HOW TO BREAK DOWN YOUR MARKETING BUDGET FOR THE REST OF 2020
Pro Tip: Don't Start With Platforms
No one likes talking about budgets. I find this to be really sad, because I honestly love talking about budgets (just ask my husband!). Whenever you bring up the word, for many it’s like you just put a straight jacket on them and asked them to make their beloved first cup of coffee for the day.
So, let’s take the straight jacket off and just for a moment, imagine your budget as a propeller of ideas, creativity and, most importantly, increased sales. Your goals are the clouds and your ideas the plane, but you still need the fuel to get the plane into the air. Imagine just how far the right ideas can go when the budget (big or small) matches up?!
Deciding What to Spend and Where
One of the things I love about Innovations is that we don’t try to force feed a marketing plan to you. We never tell a client that X platform or tactic is the only way to do marketing in the 20s. We don’t start with a list of platforms you need to be using. Instead, here’s our process:
1. We take a look at your goals. Not necessarily your marketing goals, but your overall business goals. What are you hoping to accomplish in 6 months, a year, 10 years.
2. We examine your budget. Not only your budget with us, but your entire marketing budget. Where is every dollar being spent, what kind of success have you had, and where should we allocate those dollars for maximized results?
3. We research your customers and your industry so we know who we’re talking to, where they’re getting their information and why they do/don’t work with you.
4. We examine all of these factors and build a marketing plan we believe will get you closer to the goals you laid out at the beginning. It’s not about spending marketing dollars. It’s about reaching goals and making an impact on your customers.
But, you didn’t come here to learn about our entire process, you clicked on this article probably because you want to know what other marketing departments are spending on their marketing and advertising efforts. Now, at the beginning of 2020, marketing budgets were looking up, but then COVID-19 happened… and for some companies they saw their budgets scaled back while others were pressing forward. So, the predicted 8% of company revenue being spent on marketing for the year, may not be an accurate number for many.
I’m not going to go into all the research that says pouring money into marketing during a crisis is actually the best thing you can do… instead, I want to focus on how we recommend you think about your marketing budget in crisis or out of it.
Marketing Budget Pitfalls
First, let me explain a few budgeting pitfalls we’ve witnessed over the 20 years we’ve been in business:
1. Hasty decisions with little planning. When a crisis hits, it can be the gut reaction for many to stop everything. Or, they’ve had a great idea and they want to implement it immediately. What’s wrong with both scenarios? They’re impulse reactions instead of planned decisions. Whether it’s a crisis or a great idea, without proper planning and analysis, you’ll see marketing dollars actually wasted, not saved.
2. Pulling well-performing ad budgets to fund one-off projects. For example: What if you knew that a $100 spent on social media = 1,000 website views and $20,000 worth in potential sales? How willing would you be to move that $100 from social media to something that hadn’t proven results yet? It is vital to track your marketing results. Traditionally speaking, that’s a little harder to do, but with digital marketing, it’s very possible to track this type of impact.
3. Starting the budget talk with platforms and tactics. This is very tempting and I’ll be honest, sometimes I find myself trying to start here. Ideas start flowing and you just get so excited about all of the things you want to try. But, here’s why this approach won’t benefit you: tactics are only beneficial if they help you reach the goals of the company. Adding tactics or platforms to your marketing plan just because they’re the “new” thing, doesn’t translate to the bottom line of your company. Don’t forget the basics. Don’t forget to start with your goals and then move on to your budget, plans, tactics, etc.
4. Budgeting for distribution and not creative, or budgeting for creative but not distribution. It’s very easy to sit in a room and brainstorm creative ideas and forget to ask what the distribution budget is. Here’s what that means: Let’s say you have a campaign idea and you know you have the time to create the content and the social media posts, but you also know to truly be successful with this idea, you need Spotify, Hulu and Facebook ads, which you discover is not in your budget. It’s a delicate balance in the creative process. It’s best if you brainstorm first with a general idea of budget in mind and then move things to “future ideas” as you narrow down what can actually fit inside this campaign’s budget.
Now, if you’ve found yourself making some of these mistakes, don’t fret, we’ve all made them at times. Below you’ll find a general idea of the ideal marketing budget. If your budget allows, this diagram explains the four main focuses of your marketing budget.
Keep in mind though, your budget may dictate that not all four can be focused on at one time. That’s why we go through the process mentioned above. There’s not a cookie cutter marketing plan, each business has different goals, budgets, and customers which means each business has a different marketing plan. But, this is a good place to start in thinking through what your marketing budget should be funding.
4 Main Marketing Budget Breakdowns
1. Creative Budget – This is the money needed to brainstorm and create. This might include paying an agency, like Innovations, to plan, create and execute campaigns. It might include paying an actor for your next TV commercial. It might include the creation of sales support materials or content specific for your website’s upgrade.
2. Everyday Awareness – These marketing dollars are spread across general awareness social media posts/ads, creating blogs, email workflows, Google Search Ads, PR or community engagement efforts, retargeting ad, etc. It’s spending time and money to keep your current customers engaged. Ensure you’re easy to find if someone wants to reach out directly to purchase.
3. Campaigns – This is where you narrow your target for a limited timeframe to increase your potential sales toward a particular customer type. Now, campaigns have endless possibilities. You might spend money toward print materials, Google Display Ads, Youtube Preroll Ads, Spotify/Pandora Ads, TV ads, social media ads, retargeting, etc. Remember, wherever you’re spending money to distribute your campaign, you’ll need to make sure your creative budget can also support all of the content creation needed.
4. Customer Retention – You’ve made the sale! Yay! But, don’t think that means you’re finished spending money keeping them a customer. Did you know that it costs 5 times as much to attract a new customer vs. keeping an existing one? So, if there’s an opportunity to upsell, resell or convince them to refer your company to others, don’t neglect this piece! It’s a good idea to set up an ongoing customer retention campaign, or potentially an onboarding process depending on your business model.
Now, this may seem like a simple breakdown, but the deeper you go, the more complex you’ll find each of these focus areas. You will have different goals, different target markets and a different budget total for each piece of this financial breakdown. That’s why it’s important to let your agency in on all of your marketing decisions. We pride ourselves on not just spending your marketing budget but maximizing every dollar toward reaching your business goals.
If you’re maximizing something, that’s not putting someone in a straight jacket, now is it? No, instead you’re fueling your creative team to work toward your business goals. You’re fueling up the plane to not only take off, but land perfectly where you planned. So, let’s start with what’s financially responsible for your company, then step back and see what’s possible.