Marketing Budget Guidelines and Goal Based Budgeting

When it comes to marketing every firm has a budget. Essentially, for any business owner the bottom line is the same; spend less money but receive equally impactful results.

When it comes to developing a marketing budget that brings strong results, business owners should expect to spend a good percentage of their revenue as a primary source of investment for their campaigns. In fact, based on statistics, it is estimated that for a business seeking to grow at a steady and healthy rate of 20% that business would have to roughly spend 8%-14% of its total annual revenue. Knowing this can be a huge benefit in regards to estimating how much to plan for a yearly marketing budget for an established or start up firm.

The following article will focus on how to constitute and develop a marketing budget that pays dividends to a company’s marketing goals.

What is typically included in the Marketing Budget?

When it comes to marketing budgets, allocations within the marketing budget vary from company to company. In fact, nearly 47.9% of companies include expenses for marketing employees in their marketing budgets. Comparatively, other companies may put marketing employee expenses into general and administrative expenses, sales, or other areas.  

In addition, majority of companies (61.3 percent) include direct expenses for marketing—such as advertising, trade promotions, and direct marketing—in their marketing budgets, but once again, this varies by industry.

Percentage Breakdown

When analyzing the marketing breakdown by service industries; the categories are usually split into services between business to business and business to customer. For both these clients the marketing budget breakdown varies. Let us go deeper into the breakdown itself.

Business to Business (B2B)

In regards to business to business consultation, the marketing service budget is broken down in the following way,

  • Direct Market Expenses: (19 percent)
  • Social Media: (16 percent)
  • Marketing employees: (17 percent)
  • Market research: (12 percent)
  • Marketing training: (8 percent)
  • Analytics: (14 percent)
  • Overhead: (13 percent)

Business to Customer (B2C)

In regards to business to customer consultation, the marketing service budget is broken down in the following way,

  • Direct Market Expenses: (20 percent)
  • Social Media: (18 percent)
  • Marketing employees: (14 percent)
  • Market research: (14 percent)
  • Marketing training: (8 percent)
  • Analytics: (13 percent)
  • Overhead: (13 percent)

As you can see for both B2B and B2C services majority of business invest nearly 20% of their marketing budget towards social media alone. This investment however is only conducted with the assumption that there are results, quite typically an ROI. This raises the question, how do you calculate your ROI from your social media marketing and digital marketing efforts? In order to do this, a business must utilize goal based strategies. Essentially you want to ask yourself, what goal are you trying to achieve with social media and how can you track this goal?

Step 1 – Choose a Goal

When choosing a goal you have many options, for some these goals may include,

  • New followers
  • Clicks on link in update
  • Online purchases
  • Filled out contact form
  • Signups for newsletter
  • Downloads of .PDF file
  • Time spent on important webpage

Step 2 – Track Your Goal

For step two you can choose one or more of the above conversion goals, and start tracking. You can track website actions (sales, downloads, signups) in Google Analytics by setting up goals and event tracking. You can track social media interactions (shares, likes, follows) using Buffer or Hoot-suite.

Step 3 – Assign a monetary/cash value

Once you’ve chosen a goal and tracked the actions, it’s time to tackle the dollars-and-cents side of ROI. There are several different methods to choose from here:

  • Lifetime value – How much do you earn on average from a customer?
  • Lifetime value, multiplied by conversion rate – How much is each potential visit worth to you?
  • Average sale – How much is the average purchase through your site?
  • PPC costs – How much would you end up paying if you were to use ads to achieve the same social media actions?

Therefore, if it costs $0.50 to gain a single new fan to your Facebook page, then your organic gain of 50 fans is potentially worth $25. In addition to this, below are a list of benchmarks on what to expect from an ROI perspective,

  • Facebook like average – $0.50 per page like
  • Reach average – $0.59 per thousand impressions
  • Click average – $0.50 per click
  • Promoted tweet – $3.50 per thousand impressions
  • LinkedIn – $2.00 per click

Conclusion

All in all the saying, “to make money you need to spend money” is 100% true. To compete in marketing in the digital age, businesses need to be willing to allocate more of their budget into online marketing in order to truly see, company growth.

Contact Us

Sooner Marketing Solutions is devoted to helping businesses grow and develop their marketing foundation. One amazing service we provide is Social Media Marketing and Management. From advocating your social media platforms to creating content our goal is to help your business grow and get you the most return of investment.

Visit our website at: https://soonermarketing.com/

Give us a call at 918-609-3248

Check out our blog at: https://soonermarketing.com/blog/

We Look forward to working with you!

 

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