If you’re like me, of all business activities, creating a budget is not the most thrilling part of the job. Budgeting is one of those things that many of us say we will do, but end up not finding the time to sit down and actually do it.
But luckily, we’ve got all the information that you need to start planning your marketing budget for 2023.
What is a marketing budget?
A marketing budget documents how much money your business plans to spend on marketing projects over a specific period of time. A good marketing budget helps an organisation to get more customers, make more sales and reach their goals.
Without this budget in place, your business may not progress as smoothly as you want it to. So, how do you create it? – We take a look at everything you need to know. Follow these seven steps to get started.
1. Identify your marketing goals
Whether you’re a solopreneur without enough hours in a day to focus on your marketing plan or a co-partner discussing the best strategy for your business, you need to have a clear understanding of what you aim to achieve with your marketing efforts.
In business, these goals act as a foundation for your marketing plan and give you clear direction for what needs to be done for your product or service to do well in the market. So, When you set your marketing goals, make sure they’re SMART.
You don’t want to set a goal like “increase sales” because it won’t give you a precise target to work towards and accomplish. Instead, set a goal like “increase sales by 15% by the end of 2023.” This goal is measurable and gives you a concrete reference point when budgeting for marketing because you’ll know much you want to achieve and the exact timeline for achieving that goal.
Pro Tip: If you need help with increasing your sales for the year, check out how we generated close to R100 000 in direct eCommerce revenue for one of our clients, Red and Yellow.
2. Do your research
Taking a long hard look at marketing budgets is a common experience for most business owners. Determining your spending plan can be a challenge, especially if you’re new to marketing investments.
According to the CMO Survey, “41% of marketing budgets are based on the previous year’s expenses and adjusted during the year if needed.” But marketing spending can vary widely depending on your industry, location and business’s goals. This means that if you want to prepare your spending plan properly, a good place to start is by conducting your own research.
When you do so, it’ll be clear who you want to reach out to (your target audience), where you’re most likely to reach them, (your selected marketing channels), what they’re interested in, and who’s vying for the same customers (your competition). If you’re a startup, allocating “12-20 percent of your gross revenue or projected revenue on marketing for the year” is widely recognised as an industry best practice. But if you’re an established company, it’s often recommended that you “allocate between 6-12 percent.”
You don’t want to go into any marketing project blind without any prior knowledge about your customers or competition. But thorough research can help ensure that you’re receiving value from the money you’ll set aside for your marketing projects.
3. Assess your monthly marketing operational costs
Next, you’ll need to take another look at your current marketing expenses and determine what’s working for you and what isn’t. These costs are all the basic things you need to pay for to keep the marketing department running. Some of these expenses include website hosting services, salaries, and the cost of marketing tools.
This assessment is important because it can help you make informed decisions about which areas to invest more in and which to cut back on. To help you get started, download your FREE marketing budget planner here.
4. Input your budget line items:
At this point, you need to determine how much money you can realistically set aside for your marketing efforts. This will depend on the overall budget and goals you’ve set for your business.
Before you continue scrolling, check out this infographic to find out how much money is usually set aside for digital marketing efforts in the South African landscape.
5. Choose your marketing channels
Now that you’ve (hopefully) looked at our infographic, it’s time to discover how to select your marketing channels.
Based on your research and goals you’ve set for your business, you should put aside money for each marketing channel that you plan on using. These channels include social media, email, or websites. The marketing budget should be detailed and include all the projects your team plans to develop in the short and long term, which can help you reach a wider audience and stay ahead of the competition.
Be sure to leave room for flexibility in case you need to make changes to your budget throughout the year.
6. Allocate an amount for contingencies
If there is one thing that the 2020 coronavirus pandemic taught us, it’s that there will always be circumstances beyond our control. So, your marketing budget should always include an amount reserved for contingencies. For example, in the event of a reputation crisis. It’s always better to be safe than sorry.
7. Monitor & adjust
Finally, it’s important to keep track of your marketing efforts and their results continuously to see what’s working and what isn’t. This will allow you to make adjustments to your budget as needed
Now that you’ve got your marketing budget set up and ready, get in touch with our digital marketing team to see how we can help you achieve your goals for the year.