Allocating Your Marketing Budget
By Meghan Hinds, MPA Media Marketing Coordinator
Determining how to allocate your company's precious resources is a lofty challenge without adding marketing into the mix. From a large pharmaceutical corporation to a small firm, determining how to allocate your marketing resources can be a challenge.
The Counselors to America's Small Business and the U.S. Small Business Administration define a proper marketing budget to be between 2 and 10 percent of sales, but say it can climb up to 20 percent during peak brand-building years.
Celia Rocks, author of "Brilliance Marketing Management: Let Your Strengths Outshine the Competition" examines the marketing budget even further, suggesting a simple formula for companies to follow when creating their marketing budget:
- 12 percent if you haven't been marketing consistently, and need to increase your income
- 10 percent if you have been marketing consistently
- 8 percent if you don't need to grow your business, but want to keep a level flow
Your overall marketing budget -- whether it's 2 or 20 percent of your sales -- can be allocated to anything from public relations to sales training to trade shows. It all depends on your strengths, your customers and what you'd like to accomplish. To gauge this, take an inventory of your company's budget, personnel and overall assets -- develop a comprehensive marketing plan.
A marketing plan is an essential part of any business strategy and should include marketing challenges, objectives, strategies, tactics, budget and deadlines. Make sure to leave some wiggle room in your plan. Your plan should evolve as new opportunities to communicate your message arise. You never know when the next Facebook or Twitter will come along.
You need to thoroughly understand your customer and their needs. Why? Marketing budgets should focus on the preferred method of outreach to your customer. If your customer prefers face-to-face interaction and isn't tech savvy, then a social media marketing campaign isn't right for your customer.
Keep your company's objectives in mind when allocating your marketing budget. Do you want to drive people to your website? Your best bet is probably web or mobile web marketing. Increase sales? A sharp marketing collateral package combined with a strategic outreach plan may be the answer.
Many companies make the mistake of pouring their entire budget into their leads and prospects, ignoring every organization's secret weapon: current clients and customers. Happy clients are willing to promote you to others. Giving more attention and more of your budget to existing customers will help increase referrals and, in the long run, lower your overall marketing costs.
As the old adage says, don't throw all your eggs into one basket. Though communicating through web and mobile silos are increasingly becoming more popular, you need to spread your marketing budget out to include activities that will touch your entire customer base.
Allocate part of your budget for surprises. Use, say, 90 percent of your marketing budget for "proven" marketing methods -- press releases, traditional advertising, events -- and leave 10 percent for experimenting with a high-risk, high-reward marketing scenario. When a new opportunity arises, you'll want to have the funds to move fast.
No marketing team to execute your marketing goals? No problem! MPA Media can help your business tap into our creative marketing services, custom research and market intelligence to help you get the most bang for your marketing buck. From strategic marketing plans to execution, our customized programs assist our advertising customers in maximizing their return on every marketing dollar spent.
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