Did you know that brands spend an average of up to 10% of total revenue on their marketing budget?
A percentage that increases year-by-year.
That’s a significant chunk of money going towards strategies that might not always pay off in the ways you want. Which is why marketers have specific key performance indicators (KPIs) in place to ensure that their efforts are worthwhile.
One of the most common/beneficial KPIs is achieving a positive return on investment (ROI). Something that is a lot easier said than done. You see, there are countless ways to market your brand, and even more ways to measure the ROI of those strategies.
The Marketing Audit Template
Did you know that brands spend an average of up to 10% of total revenue on their marketing budget? A percenta...
Every penny spent needs to be in service of your goals. What your marketing goals look like might differ from the next brand. Some will focus on conversions, whether others might care more for attracting more traffic to certain pages of its native website.
Whatever your goals, you need to be keeping tabs on your performance. The alternative is to spend money in areas that cost way too much and yield little to no results.
In this post we’re going to help you make the most of your marketing budget. We’re also going to help you better understand the ways to measure the ROI of those strategies.
What is a Marketing Budget?
Simply put, your marketing budget outlines all the money you intend to spend to engage with your target audience.
When creating your budgets you need to be looking at your marketing goals and how much you intend to spend to achieve them. As a standard exercise, brands should write down the various strategies they’ll implement and allocate spend as they go.
Here’s what this might look like:
- Social Media Marketing: £15,000
- Content Marketing: £10,000
- Print Marketing Materials: £5,000
- Marketing Budget Total: £30,000
Do keep in mind that the figures we’ve just mentioned are just an example. How much you spend might be a lot higher if you’re an established business, or a lot lower if you’re only just starting out.
As a general rule of thumb, experts recommend that you spend no more than 8% of your total revenue on marketing (for B2B businesses). If you run a B2C business, it’s recommended to spend as much as 10%. New businesses tend to spend more (up to 20%), at least until they establish customers.
Do keep in mind that percentage of revenue is but one way to determine your marketing budget. ROI is another.
How often you adjust your marketing budget will vary. Some brands set their marketing budget once a year and stick with it. Others will adjust it quarterly to account for seasonal campaigns and any other notable events.
Before we move on to what is typically included in a marketing budget, we’ve put together a few benefits to sum up why you need a marketing budget:
- Brands can Allocate Resources More Effectively
- Allows you to Easily Track ROI
- Can Motivate Employees to Succeed
- Encourages Long-Term Planning and Growth
What is Included in a Marketing Budget?
It’s important that you understand what’s included within your marketing budget. These budgets cover more than your advertising spend, despite what most marketers think.
Typically, your marketing budget will consist of:
- Advertising Spend: Money that will go towards your preferred marketing channels (i.e. social media, SEO and print).
- Outsourcing Funds: Some brands seek the help of freelancers, agencies and paid interns to help them deliver their marketing.
- Event Costs: Many brands take part in, or run their own, events to promote their brand and their offering.
- Staff Salaries: How much you’re paying staff members needs to be covered under your marketing budget in some instances.
- Brand Swag: Merchandise to promote the brand (i.e. hats, stickers, beanies, tote bags, etc.).
- Software/Tools: Any analytical/research tools that help you conduct your job effectively (i.e. Ahrefs and Grammarly).
Every marketing department is different, but most will need to account for advertising spend and software tools.
Those are requirements, not suggestions.
Brands that leverage video marketing will need to assign spending to this too. Hiring equipment, renting a location for the day, and paying any featured actors will all need to be considered within your marketing budget.
How Does ROI Affect Marketing Budgets?
Asking why measuring your ROI is important is like asking whether or not you like wasting money in areas that bring you no closer to your goals.
And in business, no one likes wasting money.
ROI is a compass of sorts, one that guides brands in directions that make the most from their marketing budgets in line with their greater marketing goals. In other words, understanding where the money goes and how effective your strategies are will ensure that budgets are used effectively.
If you know that parts of your marketing output aren’t generating a positive ROI, you can then course correct and put money into the areas that do generate the best traction!
Two out of three marketers state data-based decisions to be more effective than gut instincts.
– Think with Google
Marketers have a habit of choosing strategies that they think their customer base would like, not what they know they like.
Going off gut feelings and instincts is great and all, but your ROI defines your success with real numbers, empowering brands to choose strategies that link them with their audience.
Again, your ROI is your compass. Follow it to the wire and you’ll negate what isn’t working, while doubling down on the strategies that bring you closer to your goals!
How to Measure your Marketing Budgets to Maximise ROI
To measure your marketing budget effectively you need to be looking at what strategies you’ll plan and execute. Or, more specifically, the types of marketing channels you’ll be using to reach and engage with your audience.
Variety is the spice of life for marketers in the modern day. Traditional marketing is no longer the only option. Digital marketing has blown the doors completely off, allowing brands to cut straight through and target audiences based on location, interests, and so much more!
