LET’S GET STARTED
- 1 What Is A Marketing Budget?
- 2 Why Is It Important To Create A Marketing Budget?
- 3 How To Create A Marketing Budget?
- 4 Tips For Creating A Marketing Budget
- 4.1 Understand Your Market
- 4.2 Build Your Marketing Strategy
- 4.3 Research Strategy Prices
- 4.4 Know Your Outside Costs
- 4.5 Have An Attribution Model To Measure Performance
- 4.6 Identify Your Marketing Goals
- 4.7 Choose Channels Based On Your Audience
- 4.8 Align With Your Sales Team
- 4.9 Find Your Monthly Marketing Operational Costs
- 4.10 Don’t Put All Your Eggs in One Basket
- 4.11 Be Aware Of Hidden Costs
- 4.12 Remember Where Your Priorities Lie
- 5 Here, Some Marketing Budget Example
- 6 You Are Ready To Create A Marketing Budget For 2022!
- 7 FAQs
Did you read that?
That’s how crucial creating a budget is. This applies to your marketing budget as well.
Without a marketing budget, you will have no idea where your money is going. You will just keep pouring your money into different marketing channels and it eventually loses your money.
Maybe your business too.
This is why you must create a marketing budget before you start promoting your brand.
However, if you are wondering how you can create a marketing budget for your business that keeps track of your financial journey, please keep reading.
In this blog, you will learn what a marketing budget is, why it is important and how you can create a marketing budget template.
So guys, grab your pen and paper to write down the ideas and be ready for an insightful journey you are about to start!
What Is A Marketing Budget?
It wraps all costs linked with the marketing aspects of your business, such as paid ads, hiring costs, marketing tools, maintenance expenses, etc.
Why Is It Important To Create A Marketing Budget?
Before you ask how to create a marketing budget you should ask why you need it. Here I’m giving you the top 5 reasons that will help you to answer the question :
- A marketing budget helps you to stay on the financial track. With a marketing budget, it would be easy to keep track of your expenses. This helps you know where to spend money and where not.
- Furthermore, how would you know if you are overspending or can still spend more on the specific strategy?
- The worst thing about not having the budget is you’ll just keep spending more and more nowhere and prepare your business to fail unknowingly.
- The budget also helps you to allocate funds in the right place. Yeah, a budget map will guide you to spend your money and resources on the right marketing strategy.
- Having a well-defined budget helps you to set realistic goals that move your business forward. After preparing the budget you will know how much you can save and where you can spend the saved amount.
How To Create A Marketing Budget?
Now that you know what and why of creating a marketing budget, let’s talk about how to create a marketing budget.
Tips For Creating A Marketing Budget
Understand Your Market
It is obvious.
Knowing where you fit in the market is the first and most important step to building an effective marketing plan.
You need to know what is your market, who is your audience, where they spend their time, who your competitors are, and what marketing tactics they are using in their marketing campaign.
Then you plan what you need to do to beat them.
This way, you will know what you need to do and where to spend your money to create an outstanding marketing budget.
Build Your Marketing Strategy
A crucial component of preparing a marketing budget for 2022 is to create a realistic marketing strategy.
A marketing strategy will give you an idea of what steps you will need to take to achieve a particular goal, and by which marketing channel you can do that.
This way you will be able to know the cost of every marketing step to achieve your business goal, and also this will help you with your “how to create a marketing budget” confusion.
Research Strategy Prices
By knowing the marketing channels you can easily have an idea about which channel will suit your marketing strategy and answer your “how to create a marketing budget” question. This way you can easily create an effective marketing budget for your business growth.
Whether you want to run your marketing campaigns on your own, or hire a digital marketing company, or hire freelancers, you need to know how much promoting your business on each marketing channel will cost.
Your marketing budget spreadsheet should be highly focused on how much each marketing strategy will cost your business.
First, you must decide how you are going to handle your campaign:
- On your own (In-house): If you are thinking of handling your campaign on your own, know that expenses are waiting for you in the forms of salaries, office equipment, and materials and stuff such as desktops and furniture. Along with this, you may also have to buy some tools and services to manage your marketing campaigns.
