Why you’re wasting your money on marketing and what to do about it
That’s right. You are wasting your money on marketing. Do you know why? It’s because you don’t have a marketing budget and you don’t track how well the money you do spend is working.
I bet you’re thinking you don’t have the time to set up a marketing budget. As business owners, we’re all strapped for time, but a bit of work upfront will make sure you spend your time and money in the right place.
Why do you need a marketing budget?
Many business owners I meet tell me that they don’t have any money to spend on marketing. Yet, when I dig a bit deeper, I find out that they are spending money on:
- Email marketing software
- Facebook advertising
- Webinar software
The list goes on, and, guess what? You are spending money on marketing. So where does having a budget come in, you ask? If you don’t set how much money you want to spend on marketing, then where’s your limit?
Setting a budget (not unlike your own personal budget) will help you prioritise the activities you spend your money on, and you’ll also be able to see when money will go out of the business, so you can manage cash flow too.
How much you should allocate?
That’s the big question! There are really two ways you can set a marketing budget:
- Top-down approach. This requires little upfront work. It’s the money you have for the year that you can set aside to spend on marketing. You may decide that this amount is a percentage of your revenue. You then need to do some work to divide this up to cover the activities you want to do.
- The bottom-up approach. This is where you make a list of all the things you think you will spend money on, then add an estimate of how much each thing will cost. The total is your budget. You may decide that the total is more than you can afford to spend. That’s OK. You can reprioritise activities and reduce the total.
So, now you have your budget and you know what you have to spend on marketing activities.
How should you track what you spend?
For me, the best way to track spend is on a spreadsheet. Take your time setting it up and use the auto sum functionality. Once done, it will do the hard work for you. And the best thing is you only have to do it once and you can use the same format year in, year out. So it really is worth taking the time to build your tracker.
There are a number of ways you can set up the spreadsheet, but it has to work for you and you have to be able to maintain it, so don’t make it too complicated. Otherwise, you’ll never use it.
The main things you need on there are:
- Months of the year, so you can allocate a budget to them, which will help you understand when you’re going to spend money.
- A line per activity, so you know what you’re going to be spending money on.
- A column for the budget set.
- A column for committed money (activities you’ve already agreed to do or know you will definitely do.)
- A column for actual spend (what you actually spent.)
So, your budget might look something like this:
How do you know if what you spent was worth it?
You really don’t want to spend money on marketing if you can’t see the impact it’s making to your business. So measuring the ROI (return on investment) of your marketing spend is important. If the figures don’t stack up, you will not want to spend money on that activity again.
So, for every activity, you need to set a goal. What do you want to achieve? Is it the number of event attendees, the number of downloads of your e-book or the number of sales from your website? The success of the activity you have spent money on is measured by whether you achieved your goal or not.
Pulling it all together
Having the budget tracker set up is the start of you really managing your marketing budget.
Set aside time each month to update it. You will need to update the ‘Actual’ column with details of money you have spent. You’ll also need to think about spending you know is coming up and add that to the ‘Committed’ column. As you’ve used the auto sum feature, all the adding and subtracting will be done for you and you’ll know what you have left to spend for the rest of the year.
Now you understand why you’re wasting your money on marketing, will you start working on your budget?