Seventy-two percent of marketing leaders said that the role of marketing had expanded in their organizations over the last year, according to a February 2021 CMO Survey, The Transformation of Marketing: Emerging Digital, Social, and Political Trends.
Many business leaders know that marketing is about far more than acting as a sales funnel or driving website traffic. It’s about creating brand awareness and optimizing your image as a company. It’s about creating and nurturing relationships with consumers. And it’s about making your business successful in the long term, as well as the short term.
Perhaps that’s why the same CMO Survey report predicted that marketing spending would increase by 14.3% in the next year — that is, 2022, the new year that has just begun.
Of course, you can’t devise and launch your efforts in a vacuum — you need resources and funding to make them happen and ensure that they will be cost-effective, too. That all starts with a well-thought-out marketing budget.
What Is a Marketing Budget?
A marketing budget is integral to your overarching marketing strategy; in fact, the latter cannot exist without the former.
Most businesses and organizations create a budget for each quarter. This is central to your plans for those three months, dictating what you need and how much money you need to carry out those activities.
But it’s a bit more nuanced than that. You need to spend some time working with others in your organization to determine how and where to best delegate your funds. Your financial officers will work with you to allocate your budget, and marketing personnel will evaluate the efficacy of individual activities and how much money they believe they need to perform them.
It can be difficult to create a marketing budget when you’re starting from square one. That’s why many businesses use the previous year or quarter to analyze how their activities panned out and what they should do differently this time around. Of course, if you’re a new business, you must look elsewhere, since last year’s budget doesn’t exist. Fortunately, there are many templates to help you — along with the guidance and steps we’ve outlined below.
The budget acts as a roadmap for anticipating the costs of various marketing endeavors and activities. Through it, you will track your actual expenditures, all while using the budget as a guide. That said, it is important to stick to your budget as closely as possible.
Questions to Ask Yourself When Building a Marketing Plan
How do you go about devising a marketing plan? Here are some questions to ask yourself that will act as a guide:
- What are the specific marketing activities you engage in typically?
- What new activities or initiatives are you looking to try this year?
- How important is digital marketing? What percentage of the budget should it comprise?
- Where have you seen the most revenue growth? Where have you seen the least revenue growth?
- Where did consumers show the most satisfaction? Where did they show the least satisfaction?
- How are you nurturing customer relationships? (e.g. Do you use a CRM or another tool?)
- What specific problems are you trying to solve with your product(s)?
- How do you gauge customer loyalty?
- What are your competitors doing to drive revenue?
- What current resources do you have? What resources do you still need?
- How has your industry changed in recent months or years?
- How has the environment for your product or services changed in recent months or years?
- Is there are new audience or key demographic you’re looking to target?
- How do your marketing strategies complement your overarching goals as a business?
Steps to Create a Marketing Agency Budget
1. Identify business goals.
From the beginning, you will need to have a deep understanding of your overarching business goals. Work closely with other leaders at the company to gain insight into what the main objectives for the year are, and then devise marketing goals that complement and support these overarching goals.
Many organizations use the SMART system to devise their goals. SMART stands for:
- Achievable or attainable
Using SMART goals will allow you to track your efforts and see how much progress you’ve made. It will also enable you to know how and where to direct your efforts and calculate a budget that aligns with your aspirations for each specific quarter.
Once you have these goals in place, you will be better equipped to create a cohesive plan that will allow you to meet your objectives. You will however need to put in the work and research to understand both what your goals should be and the steps you will take to achieve them. This will gear your focus and allow you to devise an actionable plan.
2. Plan major marketing events.
Next comes the nitty-gritty: what you will actually be doing in terms of marketing activities. How will you reach your target audience? What did you do in the past year that helped you reach them? What support did you get in-house and externally?
You don’t need to dive deep into every single social media post or graphic your team designed. Instead, look at the bigger picture. What major marketing events and activities do you plan to undertake this year? These will form the basis of your budget and drive the largest expenditures, as well as inform your overarching business plan.
The specific activities you undertake will depend on your brand and efforts as an organization. Some ideas might include:
- Live events and/or webinars
- e-Book publications
- New product launches
- Entire brand overhauls
- A website redesign
- A logo redesign
- Major advertising campaigns, digital, print, or otherwise
- Engaging a public relations or publicity firm to revitalize your efforts and image
- Major collateral, such as catalogs
- Major digital marketing initiatives, such as multimedia email campaigns
3. Adapt to changes in behavior.
Major events and circumstances can disrupt patterns in consumer behavior, even ones that have seemed like more or less of a given for some time. Take the COVID-19 pandemic, for example. No one could have foreseen what a huge toll it would have taken on all of our lives. This has been a period of great upheaval, and these dramatic changes disrupted practically everything, including consumer spending and purchasing habits.
While you can’t predict the next events that will shake things up, so to speak, you must be cognizant of the fact that disruptions can and will occur. And your marketing budget, in turn, must account for that fact.
Closely examine previous consumer patterns. For example, notice how digital sales have been dramatically climbing in recent years, even before the pandemic began. Then, consider how this shift was only augmented by a huge disruption. Nothing changed or reversed course; what was already in motion simply accelerated in the same direction.
Consider this as you assess behaviors and buy patterns, and have plans in place for adjusting your strategy should the unexpected occur. Your budget should carry some sort of safety net that will allow you to augment your efforts or pivot should they take place.
