It is tricky to determine how best to allocate your marketing budget across multiple channels. Especially if you have not previously engaged in any marketing activity. To help your business understand the smartest way to allocate its marketing budget, this blog will discuss:

• What a marketing budget is.
• How you should allocate your budget.
• When to review your budget.

Let’s dive in!

What is a Marketing Budget and How Should You Allocate It?

Your marketing budget is the money you plan to spend on all your marketing activities. When allocating this you need to distribute your budget wisely to achieve the maximum return on investment.

To determine which channels will best help your business grow you should start by auditing your business. Assess what aspect of your business would most benefit from marketing and decide what methods would be the most effective at achieving this.

Deciding on a Budget

If you’re struggling to decide the size of your budget, conducting some market research would be useful. A good place to start is with The CMO Survey which publishes regular reports outlining statistics on industry marketing budgets.

If you want to look at average spending for different types of marketing, Spendesk has collated a lot of research on this topic.

How to Allocate Your Marketing Budget Across Channels

Step 1: Set Goals

Once you have decided on your marketing budget and you have audited your business, you need to set some goals. First, determine if it would be best to focus on improving:

1. Your brand’s awareness.
2. Your customer engagement.
3. Your conversion rate of new customers.

Determine Which Channels Will Help You Achieve Your Goals

Most companies will start by focusing on increasing their brand awareness if they have not engaged with marketing before. This will help you become known in your target markets. A focused PR strategy is a cost-effective method for increasing your brand awareness and should form a part of your marketing mix if you are looking to reach new markets or audiences.

To increase customer engagement a quality content marketing campaign including social media content will quickly help you to engage with your target audience. By creating content that is genuinely useful to your ideal customers, you will build a following that likes and engages with the content you create.

To convert engaged prospects, email marketing is a popular strategy for businesses. This allows you to communicate directly with your audience and is a great channel for building brand trust. Which is, after all, what makes people buy from your business.

Step 2: Use Past Experience

When deciding how to allocate your marketing budget, you should also look at what has worked previously for your business. Do you have a loyal social media following? Have you written some great thought leadership articles?

Either way, auditing your business to decide which types of marketing would be a successful reinvestment is strongly advised. Using data backed insights to inform your marketing strategy is also recommended. This allows you to make educated judgements to improve your ROI.

Step 3: Don’t Just Stick to What You Know

An important aspect of your budget allocation should be dedicated to experiments. This will allow you to explore if there is anything you are missing from your current marketing plan.

We recommend setting aside 10% of your budget to test out a different marketing channel. Some examples of how you might use this include:

• Creating video content.
• Launching an ad campaign.
• Redesigning your website.

Only using a small percentage of your budget to test out a new strategy is advisable as you want to limit the risk you expose your business to.

Reviewing Your Performance

A crucial aspect of how you allocate your marketing budget is reviewing your performance. Once you’ve decided how you will distribute your budget, you should regularly check how each aspect of your marketing strategy is performing.

This should involve deciding what key metrics will show progress towards your overall marketing goals. For example, if you want to increase your brand’s profile, you should track your social media post impressions and the publicity reach of your PR material. This will help you gauge how many people your brand is reaching.

When Should You Reallocate Your Marketing Budget?

It’s time to switch things up if you see either a persistent decline or decrease in growth. This indicates that your budget may be better spent on other marketing activities with a better ROI.

However, you should be cautious when changing your strategy as certain activities such as PR require a longer period of investment to see results. After only a few months, you simply don’t have enough data to make an informed decision about the long-term success of your strategy. So, to make changes to your strategy at this stage would jeopardise the overall results your marketing mix could achieve.

FAQs

How Much Should I Spend?

Although it is recommended that you carry out research related to your own industry, the average spending on marketing for B2B companies is around 10% of their total revenue.

For B2C companies, marketing budgets are usually a lot higher.

Should I Cut My Budget in a Recession?

When times are tough it is recommended that you try to maintain to same level of marketing if possible as this will help you to gain a competitive advantage when others cut their budgets.

If cuts must be made to keep the business viable, then you should use data backed insights to determine which areas of your marketing budget are the least profitable.

What Should You Include in Your Marketing Budget?

Your marketing budget should include the salaries of your marketing department, the cost of any marketing agencies you outsource work to plus any marketing platforms or advertising that you pay for.

Should I Increase My Marketing Budget?

Yes, if you can!

But if you see some really positive results from your PR, content marketing or email marketing and want to invest further in this you need to be able to justify this to directors and board members.

To do this you need to show key decision makers the data and reports that indicate the progress you have made towards achieving your marketing goals. You then need to be able to explain how increasing your budget will help reach your goals quicker and improve business growth.

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