Marketing can be a challenge, but even the most modest budgets and the newest start-ups with shoestring budgets can start marketing with little to no outlay in the first instance. This means that success in marketing is not just reserved for those with large budgets, offering hope and optimism to small business owners.
As your business grows or needs to grow and expand to follow its natural course, allocating the right amount of money to your marketing will enable you to get the real exposure you need without bankrupting yourself in the process.
A 2022 survey by Visual Objects found that 70% of small businesses set aside some budget for social media marketing. Experts suggest that anywhere from 7 to 37% of revenue should be allocated to your marketing budget.
Once your marketing budget is set, strategizing is the next crucial step. Remember, marketing is not a one-size-fits-all solution. It’s about finding the right balance and allocating funds to different avenues. This flexibility is your key to achieving the desired results, empowering you to adapt to changing needs and opportunities and instilling a sense of control and confidence in your marketing strategy.
Generally speaking, your marketing budget allocation should look something like
- 40 to 50% for digital marketing
- 20 to 30% for traditional marketing
- 10 to 20% for events and sponsorships
- 5-10% for research and analytics
The 70/20/10 rule is a popular method for budget allocation. It suggests allocating 70% of your marketing budget to proven tactics that you know will work, 20% for innovative strategies that have shown potential but need further testing, and 10% for untested experimental initiatives that could yield high returns if successful. This rule provides a structured approach to budget allocation, balancing risk and reward in your marketing strategy.
This article is going to dive into some tried-and-tested strategies for marketing budgets, so you know exactly how to divide it up to cover everything you need to.
Set Goals
To set your marketing strategy, you need to establish your marketing goals. Different companies will have different goals, and you need to understand that your goals enable you to create the right campaign strategies and divide your budget for maximum effect. Remember that they need to be SMART, which stands for Specific, Measurable, Actionable, Relevant, and Time-based. This structured approach will guide your marketing efforts effectively, keeping you focused on the end goal.
Your marketing goals can look like the following
- Bringing in new customers
- Increasing products by 20% before a set date
- Bringing awareness of a new campaign or product
- Move into a new market
- Tap into a new audience
- Increase followers or email subscribers
Understand Previous Performance
If you have any previous years’ marketing, it’s crucial to review and understand exactly what you spent and where. Identify each avenue you invested in and assign it a monetary value. This understanding will make you feel informed and prepared for your future marketing endeavors, and it will help you refine your strategy and budget allocation for maximum impact.
From here, you need to look at the return you got for each specific one. You need to consider things like cost per action, cost per click, and return on ad spend.
Use the information you gather to understand what worked and didn’t work so you can reset the budgets for each aspect of your marketing or even rethink your approaches and look at different channels to get your desired results. This information and data will help you create an SEO budget, a social media marketing budget, a PPC budget, and any other avenue you will explore for your marketing campaign, which will be discussed in the next section.
Identify Your Marketing Options
Using your goals, spending, and analytics to determine previous years’ marketing successes and budget limitations, you can then assess what you want to do this year. As mentioned above, following the split ratio is crucial for understanding the options you wish to invest in and what will benefit most from this upcoming marketing spend.
Digital Marketing
Your digital marketing budget needs to take up the bulk of it and comprise various marketing techniques, including SEO, content writing, social media, PPC, email, and paid social ads. It doesn’t need to account for them all if you found one such avenue that didn’t generate the right results, or you can choose to downscale certain activities to account for the reduced activity if you wish. Still, your digital marketing budget needs to consider all of those mentioned above.
Research Your Audience
Knowing where to find your target audience is vital when determining how much money you will spend.
If you have taken a deep dive into the data at your disposal either form when you set up your business or the work you have completed so far or previous years activities then you will understand better when your budget will be best allocated.
The age and demographics of your audienc can be an influential factor in the type of marketing initiatives you enter into. For example, millennials respond better to video marketing, blogging, and influencer marketing, while Gen X respond more favourably to radio or tv ads, sports advertising, and traditional print media, and Gen Z and Gen Alpha are more swayed by social media marketing and visual content.
Enabling your marketing to reach your audience via the most consumed type of media and marketing can ensure that you are reaching people the way they prefer and will naturally engage with them instead of wasting money on not reaching the right people or having the right impact.
Determining your marketing budget overall is only part of the task when it comes to your spend and your marketing strategy. Knowing how to divide the budget up and allocate the right amount of funds to the right marketing methods will help you ensure you improve your ROI and get the desired results from the campaign. Be specific, use your analytics, and focus your approach to help you do more and achieve more with your marketing.