Here’s a quick rundown of the main channels marketers use, for reference:
- Content Marketing
- Paid Search (PPC)
- Paid/Organic Social
- Email Marketing
You’ll find it easier to measure ROI by setting benchmarks for each strategy. One way to do this is by looking at previous strategies and pulling the data from there.
Some metrics are easier to track than others. PPC, for example, is usually tracked automatically. Google Ads, generally, is really good at that. Other marketing types though, like content marketing, are a lot harder to gauge, unless you’re taking advantage of tracking URLs.
When it comes to calculating marketing ROI, here’s a pretty simply formula to follow:
[((number of leads x lead-to-customer rate x average sales price) – cost or ad spend) ÷ cost or ad spend] x 100
If you’re going to use this formula, you’ll need to note down a few things:
- Number of Leads
- Average Sales Price
- Cost or Ad Spend
This will all help you outline the hard revenue. But it might be worth looking at some non-financial elements. After all, not every marketing campaign is strictly money focused. Take brand marketing campaigns for example.
Other Ways to Measure Marketing ROI
Tracking social media engagement, website traffic, and brand trust will benefit brands in the long run, even if they don’t boost purchases directly. What they do, however, is give brands a better understanding of how to engage with their audiences, which is essential when moving them down your funnel.
Regardless of which marketing strategy you’ve decided to implement, monitoring the following factors will help you determine whether or not your efforts have been successful:
- Time Taken
- Promotional Costs
- Page Analytics
- Production Costs
- Non-Financial Returns
Ways to Maximise your Marketing Budget
Let’s get into the meat of this post, that’s what you’re all here for, right?
Now that we know what your marketing budget covers and why measuring ROI is so important, it’s time we looked at how to maximise your budgets to achieve the best ROI.
The marketing budget tips we’re about to share are quite varied. Since we want to help everyone, they’ll apply to businesses of all sizes, regardless of how big or how small their budgets are.
We’re going to expand on these points, but here’s a list of the various ways to maximise your marketing budget:
- Utilise the Right Marketing Strategies
- Align Budgets with Marketing Goals
- Repurpose Existing Content for Maximum Reach
- Invest in Nurture Campaigns
- Think Big Picture and the Long-Term
- Seek Agency Help Where Needed
To begin, let’s look at the most important way to maximise your marketing budget, that being, to choose the right strategies that connect you with your desired audience.
Utilise the Right Marketing Strategies
What works for one company might not work for another. Every brand is different. Meaning they need to formulate their own marketing strategy, one that aligns with their goals and objectives.
How do you know which strategies and channels to leverage?
You look to your audience, or more specifically, your customer journeys. It’s these journeys that outline how they’d typically discover your products, what they need to know before making a purchase and so on. Information that gives you a rough idea of what they’d most likely be influenced by.
For example, let’s say you’re a B2B marketer looking to market your cloud-based products to security-conscious buyers.
By understanding your buyer’s journey, you know that these individuals spend a lot of time online, might have an ad-blocker turned on, and like to expand their knowledge of certain subjects that relate to their job – as told through videos, blogs and podcasts.
This tells us one of two things:
- They’re Quite Specific in their Searching Habits
- Direct Advertising Won’t Reach Them
- They Care About Expanding Their Knowledge
Knowing these things tells us these individuals are more likely to respond to specified content marketing, or, more specifically, search engine optimised blog content. This indirect way of marketing ticks all of the boxes in terms of what they’d typically respond to.
What’s great about blogging is it might not cost you nearly as much to run compared to other forms of advertising too. Which means you’re spending less to establish a lead!
We know we said that every brand is different, meaning they need to come up with their own strategies. But another way to discover what works best, and what doesn’t work so well, is to study your competitors.
More often than not, your competitors will be looking to target the exact same pool of people. Odds are, they’ll be looking to maximise their budgets to get the best ROI too!
Of course, you won’t be able to see how much money is being spent on these campaigns. But simply seeing where they’re active and what channels they’re using will give you enough to go off.
Align Budgets with Marketing Goals
What you spend and where you spend it needs to be in service of your greater marketing goals. Understanding these goals will help you plan ahead, in line with whatever you’re hoping to achieve.
For example, you might be launching a new product in the not-so-distant future. To build anticipation for its launch, marketers could pay for things like Facebook ads that tease the release. An email marketing campaign would work perfectly for this too – especially if you segment your audience, sending emails to individuals who are more likely to click through to your website.
Aligning your budgets with your goals can feel restrictive. Which is why you should think about following the classic 70-20-10 rule when allocating spend.
This is where brands dedicate 70% of budgets on strategies they know work well, 20% on new strategies aimed to help them grow, and finally, 10% on experimental strategies.
Reserving some of your marketing budget for experimental strategies could highlight opportunities for future growth.
If you’re looking for the perfect starting point. Many brands have cited TikTok as being quite beneficial in terms of growing brand recognition in and amongst younger audiences.
Repurpose Existing Content for Maximum Reach
Another way to maximise your marketing budget is by taking what you already have and repurposing it. This is more than ideal for brands that don’t have the budget to create something but want to present something engaging.
Brands that run content marketing campaigns will have a bonafide treasure trove of information to pull from. Information that they can take out and apply to other types of content.
