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How to Plan a Marketing Budget for 2023 - YouTube
Channel: WebFX
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(upbeat music)
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Hi there, my name is Dan Varno,
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a member of the web
strategy team here at WebFX.
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So you have a limited amount of money
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and a lot you wanna do with it.
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So what do you do?
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You set a marketing budget.
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So here's what we'll cover today.
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What's in a marketing budget.
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Channeling traditional marketing spend
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into digital marketing.
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Why a budget matters.
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Things to think about before
determining the budget
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and how to determine the marketing budget.
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So what should be in a marketing budget?
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When putting together a marketing budget,
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we should consider all
activities that we're undertaking
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to market the business.
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This can be fixed operational costs
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such as marketing salaries, website costs,
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agency and consultant fees,
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advertising expenses,
membership fees, software costs,
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continuing education among other things.
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Channeling traditional marketing spend
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into digital marketing.
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There's a case to be made that
traditional marketing spend
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can often be more effectively channeled
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into digital marketing spend.
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The problem with TV, radio, print
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and other traditional efforts is
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that it can often be extremely
passive, highly expensive
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and difficult to track the
results of the campaign.
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The benefit of digital marketing is
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you have the ability to better target
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high intent potential customers,
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track every effort back to revenue
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and traditionally, have a much lower CPA
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compared to traditional channels.
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We always recommend looking
into average CPA or CPL data
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for digital marketing in your industry
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and comparing that to your
existing acquisition numbers
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and continuing to invest in digital,
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as long as you're seeing
that profitable CPA.
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Being able to consistently track
the success of the spending
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will increase the
probability of reinvestment
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and allow for the ability
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to grow the prioritization
of the marketing team.
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So why is having a
marketing budget important?
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It's important to have a budget
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because it allows you to
set benchmarks and goals
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against a budgetary outlay.
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You're able to set
business expectations for
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what will be allocated toward marketing
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and have a strong understanding
of what types of revenue
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will need to be driven against that budget
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for those marketing efforts to make sense.
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From there, you're able to
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continuously optimize
any marketing efforts
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to maximize the allocation of that budget
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in hopes of seeing the best results.
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When multiple stakeholders are involved,
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by agreeing upon a budget,
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it allows you to have a
longer-term perspective
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for marketing efforts
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versus having to start and stop campaigns
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and having to continue to fight
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for additional marketing spend.
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Before you put together
a marketing budget,
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it's important to consider
a handful of factors.
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What team members are involved
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in the decision-making process
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and how will they be impacted
by the marketing efforts?
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What are my company goals for this year?
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Whether that's revenue,
sales, growth percentage.
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Who are my competitors and
what are they doing well
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that I'd like to do as well if not better?
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And have a clear understanding
of your target market
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and your specific sales funnel
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to determine the channels and strategies
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that will make the most
sense for everyone.
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And then ensure everyone
is on the same page
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for how the marketing campaign
will be measured for success,
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whether that's brand
equity and your sales,
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customer impressions, company
growth, you get the point.
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And there are a handful of ways
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to define the overall marketing budget.
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One way would be to simply
develop a marketing budget
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based on percentage of revenue.
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Newer businesses should
often plan on allocating
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about 15 to 20% of their overall revenue,
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to those marketing expenditures.
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And once the business begins
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to get a little more established
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and build a team related to marketing
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and allocation about 10%
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is typically a fairly healthy range.
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Another way would be simply
competition matching.
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What am I seeing that my
competitors are doing?
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Are they always at the
same trade show every year?
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Are they consistently spending
on Google advertising?
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Does it look like they're
doing a ton of blogging
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and are active on social media?
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And what do I believe I need to spend
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to stay on pace with them?
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In our opinion, the best way
to determine a marketing budget
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would be to keep it goals-driven.
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Ideally, we'd have some information about
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what our target cost per
new customer would be
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and how many customers you need to acquire
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as a result of your marketing efforts.
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From there, it could be a simple formula.
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If your target cost per acquisition
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is about $300 per customer
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and you wanna add 200 new ones,
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then you should plan on
allocating about $60,000
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toward those marketing efforts.
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In addition, of course,
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you need to add any
fixed cost to this number
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to really determine the all-in budget
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but the great thing about this method
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is you can track all of your efforts
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against those customer goals,
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as well as the target
cost per acquisition,
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to really determine the efforts
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that are being the most effective for you.
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In conclusion, we hope that you feel ready
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to put together your budget.
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If you're ready to allocate your budget
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to digital marketing,
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give us a call and check out our website
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to learn more about how we
can grow your online presence.
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Thanks so much.
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