As 2015 draws to a close, one thing most marketers are looking forward to is the annual renewal of their marketing budgets for 2016.
If you’re looking for ways to determine how to allocate your marketing budget, don’t be quick to settle on replicating last year’s financial plan.
Here are some variables to consider:
- Industry: Does your industry demand heavy marketing involvement?
- Company Size: Are you a small business focused on your immediate surroundings, or are you a larger enterprise that is competing on a national or global scale?
- Company Growth Stage: Are you a startup or an established player?
- Product/Service Growth Stage: Are you selling a completely new offering or are you focused on selling a very established product/service?
- Consumers: Have you clearly identified your target audience(s), or are you still figuring it out?
- Profit Margin: How much budget does your margin support?
- Competition: Do you need to spend at a specific level to keep up with competitors?
- Percentage Of Sales: Do you have a formula to calculate what your marketing spend should be? Here are some general guidelines that others follow:
- < $5 million revenue - 7-8% marketing spend
- $6-10 million revenue - 6-7% marketing spend
- $11-100 million revenue - 5-6% marketing spend
- $101-300 million revenue - 4-5% marketing spend
- $301 million+ revenue - 3-4% marketing spend
Additional questions to ask yourself:
- How am I going to track my marketing spend to ensure ROI?
- What percentage of my budget will I reserve some budget for experimentation?
- What ideas do I want to keep in my back pocket, in case I have extra budget for Q4?
- How frequently am I going to revisit the budget to make adjustments?
- Am I going to hire an agency to help execute the marketing strategy?
- Have I allocated enough money to cover hard media costs plus agency fees?
Here are a few examples of marketing budget line items:
- Brand development
- Website development
- Content creation
- Email programs/E-newsletters
- Graphic design, collateral development, and production
- Market research
- Marketing software
- Metrics/data analysis
- Mobile marketing
- Digital media (SEO/SEM/PPC)
- Traditional media (TV, radio, billboard, etc.)
- Direct mail
- Public relations
- Social media marketing