It’s easy to get lost in the process of creating a marketing budget. How much should you spend? Where should you spend it? Take a deep breath and let’s break down what a marketing budget means, how it can boost your brand reputation and attract people to your company, and how it works to generate sales.
The saying, “You have to spend money to make money” is especially true in brand marketing. But before investing resources into a marketing plan, you’ll need to identify your company’s budget for marketing. The following questions will not only prepare you to build a marketing budget but help you achieve the ROI you’re looking to achieve.
5 Questions to Ask Before Creating a Marketing Budget
1. Who is your Intended Audience?
Any business plan starts with discovering how your product fits into the market. Analyze your competition to see who they’re targeting and how you can reach them more efficiently, or how you can better market to an area that your competitors are lacking in.
Ok, so you’ve got your prime audience. Now how do you go about reaching them? Before you start shelling out your hard-earned money for paid ads across social media, you need to first research where your target audience resides. By identifying who your client base is, and where they spend their time on social media, you can begin to break down the best platforms to reach them. Compare social media channels by audience size, advertising costs, and potential sales, to gain an idea of what an effective marketing budget will cost.
2. What is your Brand Image and Message?
Before you can convince someone to buy your product, you’ll need to know what your company represents and how you’ll portray that image to the market. It is integral to have your brand image and message nailed down before you spend a dime marketing it.
3. Have you Analyzed your Competition?
No, this doesn’t mean stealing your competitors’ approach will immediately lead to sales. Analyzing the campaigns of your competitors to see where they’ve succeeded with their marketing plans will, however. Digest what your company can learn from these pitfalls, and how you can create a stronger marketing budget and strategy that succeeds where theirs failed.
4. How Much are you Going to Spend?
Take a hard look at your overall budget. How much are you willing to designate for marketing? Define a dollar amount and zero in on the absolute essentials to help you to craft the most effective plan of attack. A fixed budget is common among new businesses, but it’s important you understand who you’re targeting. A smaller budget may only afford one campaign or event, so use it wisely.
Another way to calculate a marketing budget number is by revenue. For small businesses, a general rule of thumb is using between seven to 12 percent of your total revenue. This approach is advantageous because your budget will grow along with revenue, helping to increase your marketing dollars as your brand presence evolves.
5. What is your Marketing Budget Goal?
And finally, identify your end game. What do you want to see from your marketing investment? If it’s sales, consider how much you’ll need to spend on marketing to generate a specific sales number. This process will take both time and testing to pinpoint, but it will help to give you realistic expectation with actual numbers and statistics involved. Meeting your goal may be something that stretches over years. Don’t be dissuaded if you don’t see a way to make your ideas a reality by next week.
- READ MORE: 5 Advantages of Account-Based Marketing
Before you begin creating your marketing budget, define the direction of your company’s focus and recognize that marketing is more experimentation that a straightforward equation. Your marketing budget will be in constant flux but knowing these answers beforehand help clarify your company’s vision and push you towards a successful introduction to potential customers.