A marketing budget is the sum of money a company assigns to marketing projects (paid advertising, marketing automation software, sponsored content, etc.) aimed at product promotion. It helps startups and established companies manage resources efficiently and achieve business goals.
In this article, we’ll review the types of marketing expenses and find out how to create a marketing budget.
Why do you need a marketing budget?
A well-thought-out marketing budget is essential for every business that seeks success. It helps stay competitive within the market and increase revenues. With a marketing budget, you’ll be aware of the money you have to put in to effectively promote your brand and product. Your company needs marketing methods to catch attention, communicate the message, and win customers. A well-marketed product will bring you good ROI. However, it’s not possible without a marketing budget.
It’s crucial to manage the capital wisely. You need to comply with the plan and use only available resources so that your company operates properly. Having a budget for marketing-related projects ensures that you will achieve your short and long-term goals. Many businesses with no plan can’t pay the costs and receive ROI. As a result, the company’s reputation suffers.
Now that you know why to consider creating a marketing budget, it’s time to reveal the types of marketing expenses. The next section will give you a clue about the costs you might need to pay to promote your brand.
Types of Marketing Expenses
Many marketing approaches help you get your business to the next level and require you to allocate a specific sum of money to do everything successfully. In this section, we’ll review the most crucial types of marketing expenses for product promotion. So, let’s unveil them so that you can include these costs in your budget.
- Advertising. If you want to catch customers’ attention, resonate with your target audience, and win new prospects, consider implementing different types of ads. They will help introduce your company to a wide audience, communicate the necessary message, and promote your product. Digital marketing offers many possibilities to businesses. You can incorporate pay-per-click and sponsored ads on social media platforms like Facebook, Instagram, and TikTok. Besides, many marketing channels help reach different goals. You can send email campaigns and promotional SMS to share upcoming releases and set up chatbots and web push notifications to inform about sales. SendPulse allows you to schedule email campaigns and incorporate chatbots and SMS to communicate your product’s value. If you are committed to traditional advertising, allocate resources to advertisements in newspapers, television, radio, and billboards.
- Events. Holding events involves certain costs, such as catering, decor, photographer, marketing, equipment, entertainment, transportation, venue, etc. You can organize different events to launch your product, present a new feature, or celebrate your brand’s anniversary. Face-to-face meetings drive the attention of potential customers and partners. Consumers can buy your product, and partners make investments. If you plan to visit an event, you might have the following expenses: display costs, registration fees, and supplies.
- Company merchandise. Distributing promotional merchandise boosts brand recognition and encourages organic promotion. Promotional merchandise includes bags, office supplies, clothing, etc. For instance, if you have a brand, you can become more recognizable to potential customers with the merchandise. A person who sees a T-shirt with a logo and is curious about the brand, can easily browse the internet and find information about the company.
- Tools and technology. The development of marketing projects isn’t possible without special technology. Marketers use design software to edit photos, produce video and audio, and create animation. They also search for companies that help make a website so that users can explore the product and its features. Your company also needs an all-in-one marketing platform to manage contacts in one place. SendPulse’s CRM enables you to collect information about your deals in one place free of charge!
- Devices. You need special equipment to create marketing materials. Examples include laptops, smartphones, cameras, printers, and video production devices. The equipment you use depends on your marketing needs and goals. For instance, if you want to record a podcast, you might need to rent some professional audio production equipment.
Now that you know what expenses you should be ready for, let’s figure out how to create a marketing budget. It will help you allocate resources appropriately.
How to create a marketing budget?
A marketing budget is a crucial part of your marketing plan, and you should pay close attention to it. In this section, we’ll unveil the steps to develop a budget.
- Explore your sales funnel. Consider exploring your sales funnel if you strive to create an effective marketing budget. You should monitor the revenue cycle to see the results. Keep an eye on the process of converting prospects into customers. Having data in CRM simplifies your tasks. Explore the following indicators: site visits per month, number of generated leads, number of qualified leads and their cost, and the number of closed deals.
- Identify operational costs. These are expenses that support a business's day-to-day operation. You should understand these costs to calculate the marketing budget correctly. You need to find out the time for getting customers' contact information, your employees' compliance with requirements, the cost of hiring a special agency, potential costs of your inaction, and other factors.
- Set the budget based on goals. Ask yourself what things you want to achieve to determine your business goals. Make sure to identify your company’s goals for the quarter, for the year, and for a couple of years. You should also determine the number of closed deals to hit to achieve your revenue objectives. Small companies usually spend 7-8% on marketing efforts like websites, ads, events, marketing campaigns, etc.
- Explore marketing trends. Since marketing trends constantly change, you need to monitor and adapt to them. It will help you effectively reach your target audience and resonate with customers’ needs. For instance, if you decide to use email marketing for your product promotion, consider exploring the latest trends like marketing automation. However, makes sure to research the newest options before implementing them. If you succeed in combining modern and traditional marketing approaches, you can effectively reach different audience segments and encourage them to purchase.
Congrats, now you know what the marketing budget is and why it’s crucial. Hope that our step-by-step guide will help you develop a marketing budget for your business.
Last Updated: 22.03.2023