Are you having trouble figuring out how to take your business to the next level by utilizing marketing channels? Are you trying to remain profitable but at the same time allocate enough money towards your marketing efforts? You are definitely not alone in that struggle.
It’s actually one of the most common challenges as a business owner, figuring out how much of your operating budget you should put towards digital marketing efforts. There’s a very fine line—if you invest too little then you miss out on a lot of opportunities. On the other hand, if you over-invest you end up draining your reserves which could prove detrimental in an emergency situation.
However, there is a proven budgeting formula that does increase your odds of success with your marketing efforts. As with anything in marketing, nothing is guaranteed however we can tell you how to increase those odds. Just be aware it does require taking a leap of faith and making smart decisions on how you spend those marketing dollars.
Ready to learn more? We are here to show you how it can be done so keep reading.
Finding The Sweet Spot In Your Budget For Marketing
When you’re discussing how much to spend on your marketing efforts there’s really not a universal answer on the surface. However, once you take into consideration some important factors about your business it will help you hone in on that optimal budget.
The most important thing that we can teach you is that your marketing budget is that it’s going to be directly tied not just to the revenue that you make now, but the revenue you’re aiming for. As Hector mentions, you should allocate a dollar amount that’s equal to 12 to 15% of the revenue you want to make.
So, as he gave in the example if you want to make $100,000 within the next month in revenue then you should be spending between 12 to 15,000 a month. Now, that being said you have to set realistic goals for the revenue that you want to attain. You may not be able, based on your current revenue, to afford the marketing budget it takes to get where you want to be.
So, that is why you have to scale not only your goals but your marketing budget in line with your current revenue. So you may not be able to afford what it takes to make $100,000 within the next month because your current revenue is only $10,000 a month. However, you can set a goal that is relative to let’s say $30,000 a month.
Now, if you spend that money that you allocate wisely, then you will increase your odds of reaching that $30,000 a month. Then you can ramp up your marketing efforts to align with your new increased revenue. You won’t build an empire overnight it’s definitely the long gameplan—but it’s a solid gameplan.
Set Realistic Goals And Relevant Objectives
So you set your budget for marketing—but that’s only the first step what you do with that will greatly determine your success or failure. There are quite a few factors to consider when determining how to allocate those dollars. Ultimately, it comes down to setting realistic goals and relevant objectives.
If you don’t have a clear vision of what you’re trying to accomplish with your marketing efforts you’re not going to have a clue how to allocate the money effectively. You can have laid out the best purpose for your marketing efforts but purpose without vision is blindness. What you will end up doing is accomplishing nothing and blowing through your profit that’s gone to waste.
You need to take the time and get analytic about your goals. Look at where you’re at, look at where you’re trying to go and identify the roadblocks ahead. Once you can do that you can dive deeper into what it’s going to take to reach your goals and hurdle over those roadblocks. To do that you have to be able to measure success. So how do you measure that?
Well, you have to look at the metrics. We’re talking about data that tells a lot about your business and how you’re performing. Some of these metrics include:
- Generated Leads
- Website Traffic
- Conversions
Figure out which ones make the most sense for your business model and the industry that you’re in so you can see what’s working. This will also tell you where you’re coming up short so you might want to allocate more dollars towards those specific areas. Once you have a solid grip on your goals and objectives you can start compiling that budget that will accomplish what you’re trying to get done.
Setting The Budget
So let’s get down to brass tacks and look at the things that you need to consider before you allocate your marketing dollars. Remember, there is no magic number but there is just common sense budgeting. Use the data and act accordingly because the numbers don’t lie.
What Are Your Goals?
So first, you want to focus on your overall business goals. What exactly are you trying to achieve? Take a look at what it’s going to take to make that happen. Once you have a clear picture of that you could begin to allocate your funds towards efforts to help you attain those goals.
Now those efforts are going to look different for every business dependent on the industry, financial health, and resources. They could include PPC advertising, radio and TV ads, social media advertising, or a combination of all of these and other efforts as well. You have to realize it’s not a blanket solution you have to come up with the right mix that fits your circumstances and goals.
If any marketing agency sells you a magic formula and tells you that they can guarantee you specific results, they’re lying to you. Setting an appropriate budget for marketing won’t guarantee results, it will improve your odds of success though.
Who Are You Trying To Reach?
Who are you talking to? This is important as your marketing efforts should be personalized toward the demographic you’re trying to reach. For example, if you’re a dealership that sells extreme ATVs, you’ve got to target an audience that would be interested in what you have to offer. Your advertising should target them rather than a blanket audience. Sending your ad to a large audience that isn’t targeted, is less effective than a smaller targeted audience.
So in this case, you’re more than likely looking at younger people between 18 and 35 with disposable income. It would make no sense to waste money sending ads to seniors for example who likely aren’t going to be going off-roading at 65. Sure, there are anomalies in every demographic but data doesn’t lie so go with the sure thing and make the most of your marketing dollars.
Who Else Is Trying To Reach Your Audience?
Another thing you have to remember is if you’re trying to reach your audience and sell them your product you can guarantee your competitors are doing the same thing.
You need to study your competition. What’s working for them? Where are they spending their marketing dollars? What type of creative efforts are they making? Now, you don’t want to just blindly copy them but it can help you shape your own original efforts. And in fact, you can position yourself to stand out from what they’re doing and try to get an edge. It really is a popularity competition, so you really have to know your audience and what’s going to draw them in. Because if you don’t reach your people your competition will.
Let’s Spread The Money Around
Once you’ve considered all factors, you’ll have a clear picture of what’s likely to work best and where to focus your dollars. Just remember flexibility is crucial when developing a budget for marketing. You have to be ready to adapt quickly based on business and market changes.
So, what do you spend your money on? Well like we said, there’s no universal answer but here’s some of the efforts you could put some money into. This isn’t an exhaustive list but it does give you a good idea to get the ball rolling.
Digital Marketing: This is basically anything that falls within the realm of online marketing. We’re talking about things like SEO, e-mail marketing, social media, and PPC advertising. If you’re just getting started with your marketing efforts, this is where we recommend you spent a good chunk of that. We’d say at least 75% of your total budget to begin with.
Traditional Marketing: This covers more traditional marketing channels such as print ads, TV and radio spots, and mass media. While digital marketing is currently the king, traditional is not dead and can deliver some great results. We’d say go about 10% in this area if you’re just starting out.
Events & Sponsorships: When you’re just starting out with marketing efforts one of the toughest things to do is raise awareness for your brand. Take these opportunities and get involved with events such as charity golf tournaments, local organizations, and municipal festivals. These types of events can be a great way to get your brand seen by the people you’re trying to reach. Allocate about 15% to these efforts simply so that people can know that you exist.
We know this sounds like a lot of work but the reward is worth it—but there is a way to get the reward without the work.
Let BrandNation Manage Your Budget For Marketing
You know your business and we know ours. If you’re a car dealership you know what it takes to sell a car and you want to focus your efforts on that. You don’t have the time to worry about Google Analytics, key search term trends, and anything else regarding the marketing side.
That’s where BrandNation fills in for you. We analyze your business, your competitors, your market, and your opportunities for improvement. From there we can tell you the minimum amount that you would need to have the best shot at achieving specific goals. What makes it even better is we do all the execution, and you reap all the benefits. How much easier can we make it?
Contact us let’s get your business growing.