4. Be strategic, and stay open-minded.
This sounds simple enough. But being strategic and open-minded simultaneously can be a surprisingly difficult feat to accomplish.
In order to devise a marketing budget and accompanying plan that allow you to accelerate your efforts, achieve your goals, and improve your bottom line, you will need to think long-term. Yes, you’re creating a budget for a specific quarter or another period of time, as the case may be, but you must reach forward and consider expenditures that you will need to make far into the future, too.
It should be detailed, and every item or process you budget for now must complement the bigger-picture goals and objectives. Your strategy, however, comes first. Your budget must complete your strategy, not the reverse.
At the same time, while you’re thinking strategically, you must not be afraid of staying flexible. As we have discussed, unexpected events can and will occur, and your ability to keep an open mind to change will allow you to stay afloat.
5. Stay data-informed with your marketing budgets.
DO NOT go in blind. Your budget must be based on concrete data that supports it. This, and only this, is how will you realize a solid return on investment (ROI)
Some people find this intimidating. But backing up your efforts with facts and information is more straightforward than it might sound. All it really means is that you will be using solid results, preferably of the numerical variety, to guide your efforts.
Look at your own past results. If you are able to, hire a marketing analyst to collect, track, and assess the results of previous campaigns and efforts. You may also choose to outsource this work to an outside agency. Or, you can perform it internally if you have personnel with the necessary skillsets.
If you were successful, consider how the results can guide your budget such that you replicate and enhance them this year. If you didn’t determine what went wrong — and, again, account for this in your marketing budget.
If you’re trying a marketing approach for the first time, look into industry standards and competitor efforts to understand how different approaches pan out and where you should be aiming.
This is not one and done. You must continue to review your results to determine what’s working and what’s not to better inform your budget and efforts in the future.
6. Stay updated with digital marketing trends for 2022.
In addition to examining your own efforts as a business, you should also account for trends that are taking place at the moment. This will take extensive research and monitoring on your part. Make analytics part of your routine. Set up Google alerts to stay abreast of what’s going on in your industry. Spend plenty of time looking at the competition.
Marketing is a world that’s constantly changing and evolving. But some overarching trends you should have on your radar include:
- Embracing a multitude of digital marketing channels, from social media to company websites and pages
- Search engine optimization (SEO) best practices
- Digital transformation and acceleration
- Data-backed strategies and analytics-informed assessments
- Generating brand awareness, not just product awareness
- Increasing digital ad spending
- Increasing spending on advertisements through a variety of media, including print and television
- Ramping up content marketing: blog posts, webinars, videos, audio clips, podcasts, e-books, white papers, thought leadership articles, and other content
- Defining niche audiences
- Targeting accordingly
- Embracing automation for certain — but not all — marketing efforts
- Lead generation to nurture existing consumer relationships
- Increasing organic traffic
- Ensuring that your content is cross-platform and cross-device capable
7. Identify your costs.
Your budget, of course, is nothing without first understanding the costs you will incur as a business. These expenditures are applied to both internal and external activities.
Working alongside your finance department, identify the total costs of individual activities, no matter how large or small. Take into account the salaries and hourly rates of full-time and part-time workers, as well as freelancers you may need to rely on in the coming year.
Consider major initiatives, which may require additional labor and manpower to complete. But think about smaller-scale activities, too, from daily social media posts, which will require paying for platforms, to blog posts and the associated software you’re using to launch them.
8. Perform competitor analysis.
Market research is the foundation of your marketing budget. This is the process of looking into how your product or service will perform in your target landscape. It will help you to identify the audience and customers who will respond best to it and gather feedback and information on how to position and present it.
Market research as a whole is an extensive undertaking, and competitor analysis is just one piece of it — but it’s an important one nonetheless.
Look into the competitors who are looking to reach your target audience to determine how they are guiding their efforts. A SWOT (strengths, weaknesses, opportunities, and threats) analysis can help with this approach. That way, you’ll be able to see what’s happening in the market currently and how you can find your place in it. It’s a plan to stand out from the competition and identify your particular niche within it.
This, too, will allow you to plan for your marketing budget even better. Can you find an untapped market? How will you stand out in a market that’s potentially saturated with competitors? What will these various activities cost?
This is a bit more nuanced than you might expect.
The competition isn’t solely just the competition. There might even be opportunities to work together toward a common goal — large-scale campaigns and initiatives that could drive customers to both of your businesses. They can also help you thrive; you can, for example, derive invaluable insights from what they have done successfully or unsuccessfully, allowing you to inform your own marketing activities for the present and future.
Why do you need to prepare a marketing agency budget?
Budget planning is central to driving your efforts as a marketing team. This is part of your strategy — and an extremely important one. It acts as a guide for you and your team, informing how you will act as a business and how you will support your activities. It will enable you to grow and transform into the organization you want to become.
And it’s not just about your department alone. This is also important for your sales team to follow up on qualified leads and act as a partner in your efforts. It’s pivotal for your finance department to understand where and how you’re spending money and what you intend to accomplish, too. In fact, it affects your entire business.
That’s why you shouldn’t attempt to do this alone. Get input from other departments and teams to guide your efforts as you devise your budget and plans to confirm that what you have devised are cohesiveness and well-thought-out.
This, of course, is just a starting point. But once you have a marketing budget in place, you will guide your activities as a team and understand how to move forward and make your organization more successful and functional.