- Freelancers: Freelancers are specialized in a particular strategy or say few of them. Note that, if you hire a freelancer you’ll naturally pay on an hourly basis or per-project basis. The price may be higher as per the freelancer’s experience or the project’s length.
- Digital marketing company: Thinking to opt for hiring a digital marketing company? You will get everything in one place with tools and software, and you just need to pay them monthly to retain them till the project ends.
Knowing the costs of each strategy, you can easily work on your ‘how to create a marketing budget’ stuff.
Know Your Outside Costs
If you want to know how to create a marketing budget, start by knowing your outside costs.
Once you know what external or outside bills you need to take care of, you can automatically generate ideas about creating a marketing budget.
Your external costs may include:
-Product manufacturing costs
-Costs for running the business (electricity, other monthly bills)
Have An Attribution Model To Measure Performance
Without knowing which campaigns and channels are actually generating good revenue, spending money on business is a fool’s thing.
Yes, you read that right.
You need to define and set up tracking for your marketing channels, so you know from where you can generate actual revenue, before dumping your money!
Until you test and measure the marketing journey, you will really have no idea what will work and what will not.
Identify Your Marketing Goals
Without setting a destination, it’s not a good idea to start a journey. The same goes for creating a marketing budget. You need to determine your marketing goals. You need to see the bigger picture.
The first step of your marketing is to either create a sales funnel or direct sales plans that would skyrocket your gross revenue.
And, what’s more, marketing doesn’t generate good revenue overnight. It takes time. With that in mind, you might need to tweak your budget plan as you start deploying your marketing strategy.
That’s why you need to identify your marketing goals and be ready to tweak the budget for it.
Your marketing goals could be:
-Generating more leads
-Earning extra subscribers
-Promoting your brand
Choose Channels Based On Your Audience
This will give you an idea of where you need to spend your money more and where to spend none.
Understandably, you need to know your buyers and their journey before you allocate a budget to your business marketing strategy. This is really going to help you with your ‘how to create a marketing budget for 2022’ stuff.
Just don’t waste your money on marketing channels that don’t impact your target buyers directly.
Align With Your Sales Team
Creating a marketing budget isn’t only about the marketing team. Does it require input from the sales team too?
A good business marketing plan can be drawn out from the collaboration between the sales and marketing teams.
You need to ask your sales team what resources they need to boost sales. Listen to them and create your budget accordingly.
Find Your Monthly Marketing Operational Costs
Knowing your bill of monthly marketing operational costs is a great part of the play. You just need to write down your monthly marketing costs. This would give you an idea about how much budget you will need for the entire marketing journey.
For example, let’s say Incrementors has the following monthly marketing costs:
-$5 for an SSL certificate from Network Solutions
-$12 for the .com domain name
-$10 for website hosting
-$50 for marketing calendar
-$90 for Mention social listening
-$350 for Ahrefs keyword + Other SEO tools
-$150 for employee learning allowance × 5
-$35 for maintenance cost
-$6,400 on salary × 3
-$15,000 on paid ads (PPC)
In this example, Incrementors’ marketing operational costs for one month are- $22,102.
So for, let’s say, one year it would be – $22,102*12 = $265,224.
This helps us a lot!! And will help you too.
Don’t Put All Your Eggs in One Basket
Imagine you spend your 90% budget only on the SEO process (search engine optimization) and suddenly, Google changes its search engine algorithm.
You will lose your money.
And ultimately, you will lose your business.
It is dreadful.
This is why I quoted Warren Buffet “don’t put all your eggs in one basket”, which means don’t blindly invest your budget money only on a single channel.
Allocate your budget into different channels, so you can minimize the risk of losing your money.
Remember Buffet when you are going to invest blindly:
Be Aware Of Hidden Costs
One of the biggest upsides of maintaining a budget spreadsheet is that it helps you to avoid hidden marketing costs.
As a business owner or marketing manager, you may be aware of those end-of-quarter times when you freak out on “where did I spend all of the money!?” and start examining your marketing plans only to find out that there were so many hidden marketing costs you weren’t aware of.
Being aware of this kind of cost makes sure that you won’t lose your marketing budget eventually.
This small step can help you in your ‘how to create a marketing budget’ journey.
