I ran a workshop this morning on budgeting for marketing, an interesting subject as a marketing budget is often the first thing to be cut in times of hardship or recession. But how should you budget and more’s the point how does your business ‘find’ budget for marketing when times are tough or you are just starting out?
First and foremost, ensure that you conduct some market research. It is so much more cost effective to go into your marketplace prepared, with a good understanding of your target audience, and how you might differentiate yourself from your competition.
Next set some very clear goals, using the acronym SMART is useful as these will help you to be laser focussed on what you would like to achieve, and from here you can begin to develop your marketing campaigns.
When you are ready, consider what resources are available to you internally. Using the 5M’s might help here. The 5M’s is a marketing model that can be used to assess five different internal elements; the Manpower that you have, the Materials and Machinery that you might require, the Minutes (time) required and the Money available. Once analysed, the 5M’s can show whether you have the internal capability to achieve your plan or whether improvements or additional resources are required.
Once you are more aware of the resources that are available to you then deciding on the most effective channels may become clearer. These will largely depend on the audience that you are trying to reach and of course your timescales, however, using organic social media and emails might be a good option if your organisation has staff and time available but is low on available finance, or alternatively perhaps you may consider outsourcing if you are time poor but have a little more available spend.
Calculating the expected return on your investment i.e., what you intend to gain from the campaign in terms of profit, is a good place to start. If your campaign is set to increase your customer base and therefore your profits, then allocating a percentage of this proposed profit is often a useful and solid technique. Alternatively, you could look at what similar campaigns have cost in the past, and what they generated, and take a view based on these. This is helpful as this may give you confidence to make that initial spend if you are cautious.
Another budgeting method to consider might also be to look at your competitors and their spend. If you are competing on a regular basis, can you afford not to be in the same advertising space as them and if not, how much do you need to be able to match their advertising? This strategy is not for the faint hearted but knowing your competitors and their actions is often brilliant research too!
Within your budget you will need to ensure that you have enough money to be able to reach your target audience and produce conversions that will deliver your expected return on your investment. Without a budget in place, you might be swayed or tempted to spend more than necessary, and your ROI might falter.
And finally, tracking your campaign is the most important element to consider. There are many excellent software packages available but whatever why you choose, simply ensuring that you track results is vital as it will allow you to increase or amend your campaigns if the results are not generating your expected ROI.
Allocating a marketing budget as a small business owner is often a daunting prospect but with good research, thought and management there is no reason why you cannot succeed.