Guest post by Kristie Wright.
Developing a concise, productive, balanced marketing budget
usually always involves allocating limited funding—especially if that budget is for a startup or small business. Every department head in the company needs part of the overall budget (and most want more) for their specific team’s operations.
Many ecommerce professionals find that their budget planning processes quickly turn into power struggles between members of their team. Some members end up satisfied, while others wind up frustrated and unsure of how best to manage their workflows without adequate funding.
Marketing leaders can prevent this negative impact on morale and optimism by using proven and effective strategies to design their marketing budgets. This post will explain how to allocate a marketing budget in a way that maximizes value and ROI while minimizing operational challenges.
The Benefits of a Properly Planned Marketing Budget
Developing a comprehensive and carefully considered marketing budget:
- Helps businesses to track their cash flow patterns and spending through each marketing channel. It also helps identify any areas of overspending or under-spending that require addressing in future budgets.
- Assists in the proper allocation of funds. For example, as a business’s email marketing tactics begin to generate more traffic than its PPC approach, it can use its planned budget to divert more resources to email marketing to capitalize on the shift.
- Assists in the monitoring of progress and long-term goals. A marketing plan helps businesses to set realistic and attainable goals based on budget projections and to make the most of its marketing efforts.
A Simple Guide to Marketing Budget Design
A large percentage of proposed marketing budget breakdowns for small businesses have one glaring flaw: an imbalance of resources.
There can be several reasons for this, ranging from managers’ influence to past operational experience. But many marketing budgets tend to overcompensate in some areas and under-fund others.
This trend is counteracted by using specific budget columns to design effective marketing budgets. Modern budgeting experts recommend using Branding, Traffic, and Conversion Rate Optimization (CRO) categories to most efficiently portion the funds between a business’s most crucial marketing processes.
Professional branding establishes a company among the leaders in its industry, and ensures the brand name is well known and frequently brought up when someone mentions similar services or products.
It’s tricky, if not virtually impossible, to track a return on investment when it comes to branding. However, if customers don’t recognize, trust or appreciate your brand, sales will be difficult to make, regardless of how well you can attract traffic and convert leads.
Too often, marketing leaders place organic (SEO) and paid (SEM) traffic in the same budget group. Both focus on generating traffic, and both need adequate funding to prove successful.
Regardless of whether a business pays for SEO services or prepares its own website content to generate traffic, organic traffic generation requires funding independent of paid traffic generation. Most brands should look to their organic traffic sources for a steady and reliable flow of website visitors. Then use paid traffic to increase those numbers.
Every startup and small business should thus be cautious about under-funding its organic traffic generation efforts, because content marketing success takes time. This mistake could force them to overspend on PPC campaigns and advertising later down the line in order to compensate.
A business’s branding could be near perfect, but if it hasn’t set up the necessary traffic lanes to broadcast its offers to its prospects, sales will again be difficult to achieve. Traffic generation is as important to marketing as branding is.
#3: Conversion Rate Optimization
A brand’s audience will already know who they are and believe that they can address their problems better than other brands in a specific niche.
Even with proper branding and traffic systems in place to guide those who need certain solutions to the brand’s website and landing pages, lead generation will be sub par if CRO is missing from the equation. Developing a steady base of leads and sales opportunities relies on the successful conversion of visitors into prospects, with adequate budget to achieve that.
Marketing Budget Creation Best Practices
Every small business will have unique marketing requirements and funding pools available. However, there are a few strategies that work exceptionally well for most companies in the process of drafting their marketing budgets. The following approach can effectively create a viable and sound budget:
- Business owners and marketing experts should start by closely assessing their current financial position, budgets, and results. This is where accounting software is useful, as stakeholders can review their cash flow situation in real time. Marketing expenses can then get split into categories such as traffic, branding, and CRO activities, and compared to one another.
- Next, the team should look at the current situation for each of the three categories mentioned above. They may find that they have achieved positive results in the branding category, but that traffic or CRO are neglected. It’s crucial at this point to gauge the strengths and weaknesses present in each area and to pinpoint the weaknesses that could lead to a loss of sales.
- Using the information gleaned above, the team should determine where CRO, traffic generation, and branding should rank in their health and efficacy. If they are roughly equal, they should each get allocated a third of the total marketing budget. If (as is more commonly the case) one specific category is lacking, it needs a larger part of the budget to support its growth.
This simple but effective process applies to virtually any marketing budget breakdown. It will keep every team member on the same page and fairly allocate funds where most needed.
It’s important to note that every category must get priority if the others are to perform at their optimal levels. This makes it every department and team member’s task to support the other for the common benefit of the business.
The Bottom Line
Creating a fair and equitable marketing budget can be a complex task, but the basics can stay simple.
Every business’s goal should be to identify weaknesses in its current marketing approach and to fund all three major categories—branding, traffic and CRO—in a way that ensures their individual and collective strength.
It’s crucial for marketing teams to constantly assess the results of their marketing efforts and to be open to adopting different approaches if necessary. Marketing goals should align with the overall goals of the startup or small business in question to ensure the marketing budget gets spent in the most beneficial ways possible.
Kristie Wright is an experienced freelance writer who covers topics on logistics, finance and management, mostly catering to small businesses and sole proprietors. When she’s not typing away at her keyboard, Kristie enjoys roasting her own coffee and is an avid tabletop gamer.