For owners and marketing managers, deciding where best to put their financial resources can be difficult to judge. Most SMEs have a limited amount to spend when it comes to marketing, but without this essential activity, a brand won’t sell its products. So how do you choose where to invest your marketing budget? Here’s what you need to know.
Set a marketing budget
Firstly, a defined budget helps businesses to keep a handle on spending and create a workable strategy for the year ahead. It stops costs from spiraling, and means marketing teams invest in what matters most. Every business incurs marketing costs, so don’t forget to plan properly even if you are the owner running campaigns yourself.
Get strategic with your marketing spending
Next, think about what you want to achieve with your marketing budget. You may be looking for sales, increased awareness, or to grow your email list. How you mix these objectives will influence your spending plans.
With objectives set, take a look at your marketing strategy to understand when your most important campaigns are running – these are the times of year that you’ll focus the greatest portion of your budget. For example, a luxury chocolate maker would run major campaigns for Christmas, Valentine’s Day and Mother’s Day, so these will need the biggest proportion of the funds available.
Remember that big calendar events like Christmas aren’t just a few weeks of activity. To get the best possible Return on Investment (ROI), you’ll need three months of testing to refine your plans before rolling out a successful two-month festive campaign.
Once you’ve allocated the budget throughout the year, think about what activities will bring the best ROI. If your business doesn’t yet have its own data, the internet is full of industry-standard rates of, for example, open rates, click-through and sales conversions for email marketing campaigns.
Making these simple calculations will indicate whether your spending should be on, say, an email campaign, or whether you are better off growing your email list first, to get a bigger audience for future activity.
It’s worth bearing in mind that whilst some activities, such as Facebook Ads, can show direct conversions, organic growth activities give less direct results so it’s harder to attribute sales to a particular campaign.
Long-term strategies pay off
When planning your marketing spending, make sure your funds can last. For instance, in a saturated space like social media you’ll need a commitment of at least a year to gain ground. And of course, social media is no longer just about posting once a day: with platforms constantly adding new functionality, such as Instagram Reels and Stories, social media can easily swallow up more time and money than you expect.
Successful social relies on engagement, so you’ll need to budget at least an hour per day for this – and whether this is your own time as a business owner, or outsourced to a specialist, this has a cost implication.
As with any project, it is easy for the hidden costs of marketing to add up. The secret to keeping a firm grip on spending is in planning.
Imagine that you budget £1000 to run Facebook ads. Someone, probably an agency, will need to run the ads for you. You’ll need high quality images, videos or graphics, and you might invest in scheduling tools to ensure that campaigns run smoothly. These all come with a price tag.
It can begin to sound a little overwhelming, but with proper preparation, you can spend your marketing wisely and effectively to reach your goals.
Flex and spend
Of course, if an activity brings in even more sales than expected, don’t be afraid to allow your plans to adapt. Investing more in a campaign that customers love is a winning formula to drive sales – just make sure you don’t devalue your brand with deep discounting.
Conversely, although it can be tempting to think that anything is possible with a bigger budget, throwing money at an unsuccessful campaign will not fix a problem. If your marketing doesn’t deliver the return you expect, analyse what went wrong before spending more.
Just in case
Another component to factor into your annual marketing budget is a contingency reserve – you may need to overcome a crisis or make the most of an unexpected opportunity. It could be that the influencers you want to work with increase prices as their profile rises, or a project goes so well that you decide to repeat it. Having a contingency fund keeps your options open and lessens the impact of unforeseen costs.
The best investment you can make
As small businesses grow, their marketing activities become more complex and time consuming to plan and execute.
At this point, one of the best marketing investments you can make is in expert help. Just as an accountant manages your finances more easily than you could yourself, so a marketing expert will devise exciting activities that deliver to your business objectives and maximise ROI, all within budget.
Ready to make the most of your marketing budget? get in touch to find out how our consultancy service can help you get the returns you need.