You know you need to market your business, but coming up with a marketing budget is challenging. Marketing budgets can vary substantially depending on your business goals, industry, and the type of clients you work with. Here are six steps to create a marketing budget for your business.
Outline your marketing goals
The first step is to come up with clear and measurable marketing goals. Identify short-term and long-term goals and set key performance indicators (KPIs). Here are some examples of marketing goals:
- Increase organic search traffic to your website.
- Improve conversion rates on a social media campaign.
- Gain 10 new leads per week.
- Increase engagement with social media followers.
Pick a couple of metrics you can focus on and make sure they’re achievable. Setting your goals first can help you determine how much money you need to invest in your marketing strategy.
Identify your target audience
Your target audience is the people most likely to benefit from your products and services. Understanding your target audience is crucial because every customer has different needs and preferences.
You can learn more about your target audience by surveying or interviewing them and looking at your website analytics. Look for the following information about your audience:
- Their age.
- Marital status.
- Average income.
- What motivates them.
- How they find information.
[Read more: How to Create Small Business Marketing Personas]
It’s a good idea to invest in a combination of paid advertising, social media marketing, and content marketing.
Consider industry standards
Most companies set their marketing budget as a percentage of their revenue, and this percentage can vary by industry. On average, B2B companies spend between 2% and 5% of their total revenue on marketing, while B2C companies spend between 5% and 10%.
Doing competitor research can help you determine what a reasonable marketing budget is for your business. Start by identifying your top online competitors and figure out where they’re marketing their businesses.
Analyze their traffic sources and what keywords they’re targeting. You can use a tool like SEMrush to find this information and see if your competitors are paying to rank in Google. From there, you can see how much each relevant keyword costs.
Come up with a marketing plan
Next, you can choose your marketing channels based on your target audience. It’s a good idea to invest in a combination of paid advertising, social media marketing, and content marketing.
Paid advertising can include both online and traditional advertising. Paid advertising includes Google ads and retargeting ads, while traditional advertising includes print ads or mailers.
Social media marketing could include Facebook or Instagram ads or even influencer marketing. Content marketing includes blog posts, podcasts, and video marketing. Once you’ve outlined your marketing plan, you can determine how much money to allocate to each item.
Consider all the costs involved
Consider all the different expenses necessary to make your marketing plan work. For example, if you’re focused on improving your SEO strategy, you’ll need to factor in the cost of website hosting, regularly creating new content, and keeping your site up-to-date.
If you plan to have staff manage your marketing campaigns, be sure to budget funds to train and pay employees for their time. And budget for any software you’ll need to run your campaigns, like analytics, email marketing, and video editing software.
[Read more: How to Maximize Sales and Marketing Productivity]
Evaluate how your plan is working
Regularly evaluate your marketing plan to determine the ROI of each channel you’re using. This information will help you identify the effectiveness of your marketing plan. Any metrics you track should be tied to your KPIs.
Assess your marketing efforts and budget quarterly to see if your efforts are aligned with your results. From there, you can pause or scale back on any marketing efforts that are generating a negative ROI. You can also increase your budget in the areas where you’re seeing the best results.
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