Starting a new business is always a challenge, but it’s especially difficult when you’re trying to do it on a shoestring budget. One of the most important things you can do early on is to create a robust marketing budget and ensure your money is being spent in the right places. In this blog post, we will discuss some tips for building a marketing budget to help your startup succeed!
What Is A Marketing Budget
A marketing budget is a tool that businesses use to plan and track their marketing spending. By creating a marketing budget, businesses can ensure that they are spending their marketing dollars in the most effective way possible.
Marketing budgets typically include a mix of advertising, content marketing strategy, public relations, and promotional activities. The exact mix of activities will depend on the business’s goals and objectives.
Typically, businesses want to allocate more of their budget to activities that generate the most leads and sales. For example, if a business wants to increase brand awareness, it may want to allocate more of its budget toward advertising.
Conversely, if small business owners are looking to generate more online traffic, they may want to invest more in their digital advertising efforts. By carefully planning their marketing budget, businesses can achieve their marketing objectives while staying within their overall budget.
How To Build An Effective Marketing Budget
Now that we’ve discussed what a marketing budget is, let’s talk about how your marketing team can build a solid budget plan. When you’re creating a marketing budget, there are a few things you’ll need to take into account:
- Your marketing goals and objectives
- The size of your target market
- The marketing channels you plan to use
- Your estimated marketing costs
Once you have a good understanding of your marketing strategy, target customers, and planned marketing activities, you can start to put together your budget.
Here are 5 steps you can follow when building your marketing budget:
1. Define Your Marketing Goals And Objectives
The first step in creating a marketing budget is defining your goals and objectives. What are you trying to achieve with your marketing efforts?
Are you looking to increase brand awareness, generate leads, or drive online traffic? Once you have defined your goals, you can begin to develop specific objectives that will help you achieve those goals.
For example, if you are looking to increase brand awareness, one of your objectives might be to increase the number of social media followers you have.
Examples Of Marketing Objectives:
1. Increasing brand awareness is important for any business as it helps to create a name for the company and allows customers to become familiar with the products or services being offered. Brand awareness can be increased through various marketing campaigns, such as social media posts, print advertisements, or television commercials.
2. Generating leads is essential for any business as it allows sales representatives to contact potential customers and pitch the products or services being offered. There are many ways to generate leads, such as through email marketing, telemarketing, or online advertising.
3. Driving online traffic is important for businesses as it allows them to reach a larger audience than they could through other marketing channels. Online traffic can be driven through search engine optimization (SEO), pay-per-click advertising, or social media marketing.
3 Examples Of Marketing KPIs
1. Website traffic – Tracking the number of website visitors is a common KPI for marketing campaigns. This metric can be used to track the success of online marketing efforts, such as SEO or pay-per-click advertising.
2. Lead generation – The number of leads generated by marketing efforts is an important business metric. This metric can be used to measure the effectiveness of various marketing tactics, such as email marketing or telemarketing.
3. Brand awareness – Tracking the increase in brand awareness is a common goal of your marketing plan. This metric can be tracked through surveys or focus groups to determine if customers are becoming more familiar with the company’s products or services.
2. Estimate The Cost Of Achieving Your Marketing Objectives
Once you have defined your goals and objectives, the next step is to estimate the cost of achieving them. How much money will it take to run effective marketing campaigns that will help you reach your targets?
Remember that not all marketing activities are created equal – some will be more expensive than others. An ad on TV at prime time will cost more than an ad in a local newspaper, for example.
As you estimate the cost of your marketing plan, be sure to consider both the short-term and long-term costs. Some marketing efforts, such as SEO, can take months or even years to show results.
Others, such as pay-per-click advertising, can provide immediate results and be more expensive in the long run.
It’s important to carefully consider the cost of each activity and make sure that you are getting the most bang for your buck.
3. Allocate Funds Accordingly
Once you have estimated the cost of achieving your marketing goals, it’s time to allocate funds accordingly. This step can be tricky, as you don’t want to overspend on marketing while neglecting other business areas.
It’s important to find a balance between investing in marketing and investing in other essential areas such as product development or customer service.
Here Are Key Budget Allocation Areas
1. Advertising
Advertising is one of the most important aspects of marketing, as it helps to raise awareness of your product or service and can reach a large audience. Advertising can be done through various channels, such as television, radio, print, online, and outdoors.
2. Public Relations
Public Relations (PR) is another important aspect of marketing, as it helps to generate positive publicity for your company. PR can be done through various channels, such as press releases, media relations, events, and social media.
3. Market Research
Market research is essential for understanding your target market and what they want from your product or service. Market research can be done through various methods, such as surveys, focus groups, and interviews.
4. Sales Promotion
Sales promotion is a great way to increase sales and boost revenue. Sales promotion can be done through various methods, such as discounts, coupons, contests, and freebies.
