Budget Planning for 2019
Ah, budgets. The topic everybody loves to talk about. No? Just me? Well, 2018 is quickly coming to a close and today we’re going to dive into planning your marketing budget for next year.
“How much should be spent on marketing?” “What’s the average marketing budget?” Fair questions but the answer is going to vary, based on a lot of factors, e.g. the size of your business and how much import you place on marketing. Some folks say companies should spend 5% of their total revenue on marketing, just to maintain their current position in the marketplace. Some say If you’re looking to grow you should budget more like 10% of your revenue. So where do we begin with our marketing plan and budget?
Key Aspects of a Marketing Plan and Budget
As we know, a marketing plan is a detailed roadmap outlining marketing strategies, tactics, and costs. And we know how important it is to actually document said plan. A critical resource for any company, a marketing plan and budget keep the whole team focused on specific goals. A great marketing plan should include:
- Financial goals
- Brand strategy
- Overview of products/services
- Detailed goals per distribution channel
- Sales plan
- Marketing campaigns
- Detailed budget
- Set dates to review and adjust
It’s a time-consuming exercise but developing your plan and budget is important because it ties all your marketing efforts to tangible objectives. Set your annual goals, outline plans for products/services, outline major marketing campaigns – then develop a marketing budget.
Things to look at when prepping next year’s budget:
How do you create a marketing budget? Budgeting can be a challenging process. Companies often simply estimate, based on last year’s spend. And, in all honesty, that’s better than nothing but I know you can figure out better numbers than just an estimate! After all, you’ve already determined your campaigns and needs. Use ROI to more accurately determine the appropriate total marketing budget and look at the following factors:
Spoiler alert: You’ll need to align your marketing budget with your business goals.
Your marketing budget is set based on business goals so review your annual goals for the year. What did you want to achieve and did you ultimately reach those goals? If not, why? If so, were you satisfied? Identifying what was and wasn’t working will help inform what you should continue in the new year – and how much to spend on it. Say your business goal was to increase traffic to your website. It makes sense that a project supporting this goal should have more money allocated to them, compared to something like, for example, hosting an event. Your marketing goals need to contribute to your bottom line.
This year’s performance and costs
How’d you do in 2018? Research your company’s past income and spending patterns. Go over last year’s numbers and look at your previous marketing strategy as a baseline for what worked and didn’t work. Then get started on 2019’s plan to ensure that you have enough marketing dollars to carry your business and marketing efforts throughout the year.
Know your operational costs. Spending is often different month to month, purchase to purchase. Because of this it can be hard to look at the big picture, spending-wise. Throughout the year you should be tracking your costs per source (i.e. email, social media, website, video, ads, etc.). Add together your costs for everything: marketing tools, domain names, hosting services, SSL certificates, team education, paid website themes, ad spend, salaries. Every marketing dollar should be tied to a revenue source so you can accurately determine your ROI.
Be knowledgeable about current (and future) marketing trends. Successful marketers adopt and apply emerging technologies to their marketing efforts in order to keep up with the changes in their industry. Maybe there a new social network that is perfect for your business. Or perhaps there’s an economical management system. What opportunities are out there that you can seize on to maximize your budget? Just be sure not to react too quickly. Do you research and be able to validate your adoption of a certain feature, platform, or technology. Know your audience and know what forms of communication they are more likely to respond to.
There are a few different ways to plan a yearly budget. What has your company done in the past? Is it working or time to switch things up? Here’s a quick rundown on four main types of budgeting methods:
- Zero-based budgeting is a method of budgeting in which income minus expenses equals zero. It starts by assuming that all budgets are zero and have to be rebuilt from the ground up. So you’ve got to make sure your expenses match what’s coming in and be able to justify each expense. If you make $5,000 a month, everything you spend should equal $5,000.
- Incremental budgeting looks at last year’s actual figures and adds or subtracts a percentage to determine the current year’s budget. This is a pretty simple and common budget method that’s appropriate if your cost drivers don’t change year to year.
- An activity-based budget is a top-down budgeting method that figures out the inputs required to support the outputs you’ve set. So if your output target is $10,000 per month, you need to determine the activities necessary for meeting that and then find out the expense of each activity.
- Value proposition budgeting makes sure that everything included in the budget delivers value for the business. It’ll help you avoid unnecessary expenditures, just like zero-based budgeting does.
Remember, marketing is an investment, not a cost!
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To recap, when developing a budget for 2019, start with a marketing strategy and documented plan. Once you’ve aligned your business objectives with your marketing goals, you can develop a detailed budget and decide where to allocate your dollars. (Be it to SEO/paid advertising, social media, content offers, blogging, and email marketings, lead conversion, and nurturing, or traditional advertising.)
Need a little help figuring out how best to spend your budget? Drop us a line and let’s craft a marketing plan together.