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How To Set An Effective Annual Marketing Budget For Your Business?

After reading different marketing related articles, I have learned one thing i.e. marketing is no rocket science but just a simple concept that is displayed in a different manner or style. Nowadays marketing analogies (for e.g. ‘marketing is like —-’) are used to make every marketing aspirant understand the aspect of marketing and how to practice it?
Talking about marketing analogies, what I feel the most relatable one is- ‘marketing is like dating’. In the business jargon, the concept of marketing and dating is similar to each other. Just as in dating, one tries to impress the other; likewise, in marketing the brand or product is dressed and promoted in a way to entice the customers. It takes trust, commitment and time to get to know each other. Once all these features are imbibed, the company tends to build a sustainable and profitable business.
When it comes to marketing, the organization’s expectation is always to do more with less. An evergreen formula for building a successful business involves marketing. Although the formula changes with time but the basic concept remains the same. No matter how good or bad the product is, marketing helps your brand to travel places and increase sales.
In today’s competitive world it is important to connect with people and build a relationship; for that marketing plays the role of a mediator. Choosing the right kind of annual budget for your business is not a tough call, all it takes is some understanding of the market and a strategic planning.
First of all know where your business stands.
The money spent on marketing will depend on whether the business is a start-up, mediocre or established. For start-ups the budget and effort required is more, while for the business which is well established the budget is less as it is already known face in the market.
Then, Start marketing plans based on your business goals.
Know what your business goals are for the year, for e.g. whether you want to double the sales, get the word out for next season’s product launch, increase online conversions, etc. Based on these goals set your marketing plans by outlining strategy along with specific tactics and ploys. For e.g. where to focus more budget-wise or what areas should be focused first, etc.
Determine annual marketing budget
Eventually marketing budget will depend on your business size and strategy. Marketing is a tool that lets products and services sell themselves.
Lean Plan: 1 – 2% of your top-line revenue. In essence, you’re committing to engaging and retaining current customers with simple tools and strategies. This is ideal for companies that are looking to maintain their market position and don’t have ambitious growth goals.

Target Plan: 3 – 4% of your top-line revenue. The goal here is to attract new prospects and retain current customers with advanced tools and strategies. This is ideal for companies that are looking to increase their market share and have moderate growth goals (10 – 15% annual growth).

Stretch Plan: 5% or more of your top-line revenue. Your target is to accelerate your results by applying more resources that are focused on driving leads, conversion, and sales. To do this, you’ll use complex marketing strategies and cutting-edge tools. This option is ideal for companies who have ambitious plans to grow and increase their market share (20% or more annual growth).

3) Allocate Your Marketing Budget Dollars
Armed with your goals and a budget, you can now get into the nitty-gritty of developing a tactical plan to transform your marketing dreams into reality! The complexity of your plan will depend on the marketing budget you’ve identified, but you should also consider including tactical plans related to:

SEO and paid advertising
Social media
Content offers, blogging, and email marketing
Lead conversion and nurturing
Traditional advertising
Determine how much of your marketing budget should be allocated to each aspect of your plan. The chart below is based on a recent survey by Forrester Research. It displays the percentage of B2B companies’ marketing budgets that was allocated to each area of their marketing plans. You may decide to spend more or less based on what your direct competitors are spending, your industry, and your specific goals.

Chart showing US digital marketing forecast for 2014-2019

4) Implement A Marketing Budget Plan
Once you’ve developed a plan that supports your company’s goals, you need to implement it. And to guarantee a successful implementation, you need a team of qualified marketers, designers, and technical experts. You’ve got a few options for creating such a team:

In-House Marketing Team

To execute a complex marketing plan, you need a team of people who possess skills in copywriting, coding, design, social media, paid search, and SEO. Unfortunately, there’s no single person who can effectively do all those activities.

Large corporations will often hire an in-house team, but specialists can be expensive. Benefits, training, and equipment alone could easily cost up to $500K per year. For most smaller businesses, this isn’t an option.

Get a 1-on-1 budget consultation
Freelance Team
Freelance employees can be a good choice for individual projects. Skilled marketing freelancers can help fill in the gaps that your marketing director can’t supply, and they can be a lifesaver in a pinch.

But when you’re trying to bring a long-term, complex marketing plan to completion, you’re likely to experience a series of stops and starts on the project. Because they work on-demand for several clients at a time, they may not be as available as you need them to be. You may need to hire extra people to cover all the roles to execute your plan. In addition, there’s the coordination and communication time you’ll need to manage all the freelancers. And when a freelancer moves on, they take all the knowledge of your project with them, forcing you to start over from scratch.

Contracting a marketing agency has several benefits:
Services of top-notch marketing experts without incurring the costs of hiring, training, and managing several in-house employees
Accountability from a team that wants to succeed and prove the value of its marketing services
Predictablecosts because your marketing expenses are based on a monthly retainer fee
Hiring a virtual marketing team typically involves an investment of $60K – $150K per year, which is significantly less than the cost of an in-house marketing department. However, your team is off-site, which means communication can be a little slower at times and you may need to work via teleconferencing. Also, because marketing teams have several clients, you won’t have a claim on their time every minute of every business day.

Hybrid Team
The best solution might be a hybrid of a small in-house marketing team that’s dedicated to one or two key tasks, supplemented by an agency team that rounds out your marketing efforts. And the agency can usually provide training and best practices guidance to your staff, freeing you from this responsibility. Be sure that everyone is clear on their roles and responsibilities, agrees on metrics, and is committed to a shared vision for success. This can be a very effective approach to implementing a solid marketing plan!

The Digital Marketing Dream Team Checklist – (click to) Download the checklist
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Hope the above example clears out the doubt regarding setting up an annual marketing budget. -OR- Hope this blog clearly explains how to set up an annual marketing budget,that uniquely contributes features to the business.

In a similar situation? Connect with us and we will be happy to help!

It outlines your overall strategy and the tactics you’ll use to hit your goals (more on goals in the next step).

Oftentimes, this is also where you’ll define your target customer. Your marketing plan includes the marketing channels you will use (social media, online advertising, print advertising, etc.), along with specific tactics and cadence.
It’s common for small businesses with revenues less than $5 million to allocate 7-8% of their revenues to marketing, splitting that between brand development costs such as websites, blogs, sales collateral, and promotion costs, as well as campaigns, advertising, and events. Never base your marketing budget simply on what’s left over after covering all other expenses.

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Yet many online business owners believe that marketing begins and ends with their social media feeds. Word of mouth and community are great ways to build buzz and garner loyal customers – and retailers love social media because for the most part, it’s free. But in reality, building a customer base requires some more upfront investment. Spending money on marketing is intimidating, especially for a new or small business where margins are already razor thin.
Dig deep into which area to actually spend.

Products and services don’t sell themselves. By ignoring marketing until it’s too late, many small businesses risk hitting a brick wall and, quite possibly, failing. A hip and trendy product line shouldn’t rely solely on ongoing product investment and word of mouth.

But one must always be careful to not spend too much to reach a specific audience.

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https://www.forbes.com/sites/allbusiness/2017/05/02/6-steps-to-developing-a-small-business-marketing-budget/#4fd39e41355c

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From obtaining funding to hiring employees to planning for expansion, a business plan can be your guide to keeping your business on track. Your business plan can keep you focused on your goals and keep you moving forward when faced with obstacles.

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1 comment

  1. Sofia Helin

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