Remember Where Your Priorities Lie
There are literally just too many tools such as add-ons and extras and “premium” versions. And we sometimes want to buy every tool out there for marketing our products, exhausting our budget. And then when we execute our marketing strategy we come to know that this was a bad move – purchasing so many tools and premiums.
That’s why you need to focus on your priorities of marketing strategy.
Keeping account of where you are spending your budget, and cross-checking it with the results, will give you an idea of what is necessary and what’s not.
And that will save a lot of money which you can spend on other useful marketing channels.
Think about it.
Here, Some Marketing Budget Example
After an assessment of all the above tips, you are ready to allocate funds to your marketing tasks.
Let’s just suppose you have $50,000 as the overall marketing budget for a given month.
Here is a breakdown of how you should allocate funds to each task or channel.
- SEO 25% ($10 – 25K)
Search Engine Optimization is an integral part of any marketing nowadays. It helps your business stay on the top of the search engines. This practice can be very effective if you get the right guy to do it.
In SEO, you would need to spend money on tools like Keyword researcher, Plagiarism detector, Content creation, and more.
2. Content Marketing 25% ($10-25k)
Content is the king. And the king needs to be taken care of with brilliant care. Period.
You need a big budget for creating multimedia content like Youtube videos, Infographics, Social Media posts, Reels, Blogs and Articles, E-books, and more.
3. Email Marketing: 10% ($25 – 50K)
We talked above about how email marketing can be a good way to directly communicate with your customers. You can send them seasonal offers with discounts directly on their mobile, which is a vital part of their lives.
So, it is a great idea to invest 5-10% in your email marketing efforts.
4. SMM (Social Media Marketing) – 20% (10-25k)
SMM or social media marketing involves both SMO and buying ads on social media. These ads can drive huge traffic with the right advertisement copy and implementing target keywords.
You can also display your ads and “banners” on various relevant websites. Social media ads offered by Facebook and LinkedIn can yield an extremely high ROI.
5. Website – 10% ($50-70K)
A website expresses your business. If you can design it well, make it load faster, and user friendly, it will convert a huge amount of visitors for sure.
If you want that to happen, you need to invest in fresh, SEO-optimized content and design, plus an optimized flow that leads users seamlessly into your sales funnel. Also, you will want to work on Continual conversion rate optimization (CRO) to boost traffic over time.
6. Traditional Ads and Marketing – 10% ($50-75k)
If you really want to market your business, you not only need to promote it only online but offline as well- like all the old-age methods.
You want to advertise on mediums like events, print ads, magazines, and billboards. I’m sure this is still a good investment.
You Are Ready To Create A Marketing Budget For 2022!
What an insightful journey it has been!
So in this journey, we’ve talked about what is a marketing budget and why you need to plan it. You also learned 12 effective steps to create a budget. Plus, you also have an example of an airtight marketing budget that will make your budgeting journey easy and comprehensive.
I’m sure that after following the steps mentioned in this, you will be left with no donut over your ‘how to create a marketing budget’ problem.
However, if you need any help regarding the marketing budget, remember you can always tell me in the comment box below anytime!
1. What Makes Up A Marketing Budget?
A marketing budget is made up of all the strategies of marketing and tools you are going to spend money on. It consists of expenses such as paid advertising, web maintenance, new staff hiring, purchasing new software, etc.
2. How Much Should I Budget For Marketing?
This usually depends on the scalability and revenue of a business. However, as per the U.S. Small Business Administrator, If a company earns less than $5 million, then it should spend 7-8% of its budget on marketing.
3. How Do You Develop A Marketing Plan?
To create a marketing plan, all you have to do is write down what specific goals you need to achieve to grow your business in a specific time frame. After writing them down, calculate how much money it would take to reach those goals.
4. How Do I Improve My Marketing Budget?
You can improve your budget by simply avoiding unnecessary expenses. You can observe your past marketing strategy to know where you don’t need to spend money this time. You can use it on another goal and grow your business on a relatively small budget,
5. What Is The Purpose Of A Marketing Budget?
The purpose of the marketing budget is to keep you on track financially while you are working on a marketing strategy to scale up your business. A well-designed budget also stops you from overspending on a strategy.