Do you want to know how to set a marketing budget to promote your business?
For starters, you need to keep in mind that this investment has a high potential for returns — as long as you use the money wisely.
For each company, there is an ideal value to distribute between relationship actions, advertising, digital marketing, branding, and whatever else works for your business.
So, let’s find out how much you need to get your marketing off the ground.
Read on and learn to plan your spending in detail.
A Marketing Budget Requires A Plan
The marketing budget is the document that aligns your dissemination and promotion strategies to the reality of your finances.
That is: it is the conversion of your marketing plan into numbers.
Therefore, you need prior strategic planning to arrive at these values and estimate your expenses with maximum precision.
It is worth remembering that each company needs to adapt the marketing budget to its needs and revenue, allocating the ideal percentage to its objectives in each phase.
Examples Of Marketing Budgets
To better understand how to develop a marketing budget, there is nothing better than checking out some practical examples.
See how different types of businesses define their spending.
Startup marketing budget
The marketing budget is critical for startups, especially in the acceleration phase, when you need to acquire as many customers as possible.
However, most of these companies don’t have a lot of money available at the beginning.
For this reason, startup marketing budgets follow the “do more with less” line, using growth hacking techniques — marketing focused on growth and innovation — to use resources creatively.
Therefore, rather than guiding their budgets by revenue percentages, startups tend to decide on spending with a focus on short-term goals (e.g., increasing customer base by 40% in six months), and often include hours of work on the account.
In addition, its investments are focused on low-cost strategies and wide-reach potentials such as content marketing, viral marketing, referral marketing, and social media.
The marketing budget of a large corporation
The marketing budget of a large corporation is much more complex and crosses variables such as historical data, objectives, comparison with the competition, and percentage of revenue.
In fact, in many segments, there is a percentage standardized by the big players.
With the fierce competition for leadership, global companies need to follow market references and invest more — and better — than competitors.
In addition, the more consolidated the company is, the greater the budget for loyalty and retention actions, instead of focusing on customer acquisition.
The Marketing Budget For A B2B Company
In B2B (Business to Business) companies, the marketing budget is usually lower: between 6 and 7% of the revenue against 9-12% of B2C companies, according to the Deloitte study.
This is because these organizations do not need to invest in mass media and focus their budgets on content marketing actions, corporate events, and highly targeted channels.
In addition, long-term relationships with business customers reduce the need for customer acquisition and make the marketing budget more predictable.
How To Set A Marketing Budget
Now, we come to the practical guide on how to set your marketing budget.
1- Know The Audience
The first step, considered the most important, is to know the target audience well. I teach that, when creating a campaign, you must define whom it will “talk” to. You need to know how old your audience is, where they live, what they usually read, what sites they visit constantly, what their average income is, and any other information you can get will be helpful. For me, this data is essential to start designing the persona, that represents the real target audience. This is, by the way, also the first stage of Inbound Marketing, which is one of the great trends in digital marketing.
2- Understand The Product
The second step is to pay attention to the product or service, which needs to be very well understood. Ask yourself what its benefits are, see what it favors, and also how it works, as this information, together, will be the gateway to all marketing channels. Nowadays, there are many companies, which carry out marketing campaigns without fully understanding the product or service they sell.
3- Discover The Pain
Step linked to number one, this one requires knowing the pains and desires that your target audience has. Why would these people buy one of your products? What are they feeling on their skin? Knowing this, report the answers to the transformations that your product can cause.
4- Design A Strategy
After outlining the scenario for the product and its audience, the secret is to start designing a strategy. To do this define which are the possible channels to be attacked first. One of the main processes is to see in digital marketing short-term strategies, such as AdWords and Facebook Ads ads and spaces, separate from medium to long-term strategies, such as Inbound Marketing and SEO.
5- Evaluate The Results
Once you’ve decided what to do first as a strategy, it’s important to measure the results with Google Analytics or other tools. I think the ideal is to have the so-called “war budget”. This amount is the amount of investment in marketing, which in the first month should be aimed at testing different channels and seeing which one has the best return.
These tests will indicate which strategy should be allocated more money. As a result, you decrease your investment where you had a lower ROI. The “return on investment” is calculated based on what gives the most results. Even so, it is important to highlight the importance of not “zeroing” any strategy, as they complement each other.
6- Constantly Improve
With results analysis, the last step of an effective marketing plan is to make continuous improvements. That means switching between channels, investing more in one, taking a little out of another, or even investing more heavily in all channels, to see if they keep up with the performance, they were bringing you. Sometimes you get a very good ROI with Ads, but when you put in more money, it doesn’t follow the same proportion, and that makes the strategy have to be re-evaluated.
Follow the steps to get your budget right.
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