If you have ever been in a meeting with the marketing team of a big business you may have heard them chatting about budget allocations for ‘this project’ or ‘that element of the marketing plan’.
But budget allocations aren’t just for the big businesses. Using allocations can help small businesses stay on top of their finances, monitor their spend, highlight their return on investment for marketing activities and ensure that no areas get left out or abused as focus shifts.
If you are in business operating in a slow progressing market you may want to split your marketing budget between traditional and digital types of marketing. For the purpose of this article we primarily focus on marketing budget allocation in the digital space.
Before you can allocate any budget, you need to understand your goals. This may have been defined during a business planning process, although many small businesses do not do this so will have to understand their goals at the beginning of the budget setting stage.
Ask yourself what you want to achieve as a business, this may be in terms of growth, revenue or even strategic moves into new positions in new markets. You then need to question how marketing is going to help you achieve this. What marketing tactics and strategies will bring you closer to those goals?
Use that data
Data is a powerful tool. There is likely already lots of this information available to you through platforms like Google Analytics, social media platforms and tools such as Google AdWords and Facebook Business Manager if you do paid social advertising.
These tools will be able to give you historical data on what has worked well, what worked ok and what failed miserably when it comes to your previous marketing activities. Although of course situations change and what worked in the past may or may not work again in the future. However, this does provide you with a good basis on which to make decisions on what your most powerful tools are when it comes to marketing.
You can’t allocate your budget until you have a budget. As a general rule and rough guide, allocating 7% to 8% of your revenue to marketing is a reasonable figure. But this of course depends widely on industry accepted norms and the level of competition for your audiences’ attention.
Having a total amount of budget for marketing will let you make % allocations to certain elements based on their general effectiveness and ability to contribute to achieving your overarching business goals.
Divide and conquer
Not we know how much budget you are going to spend on marketing we can allocate each to the different aspects of your marketing plan.
Start by writing down each of the elements that you will be using in the year. This list should first be created by the methods that have worked well for you in the past and new ideas that you have seen working well in the industry or think may work well. These should then be aligned with your business goals, any of the methods that are not going to contribute to these goals should be scrapped off the list.
Once you have the list you can order these by importance based on their performance and likelihood to contribute to the wider business goals. They may include tactics such as content marketing, social media marketing, influencer marketing and website/micro-site builds.
You can then allocate budgets based on their overall effectiveness. For example, if you have excellent results in terms of engagement and even direct sales from influencer marketing then you may contribute a large % of your budget (for example 30%) of your budget to this tool.
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In this article, we have shown the process that can be taken as a small business in order to allocate budget and leverage marketing like the big boys. This is going to benefit your business as it will allow you to get a well-distributed coverage of all the marketing tools you will employ to grow and promote your brand. This makes your marketing budget go further which is important as a small business.