So much advice about marketing budgets out there starts with the bottom line.
One Entrepreneur.com author tells new companies to budget 12 – 20% of gross revenue on marketing. Another, this time from Forbes, says that you cannot begin to budget for marketing until you’ve subtracted normal business expenses first.
But even if these are good rules of thumb, money’s the wrong place to begin.
To successfully create your marketing budget, you must start with your audience.
Who are your primary audiences? Where do they live? How do they view the world? What are their top desires and concerns? Household income? Level of education?
Here’s the biggest question that will affect your marketing budget: Where do they get their news, entertainment, and reviews?
If you have developed personas using strategic questions like these, then you’ll have a good idea of what marketing channels will work best for your audiences.
If your audience is a high school student, then you should budget high for social media, video marketing, online advertising, and PPC while keeping your print budget low, focusing on small print collateral like brochures or pamphlets.
But if your audience is parents, your print and digital marketing budgets will be fairly even. And for mature audiences, you’ll need to invest more on print pieces and less on social media.
The audience drives all other decisions, so start there. If you don’t have marketing personas yet, go here and get started within 10 minutes.
Now, on to the money, right? Not yet…
After you’ve reviewed your primary audiences, take some time to review your organization’s goals and objectives.
After starting with your audience first, now it’s time to think about what your organization wants to accomplish and how your marketing plan supports those goals.
What are your organization’s key performance indicators? And what metrics will you be tracking to show how your marketing efforts are making progress on those KPI’s?
Your organization’s KPI’s will determine whether your marketing campaigns need to…
- Raise brand awareness,
- Strengthen or clarify your brand,
- Increase audience engagement,
- Drive revenue or recruitment, or
- Cultivate gifts for your development team.
All of these strategies require a different set of marketing tools and consequently, affect your budget.
Without starting with your audience(s) and then clarifying your organizational and marketing goals, creating a marketing budget is not much more than a numerical guessing game. But when you’ve put in the time for these two steps, you’ve got a solid plan that can justify a solid budget.
Once you have your audience and objectives in place, now it’s time to create your marketing budget.
On a sheet or Excel workbook, you’ll want to list the marketing activities/campaigns you’ll employ to hit your objectives, report on the KPI’s, and reach your audience(s). Then, you’ll need to list all of the expenses that will be involved in deploying your campaigns throughout the fiscal year.
At this point, it’s important to look at marketing tactics that bring the highest impact for the lowest investment.
Not all marketing tactics are made equal. Look for marketing activities that bring in the highest results from your audience for the lowest cost.
I like to use a matrix to think through which marketing activities will bring the highest return on the cheap.
The Marketing ROI Matrix
|Low Impact/High Investment
||High Impact/High Investment
|Low Impact/Low Investment
||High Impact/Low Investment
Use the matrix to choose the strategies that fit your current marketing budget and strategic plan.
While I love the feeling of getting the highest impact for the lowest cost, there really is a time to invest higher amounts of funds into certain strategic marketing ventures. And you’ll need to grit your teeth and make the investment from time to time.
However, if you’re just starting out with your first strategic inbound marketing strategy, I highly recommend that you stay in the High Impact/Low Investment quadrant.
No need to move on to High Impact/High Investment quadrant until you’ve firmly established traffic, clicks, or other KPI’s using the more economical, yet powerful, strategies in the High Impact/Low Investment quadrant.
In fact, without these “cheaper” strategies in place, the high investment strategies will not be as fruitful for you.
Once you’ve got those two quadrants covered in your budget (and if you’ve got more to spend), I recommend that you look at the Low Impact/High Investment quadrant and consider some of these strategies. While being “low impact,” these activities do well in creating awareness of your brand, which will eventually lead to greater results in the other marketing efforts you can actually measure.
So, now that you’ve firmly thought through 1.) who your audience is, 2.) what your organization’s priorities are regarding marketing, and 3.) what marketing activities will bring the most impact for the least amount of money, you’re ready to start adding up the dollars you’ll need for it all.
And by going about it this way, you can confidently justify each expense you’re planning to make.