Why your business needs a marketing budget and what you should spend it on
There’s plenty of proof out there to show just how important marketing is for even the smallest of businesses (spanning many decades). And yet way too many companies STILL underspend.
Perhaps this is partly down to a misunderstanding as to just how much should be spent (and where). Or maybe a lot of it is linked to business owners who simply don’t understand why they should even plough their hard-earned profits into marketing in the first place. I want to settle these uncertainties once and for all – answering ‘Why?’, ‘Where?’ And (the big one) ‘How Much?’ when it comes it marketing.
Why?
If you read my blog on marketing New Year’s resolutions, you’ll have hopefully listened to my advice about the importance of a reasonable marketing budget. But if you’re still not quite convinced as to just how important a budget is, here’s my explanation in solid stats and facts…
Marketing is the key revenue growth driver for over 30% of companies
(CMO Survey)
Google is responsible for 94% of total organic traffic.
(Web Presence Solutions, 2017)
Consistent brand presentation across all platforms increases revenue by up to 23 percent.
On average, 46% of users act after viewing a video ad.
So that’s the ‘Why’ behind creating a marketing budget. Your next question is probably where should you invest?
Where?
In this day and age, you have the world at your feet for marketing options. Here’s a (non-exhaustive) list…
Off-line: Direct-mail, Print, Events, Business Cards, Banners, Billboards, Newspapers, Magazines, Radio Advertising, Car Wraps, TV Adverts, Signage, In-Transit Advertising, Tradeshows.
Online: SEO, Email marketing, Search PPC, Social PPC, Content Marketing, Events & Webinars, Video Marketing, Marketing Analytics, Marketing Automation, Customer Relationship Management (CRM), Content Management System (CMS).
Feeling overwhelmed, yet?
Digital vs. offline
Let’s start by simply tackling the whole debate of digital versus offline marketing. It’s true to say that marketers are shifting media pounds towards digital. In 2018, the average firm was expected to allocate 42% of their marketing budget to online, and this rate is expected to grow to 45% by 2020. But that’s not to say that traditional, off-line mediums can’t and won’t drive customers to your door.
For example, print is far from being the dead and buried marketing medium many think it is – with 60.5% reading/looking/glancing at the printed mail that’s delivered to them (which is more than can be said of the average social advert – which contends with a busy feed). Direct mail also elicits a 4.4% response rate, compared to 0.12% for email.
But at the same time email marketing is known to return an ROI of £38 per £1 spent – so it’s not all about whether there’s a response – it’s also about how much it costs to secure which types of purchase.
Where do you start?
This brings me to a critical point – as a starting position, you need to know your customers. Here are the key questions that must be answered when deciding where to plough your pounds…
- What is your target age group?
- What is your target income level?
- What is your target geographical area? Suburb? Big city? Rural area?
- What brands does your target audience interact with regularly?
- Where do your target market spend their online time?
You can access insight into these questions with simple online research, and the answers should help you form an understanding of exactly who your target market is, where they spend their time and how receptive they may be to each medium.
Once you understand who the ‘right’ person is, you’ll also need to target them at the ‘right time’. This will involve understanding their buying journey – and the key questions and concerns your buyers have as they move closer to making a purchase. This journey has four core stages…
Attract — Boost visibility to drive new customers to your content posted on social media and your website.
Convert — Convert those who interact with you into leads that you can nurture.
Close —Personalise the content to that particular buyer segment to complete the sale.
Delight — Delight customers with your products or services to ensure they return (and tell others about how great you are!).
(Pssst – you can explore my past guides on some of your marketing options with these links: Content marketing, Email
Pro marketing tip…
Whatever mediums you choose to pursue, there’s one that you can’t afford to ignore, and that’s the power of social proof…
90% of consumers read online reviews before visiting a business.
84% of people trust online reviews as much as a personal recommendation.
Online reviews have been shown to impact 67.7% of purchasing decisions.
Tapping into these impressive results isn’t expensive or difficult. The equation is a simple one – deliver outstanding customer service, and ask your customers to share their experience on sites such as Facebook, Google Businesses, Yelp, Trustpilot, TripAdvisor, Feefo and Reviews.
How much?
If you’ve done even a little bit of online research into the matter of marketing and money, you may have heard one figure being bandied around far more than others – that figure being 10% of your revenue. And it’s true to say that two of the biggest (and most recent) pieces of research into the area support this – Gartner found that companies are spending around 12%, while a CMO Survey came in a little shorter – at 6.69% of revenue.
Pro marketing tip…
Free tools can stretch your marketing budget, as well as serving as a big helper for speeding up your speed of marketing, as well as its effectiveness (with features such as analytics). Here’s a round-up of the best…
- Email marketing – Constant Contact
- Social media – Buffer or Hootsuite
- Website analytics – Google Analytics
- Graphics – Canva
- Surveys – SurveyMonkey
A final (VERY) important pointer – Continually track and assess the impact of your marketing
It’s mission-critical that you know how your marketing budget is performing – day by day, week by week. Without it, you could end up pouring your profits down the drain.
First, you’ll need solid marketing tools for tracking time and budget – such as Due for time management, and Allocadia for budgeting (this is a powerful marketing budget planner – though this isn’t free, and starts at $75 a month). But, you know, a simple spreadsheet is great for tracking spend and I love Toggl to help me track where I spend my time (for client projects).
You’ll also need to track metrics that will shine a light on whether your budget is putting in overtime. Here are the main metrics that you may need to watch:
- Sales revenue
- Cost Per Lead
- Customer Value
- Inbound Marketing ROI
- Traffic-to-Lead Ratio (New Contact Rate)
- Lead-to-Customer Ratio
- Landing Page Conversion Rates
- Organic Traffic
- Social Media Traffic (and Conversion Rates)
- Mobile Traffic, Leads, and Conversion Rates
If some of these metrics look unfamiliar to you, you’ll need to head off to understand each one (which serves as another reason why a marketing pro is invaluable expertise).
Hopefully, that’s gone some way to answering the key questions of ‘Why?’, ‘Where?’ and ‘How Much?’. Of course, no two businesses (or their customers) are the same – so the exact approach (and spend) will always differ from company to company.
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