5. Trade Shows
Trade shows are a great way to promote your product or service to a wide audience. Trade shows provide an opportunity to meet face-to-face with potential customers and build relationships with other businesses in your industry
4. Track Your Marketing Expenses
As part of your marketing budget, it’s important to track your marketing spend to see how well your campaigns are performing.
By tracking expenses, you can determine which activities generate the most leads and sales and adjust your budget accordingly. This also helps ensure that you stay within your overall budget.
5. Review And Adjust Your Budget Regularly
Budgets are not static documents – they should be reviewed and adjusted regularly in order to reflect changes in business conditions and marketing objectives.
As your business grows and changes, so too should your marketing budget. Make sure to review and adjust your budget at least quarterly in order to get the most out of your marketing dollars.”
How Much Should A Startup Spend On Marketing?
Startups have a lot of expenses, and marketing can be one of the biggest line items in the budget. But how much should you actually spend on marketing?
That depends on a number of factors, including the stage of your startup, your industry, and your financial runway. Generally speaking, early-stage startups should allocate between 2 and 5 percent of their overall budget to marketing.
If you’re a startup in the revenue growth stage, it’s important to set your marketing budget as a percentage of projected revenue. That way, you can ensure that you have enough funds to execute your marketing plan.
Late-stage startups typically allocate between 8 and 12 percent of their total budget to marketing. This may seem like a lot, but it’s important to remember that marketing is an investment that can pay off handsomely down the road.
By allocating the necessary funds for marketing, you’ll be well on your way to building a successful business.
A recent study by Gartner indicates that the average marketing spend has increased back to the 10% zone in 2022 following a huge one-time decrease in 2021.
Changes In Traditional Versus Digital Marketing Spending
As the marketing landscape evolves, companies are forced to re-evaluate their marketing budgets. In the past, most marketing spending was dedicated to traditional marketing efforts such as print ads, television commercials, and direct mail.
However, as consumers spend more and more time online, businesses are shifting their focus to digital marketing. This includes everything from website development and social media campaigns to SEO and content marketing.
While digital marketing is often more effective and efficient than traditional marketing, it can also be more expensive. As a result, many companies are struggling to strike the right balance between traditional and digital marketing spending.
The good news is that there are a number of ways to cut costs without sacrificing quality or results. One way to do this is to invest in marketing automation software.
This type of software can help you streamline your marketing efforts and free up some of your budget for other priorities. Additionally, you can save money by outsourcing some of your marketing tasks to freelancers or agencies.
And, of course, you can always cut back on certain marketing activities if they’re not providing a good return on investment.
No matter what your marketing budget looks like, it’s important to ensure you’re spending your money wisely. By carefully evaluating your target audience and objectives, you can create a marketing budget that meets your needs without breaking the bank.
Percentage Of Marketing Spend On Digital Marketing
According to Gartner’s recent CMOs survey (May 2022), “CMOs have shifted from digital-first to hybrid multichannel strategies. When CMOs were asked to report the proportion of their 2022 budget allocated to online and offline channels, online channels took the largest share (56%). However, offline channels account for almost half the total available budget (see Figure 3) — a more equitable split than in recent years.”
We can see a clear trend toward digital marketing as more and more companies allocate more budget to this channel. This is likely since digital marketing is more effective and efficient than traditional marketing, and it can be easier to track and measure results.
Additionally, as consumers spend more time online, businesses need to make sure they’re visible where their target audience is spending their time.
Which Social Media Channels Should I Invest In?
There are a lot of social media channels out there, and it can be tough to know which ones are worth investing in. Here are a few considerations that can help you make the decision:
-First, think about your audience. Where do they hang out online? Which social media channels do they use most frequently? If you’re unsure, you can always ask them directly or look at demographic data from social media platforms.
– Second, consider your goals. What do you hope to achieve by using social media? For example, if you want to build brand awareness, you’ll want to invest in channels with a large reach. Or if you’re looking to drive traffic to your website, you’ll want to focus on channels that allow you to include links.
-Finally, think about your resources. Do you have the time and manpower to maintain a presence on multiple social media channels? Or would it be better to focus your efforts on one or two platforms?
Answering these questions can help you determine which social media channels are right for your business.
Which Marketing Strategy Get The Best Results?
Marketing is essential for small businesses and startups that want to survive and thrive. But with so many different marketing strategies and tactics out there, it can be hard to know which ones will get the best results.
Here are a few of the most effective marketing strategies and tactics that you can use to boost your business:
Content Marketing
Creating and sharing high-quality content (such as blog posts, infographics, videos, etc.) is a great way to attract attention (inbound marketing) and build trust with potential customers.
Search Engine Optimization
Ensuring your website and content are optimized for search engines is essential for driving organic traffic.
Social Media Marketing
Utilizing social media platforms (such as Facebook, Twitter, Instagram, etc.) to connect with potential customers and create a strong online presence.
Email Marketing
Sending out targeted email campaigns is a great way to generate leads and build customer relationships.
