8 Steps to a Winning Small Business Marketing Budget
When developing a marketing and advertising plan for a small business, it can be difficult to know where to allocate your money to get the best results, or even how much should be planned for your small business marketing budget. It’s an investment of both time and money that could exponentially grow your customer database if done effectively. As with any investment, there’s a measure of risk. So how do you know if you’re making the best possible use of your advertising spend and marketing budget? Today’s post explains how to plan a small business marketing budget in eight basic steps.
1. Identify Needs
The first thing that you should always do is define your goals and identify your priorities. The point of developing a budget is to help you spend wisely and stay on track with your marketing dollars.
Remember that your marketing budget needs to fit within your overall budget, and it should never be so high that it impinges on your business’ ability to function. After all, you don’t want to blow the budget on SEO and social media marketing if you need to spend it on materials for an event.
Identify both short term and long term business and marketing goals. Prioritizing them might mean allocating more or less over time, and both are important for improving brand awareness and revenue.
If you already have marketing campaigns in the pipeline, be specific when budgeting for the goals of those campaigns. For instance, if a particular campaign goal is to generate leads, it will have different spending requirements than a campaign advertising a limited-time special offer.
Be sure you have a marketing plan in place that accounts for the entire buyer’s journey. Now is the time to think about what goes on behind the scenes of a successful marketing campaign. Market and competitor research will cost money, as will hiring a contractor to set up or evaluate different channels (e.g., website, social media). Skip them in the planning process and you might spend more than you should on them in the long run.
2. Identify Your Targeted, Ideal Audience
Knowing your audience is critical to your budget, and it goes hand in hand with identifying your priorities. It will help you identify how many people you’re trying to reach, and it will also help you better identify the frequency necessary to generate the desired impact and inspire action. Segmentation is also important because it will help you identify which types of campaigns will be most effective for which groups.
3. Determine Marketing Channels
In one regard, this is an aspect of identifying your target audience. After all, you don’t want to waste marketing dollars on advertising on a channel that your customers aren’t even using. However, different channels will have different costs, and not all channels will need to be used in the same way for every campaign. For example, your social media spend might go toward regular Facebook ads or promoted posts, which your brand would continue making no matter what campaign was running.
Identifying the channels you plan on using can also help you avoid more surprise costs as well as overreaching your capabilities. You’ll consciously include or exclude channels based on your market research and plan for A/B testing, rather than just randomly advertising on a particular channel and hoping it brings success. Remember that you should investigate all channels—digital, social, traditional—rather than making assumptions and choosing at random.
4. Plan Annually
Advertising success requires a long-term view, so plan your marketing strategy for the coming year, not month. While there will always be unexpected events you’ll need to handle, identifying key holidays, seasons, or other events that impact your business and affect the cost of advertising is important.
For example, competing for TV advertising slots in 2016 was exacerbated by the presidential election. This drove up prices, while events like the debates drew viewers from their normal viewing habits. Sometimes buying in advance can lower your advertising costs, but this isn’t possible if you don’t plan ahead and look at future opportunities by planning annually.
5. Research Opportunities
The combination of our previous two steps—identifying channels and planning for the next year—help form the basis for this step. Go out of your way to explore what’s set to happen over the next year and how it impacts the channels you plan on using to discover new marketing opportunities. Dismiss the fear of missing out by identifying the opportunities you can afford to take advantage of rather than jumping at the chance last minute, which would not only be out of your budget, it would probably be much more expensive than if you’d planned for it.
6. Select Based on Potential ROI
Everything should look to ROI and the impact on your bottom line. That means taking a big picture look at your marketing goals. What are the opportunities you want to take advantage of, which channels you want to use to reach which audience segments and what are the costs associated with each? Compare your intentions with past campaigns and the ROI those offered so you can select the options that are most likely to be successful.
Remember that there’s no one size fits all path, nor is there a guarantee of success. You also can’t afford to do everything. The data you’ll collect throughout each step will help you realize which tactics are most likely to be most successful and have a positive impact on your revenue.
7. Set Total Spend
According to a survey of small business owners done by Valpak, more than 50% of the responding SMBs appear to be marketing on the fly when it comes to allocating their marketing and advertising budgets. Over half of the survey respondents site using a “bucket” approach, dipping out funds for marketing buys without specificity. A striking 82% use “flexible” budgets that are adjusted at varying intervals according to either earned revenue, market trends, or, when tracked, media performance.
As a rule of thumb, a business needs to consider spending between 6% and 20% on marketing annually, depending on how long they’ve been in the market. Remember, the marketing dollars you have to spend are limited by other budgetary concerns. Take a look at how much your business has already been spending on marketing compared to past results.
8. Break into Monthly Budget
Align your total advertising spend against your marketing calendar. The amount you budget to spend monthly might fluctuate based on your needs at the time, or the needs of the calendar. Your events, sales, special promotions and the calendar holidays all affect monthly budgets.
These steps are best practices that will help you build your small business marketing budget to set your business up for success. It will help you align your marketing strategy and goals with your bottom line, thus allowing you to execute each campaign with confidence.
Start Building Your Small Business Marketing Budget Today!
• Review your budget-building process. Compare to the steps outlined above and determine if there are steps you’ve ignored or to which you haven’t given the appropriate attention
• Ensure your budget realistically accounts for ROI so that your revenue is improved by your marketing and your budget reflects growth
• Take a close look at the channels you’re using. Is your audience present there? Are you trying to take on more channels than your business can support
• Do you have processes and analytics practices in place to gauge whether your marketing is working? You should be able to adjust your marketing throughout the course of your planned budget if necessary, to avoid wasting money because you weren’t monitoring progress
• Do you have a process in place for handling unexpected costs? For example, will you have the flex room to capitalize on real world events that happen unexpectedly
• Remember that this is simply the starting point for a solid marketing budget. Continue expanding your knowledge base and find more tools to refine the way you spend your budget
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