Understanding how to allocate your marketing budget is vital in ensuring you get value for money - and a return on investment - from your promotional activity.
According to HubSpot, 28% of marketers say securing enough budget is their top marketing challenge, often finding themselves competing against other internal departments and stakeholders for a share of the pot. Under pressure to prove ROI and justify costs, senior marketers are increasingly accountable for every penny spent - and that requires the ability to allocate budget effectively and efficiently to generate the best returns.
Allocating marketing budget is balancing act that would make even Game of Thrones’ Littlefinger pause for thought - but before you resort to pushing the CFO out of the moon door (not recommended…), here’s a few things you need to think about when planning for promotional campaigns.
1: Get your priorities straight
So many channels, so little time… when it comes to allocating your marketing budget, defining which activities get what funding can be tricky. Good planning comes down to defining your priorities. If your top goal for the year is driving leads to the sales team, then the majority of your budget should likely be allocated to activities relating to demand generation. Don’t feel like you need to allocate budget to everything - if a channel or tactic hasn’t worked for you in the past, or no longer contributes to your goals, either rethink your approach, or consider cutting it out altogether. Start with your objectives, and try to match budget with the areas that are most important to your business.
2: Data, data, data
It’s essential to support your plans with data. If lead generation is your primary objective, look at which marketing campaigns or activities delivered the best performance in this area to date. Allocating budget to tried and tested methods that deliver against your objectives is a sensible place to start. Make sure you leave room to try new things, however - beyond your historical activity, it’s worth thinking about new tactics or campaigns you want to experiment with. Review industry benchmarks to see what returns they might deliver - this guide from HubSpot is a great place to start.
3: Expect the unexpected
Have you considered all of the costs involved in a marketing campaign? Don’t get caught out by overlooking line items such as:
- the cost of acquiring, cleansing and profiling prospect data
- budget for paid social and search - it’s unlikely you can rely on organic reach
- licenses and subscriptions for tools and platforms - everything from marketing automation to CRM and project management
- third party costs, such as media partnerships, agencies or service providers
- internal resource, time and effort to plan, manage and execute marketing activity
4: Measure twice, cut once
As marketers, it’s highly likely that at some point you are going to have to report back to the business on how you have allocated budget and what return has been generated. Keeping this in mind at the planning stage is far easier than scrambling around looking for ROI down the back of the proverbial marketing sofa at the end of the financial year. Outline your expectations, and define what metrics you will be using to evaluate return from your marketing activity as early as you can. Monitor these on a regular basis - being able to adjust your strategy and reallocate budget based on what’s working and what isn’t are powerful weapons when it comes to getting the most out of your money.
In 2016, the average firm was expected to allocate 30% of their marketing budget to online - this is expected to grow to 35% by 2019
5: To outsource, or not to outsource?
The decision to work with an agency - or agencies - is an important one. Despite the initial expense, you may find that the cost-to-return ratio is greater with the assistance of a suitably skilled, well-resourced agency. Ask yourself the following questions when you’re allocating budget to in-house and external activities:
- Do you have the resources to execute on your strategy? How will your time, and your team’s time, be most productively spent?
- Do you have the specialist channel knowledge, skills and tools to compete in your market? Are you making do rather than excelling?
- What is the cost of getting the skills, knowledge and/or tools you need to achieve your objectives? How many people/tools do you need to resource your marketing strategy and deliver results?