Pay-Per-Click Advertising
Paid advertising can be an effective way to reach potential customers who are actively searching for your products or services online.
Traditional Advertising
While it can be more expensive, traditional advertising (such as TV commercials, print ads, etc.) can still be quite effective in reaching certain audiences.
Sales Funnel
One of the best ways to outspend your competitors is by using sales funnels. One of the main objectives of a sales funnel is to increase the average cart value (ACV) in order to maximize sales.
How To Track Your Marketing Expenses
One of the most important aspects of any marketing campaign is staying within your budget. Whether you’re working with a limited amount of funds or you have a generous marketing budget, it’s essential to track your expenses carefully.
This can help you ensure that you’re getting the most bang for your buck and it can also help you spot areas where you may be able to cut costs.
There are a number of ways to make sure your marketing money is being well spent. One of the simplest methods is to create a spreadsheet where you track all of your marketing activities and their associated costs.
Download our startup and small business marketing budget template here
This can be a time-consuming process, but it’s worth it in order to keep tabs on your spending. Another option is to use marketing software like Plannuh that includes expense tracking features.
This can be a more expensive option, but it may be worth it if you need to track complex marketing campaigns. Whatever method you choose, make sure that you track your marketing spending carefully in order to stay within your budget.
Common Marketing Budget Mistakes
Any business owner knows that marketing is key to success. But what many don’t realize is that marketing comes with a cost. And if you’re not careful, those costs can quickly spiral out of control. Here are some of the most common mistakes businesses make when it comes to their marketing budget:
1. Not knowing what you’re spending. Marketing expenses can add up quickly, and it’s important to keep track of where your money is going. Otherwise, you could find yourself overspending without even realizing it.
2. Not allocating enough money. A common mistake is underestimating how much marketing costs. Keep in mind that you’ll need to invest in a variety of marketing activities, including advertising, PR, and market research.
3. Failing to set priorities. When it comes to marketing, you need to focus your efforts on the activities that will have the greatest impact on your business. Otherwise, you could waste much time and money on marketing activities that don’t produce results.
4. Not monitoring results. It’s important to regularly track the results of your marketing investments so that you can adjust your strategy as needed. Otherwise, you could continue throwing good money after bad without ever achieving the desired results.
By avoiding these common mistakes, you can ensure that your marketing budget is being used effectively and efficiently. And that’s crucial for any business that wants to succeed in today’s competitive marketplace.
Mobile Marketing
Mobile marketing is one of the most effective ways to reach your target audience. With mobile devices, people are always connected and always available to receive marketing messages.
This marketing strategy can take many forms, including text messages, mobile apps, websites, and ads. One of the benefits of mobile marketing is that it allows you to deliver highly targeted messages to your audience.
You can personalize your messages based on the location, interests, and demographics of your target audience. This ensures that your message will be relevant and engaging.
Another benefit is that it is highly efficient and cost-effective. Because people are always carrying their mobile devices with them, you can reach them anytime, anywhere.
This means you don’t have to waste time and money on traditional advertising channels that may not reach your target audience. Mobile marketing is an essential part of any marketing strategy, and it should be used to complement other marketing efforts. If you’re not already using mobile marketing, now is the time to start.
Examples Of Leading Startup Companies Marketing Budgets
Slack
Here is the strategy Slack is using according to its 2021 financial statements:
“We deploy various marketing strategies and tactics to drive initial awareness and adoption. These include brand advertising, public relations, digital marketing campaigns, free trials of our paid plans, product localization, in-product customer education, and a website designed to teach new users about Slack.”
As we can learn from this quote, Slack uses an arsenal of marketing strategies to generate a constant flow of leads and paying clients. in 2021 they expensed $461 million on sales and marketing, which reflects 50% of their company revenue for that year ($903M).
Coursera
Here is Coursera’s marketing strategy to attract new students:
“Learners come to Coursera primarily through free or low-cost acquisition channels such as public relations, word of mouth, and search engine optimization.
We also derive a smaller percentage of learners through cost-efficient paid advertising channels including an affiliate publisher network and paid search. “
According to their 10-K report, Coursera’s sales and marketing expenses were $57 million in 2021 representing 31% of their total revenue.
Key Marketing Budget Statistics
- There is an allocation of 50/50 between the online and offline marketing budget.
- The average marketing budget is 9.5% of the total revenue in 2022
- The online marketing budget grew 15% year over year while the offline marketing budget stalled.
- Social advertising takes the biggest slice of the marketing budget cake with 10.1% of the total budget.
Wrap Up
To make the most of your marketing budget, it’s important first to understand how it works and what changes are happening in traditional versus digital marketing spending.
Once you have a good idea of where your money should go, you must determine which social media channels will give you the best results for your business.
And finally, track your expenses and measure your return on investment so that you can continue optimizing your budget for maximum impact.
What was the biggest challenge you faced when creating or implementing your company’s marketing budget? let us know in the comments below
