The dreaded budget allocation.
We’re well into Q1 of 2023, which means many companies have already reviewed their budget allocation at the beginning of the year and made necessary amendments.
Well-established brands will review their budget allocation each quarter – but startups should be cautious to wait and instead analyse their budget more frequently to ensure precise spending leads to success.
Moreover, budget allocation in 2023 looks far different than the previous two years, with brands now spending more on marketing than ever before as options like in-person events are back in the picture.
Below, we’ll explore a basic guide to marketing budget allocation for rookies in the business world who are new to budgeting, including expert-recommended tips. Read on to find out more.
Understanding Marketing Budgets
Each marketing budget might follow a similar framework, but its content will be unique to every startup.
Brands will have specific budgets and specific amounts of that budget in mind for different areas of the business, not just for marketing.
But did you know that 82% of startups fail due to cash flow problems – specifically overspending with a lack of understanding?
Or, did you know that the average budget allocation for marketing is 11.2% of the overall revenue?
Understanding revenue and how to calculate a marketing budget from that is something we will explore more in the next section.
As a framework, HubSpot has listed some of the essential considerations for your marketing budget:
● Technology – creating campaigns involves using technology, perhaps purchasing specific software that allows you to create a campaign or software that allows you to ‘drip’ marketing content into the WebSphere.
● Research – you can take the time to do market research yourself, or you can invest part of your budget in market research and have experts help you.
● Automation – automation services can be a lifesaver for small startups that don’t necessarily have the time or budget to manage multiple marketing campaigns.
● Production – all marketing campaigns will have some element of production costs. Typically it’s paying someone to produce the content for you.
● Paid Advertising – paid advertising is a great way to market your brand, and it’s relatively easy compared to creating your own campaign. Be warned – it can get expensive!
● There are numerous other considerations for your marketing budget outlined by HubSpot – check out the article here for a more in-depth analysis.
Calculating Revenue To Understand Budget Allocation
To understand your budget allocation, you first need to calculate your revenue and determine how much you’re willing and able to spend on budget allocation.
To calculate gross revenue, total the number of your sales and increase.
Some small brands won’t know their gross revenue yet, so look at forecasting and projection to form benchmark numbers.
Then try to use around 11% of your gross revenue on marketing. There are numerous online tools to help small brands and startups calculate it.
Marketing Investments
Marketing is an investment; that’s why you’ll notice the acronym ROI in nearly every marketing article – the return on investment.
The goal is to calculate the investment and the return you’re likely to get from it. For example, email marketing is well-known to have one of the best ROIs.
For every £1 spent, the return is £36. In-person events are also known for having an admiral ROI, but you have to consider the scale of the event itself and how much you’re likely to spend.
When you factor in hiring staff to support – as you’ll find on weareeventpeople.co.uk – the cost of the venue, and additional costs of managing the event, the ROI might not be feasible for small startups.
Again, numerous online articles outline the potential ROI for each marketing campaign, with social media and email marketing at the top for low investment and high ROI.
A Marketing Calendar
Some small businesses will find it beneficial to have a marketing calendar to understand budget allocation and how campaigns will flow throughout the year.
That prevents brands from using all of a marketing budget early in the year and allows for more control of marketing campaigns.
Marketing isn’t an easy topic – yet it’s an essential aspect of budgeting for brands. A robust marketing budget and plan can make all the difference in the first years of trading.
Marketing is a way of putting your business on the map, and budgeting helps brands achieve this without overspending.
(Pic by Unsplash licence free)
Recent Comments