For example, you could pick certain bits of information out of a blog and turn it into an ebook. Or, you could take an existing video, chop it up into multiple videos, and then post those out across your various social media channels to engage your audience.
Doing this is cost effective, and it ensures your content gains maximum visibility!
Another great way to maximise your marketing budget is to update older blog content so that it is more up to date in line with what your audience might be searching for. You can update the copy, but we’d also recommend updating any stats that are more than two years old.
You could go a step further and add more images and the odd infographic or two. You know, just to add to the appeal of the post.
By updating the copy you can also rank for additional keywords that increase the visibility of your posts within search engines. Of course, your blogs will need to be SEO optimised for this to occur. What’s more, you can increase your content marketing gains tenfold with the help of an optimised website.
Although, the costs for a new website aren’t really covered under your marketing budget. That’s something a branding budget typically accounts for.
Invest in Nurture Campaigns
Somewhere in your marketing budget brands need to invest in lead nurturing strategies.
Not every individual coming across your marketing will want to do business with you right there and then. Sure, they’ve entered your sales pipeline, but most aren’t ready to convert just yet. It will take a number of impressions before that happens.
Enter lead nurturing, a way to ensure that your marketing efforts get the best ROI through and through. How does it do this?
By helping you segment your audience, meaning your marketing finds its way to the right people at varying stages of your sales funnel. It’s targeted in that way, matching relevant actionable content with the customer’s journey.
What’s great about lead nurturing is that brands can automate various systems, thus saving them time and money while benefiting from an increase in sales!
“Truly nurturing is taking somebody who’s already engaged, who’s already shown an interest, and advancing that interest, expanding that interest, and expanding that awareness.”
– Phil Bosley, CEO of Tactical Marketing
This statistic from Lead Nurturing and Acceleration Survey Report found that 66% of marketers reported that automated nurture campaigns drive additional sales opportunities. In the same survey, they found that 86% of marketers rated their current lead nurturing strategies as either average or below average.
Marketers, this needs to change. So make room for lead nurturing in your marketing budget. One of the simplest ways of nurturing customers is to take advantage of an optimised email marketing strategy.
To learn more about email marketing, check out our blog here.
Think Big Picture and the Long-Term
Marketing is great at growing your brand and increasing its visibility in and amongst your target audience. Only brands do fall into the trap of focusing on the here and now, rather than thinking about the big picture.
Or, more specifically, where you want to be in the next 6 to 12 months and beyond.
In terms of long term marketing strategies, content marketing and SEO will provide the results you need – as long as what you’re putting out to your audience is optimised, relevant, and most of all, engaging. Delivering on all three will attract the attention you’re looking for.
Big picture-thinking is the reason why so many marketers are putting money behind brand marketing campaigns. Campaigns that have the power to increase brand loyalty, awareness and even save money in the long run.
Carma Social founder, Carma Levene explains how this type of strategy can help your marketing budget perfectly:
“If it’s done well, you’ll attract your target audience to your brand and spend less on chasing them with advertising. Customer acquisition costs decline as people know your brand and understand what it stands for. It’s said to cost 5x more to attract a new customer than to retain an existing one.”
Seek Agency Help Where Needed
Easily one of the best ways to make the most out of your marketing budget is to make sure that what you’re offering is of a set standard.
The quality of your marketing matters now more than ever due to the sheer number of brands that currently exist in the present day. Most markets are heavily saturated, which can make standing out an uphill climb. More-so if you’re only just starting out and lack the experience.
Perhaps you’re already established, but simply lack the time and effort to create things like blogs if you’ve decided to go in a content marketing direction, or design assets to be used in your social media campaigns.
Whatever the answer, outsourcing is there if you need it.
Try to avoid doing anything in-house if your employees aren’t equipped to meet the standard of the rest of your branding. As we explained in our marketing vs branding blog, the two work in-sync, and therefore hold the other up.
Poor marketing can leave a stain on your branding, which will bring you no closer to a positive ROI as far as your marketing budget is concerned.
There are a bunch of creative agencies out there that specialise in getting you set up for success. We’re one of them, only with us, we’ll have an actual conversation with you to understand what you’re wanting and where you’re going as a business.
Which is a lot different to many other agencies that talk at you and don’t really listen to what you have to say. But yeah, going with an agency that gets you, and has a reputation for success, will all-but guarantee a positive ROI on any and all marketing efforts.
How to Make the Most of Your Marketing Budget to Get the Best ROI
Action any of the above tips and you should have no trouble maximising your marketing budgets to confirm a positive ROI.
And remember, there are countless ways to measure marketing ROI, some a lot more easier to track than others. Measuring time, as in how long it takes to create content or marketing materials, is another great way to determine how effective certain strategies are when it comes to costs.
If it’s taking too long to produce these assets, then it’s time to talk to an agency.
The effectiveness of your marketing budget depends on it!
Canny has saved countless brands a lot of money through our services. And can do the same for you.
Get in touch today to find out how we can help you maximise your marketing budget.