions and investment. By working closely with the finance team, you can better align expectations and work towards the best outcome for both.
When it comes to navigating marketing budgets, a holistic approach is crucial. Know your buyer's journey, align your budget with goals, strategically allocate funds, diversify your channel mix, balance the need between internal and external resources, and regularly revise your strategy. By following this framework, your marketing budget becomes a dynamic tool for sustained growth and success and more importantly you don’t get caught in the never-ending maze of numbers.