How much should you allocate for your marketing budget?
Marketing is fundamentally about nurturing growth. At Mackman Group, we are often asked ‘How much should I spend on marketing?’ and ‘How can I calculate my return on investment?’ This is a question that an agency can advise on, but can only be decided internally. When discussing a marketing budget, it is natural to want to spend as little as possible to achieve the best results. Many clients have had their fingers burned in the past with marketing and are therefore reluctant to spend more money on it.
According to the latest IPA Bellwether report, British marketing spend is at an eight-year high point. With rising inflation hitting both business costs in the short term and consumer spending in the medium term, forward planning is essential. Sometimes small budgets can force businesses to think creatively, however successful low-budget or guerrilla marketing strategies depend on being realistic about where budget, no matter the size, will be spent.
When planning a marketing budget, there are several points to consider.
If your business is ready for growth
Working with key stakeholders within your business, investigate whether you can deliver on growth targets by examining your ability to produce excellent products or services, with exceptional customer service to match. Being realistic about your goals is essential, as even if you decide that your business is ready for targeted growth, the workload associated with it may challenge your team, and has the potential to damage your brand reputation if you overstretch.
What are your business goals are
Whereas historically businesses set aside a percentage of their annual revenue for marketing – typically ranging from 5% to 15% – the recent pandemic has forced decision-makers to become more agile and shift towards a goal-orientated approach to budgeting. This is as straightforward as defining a desired outcome and assigning a budget based on how much it will cost to achieve that goal. This often relates to how much it will cost you to acquire a customer, and how much that customer is worth to your business. This is known as Customer Lifetime Value (CLV). Answering this simple question will provide high-level guidance on your marketing budget.
How your marketing budget will be split
Events budgets are seeing a particularly strong uplift this year as part of the Government’s ‘living with Covid’ strategy, as increased public confidence has led to a return to face-to-face exhibitions and events, and by an economic imperative to continue the country’s economic recovery. Across industries, businesses are investing in connecting with their audiences. No matter how your marketing budget is allocated, reflection is key. Learn from your earlier marketing strategies, whether they were successful or not. If your marketing is under-performing, draw a line under it, learn from it, and start again.
Before committing to an untested marketing strategy, consider market research to test the waters and provide empirical evidence for customer opinion on future marketing efforts. Market research creates a channel of communication between your business and its customers, so ask your audience what they expect from your business, whether they would respond to specific forms of promotion, and how their needs are evolving under cost-of-living constraints.
In summary, no matter the size of your business, a comprehensive and well-researched marketing strategy will ensure that your money is well spent. To understand how to avoid overspending and underachieving with your marketing budget, contact Mackman Group by emailing email@example.com or calling 01787 388038.
This article initially appeared in Suffolk Free Press in June 2022.