(upbeat music)
Hi there, my name is Dan Varno,
a member of the web strategy team here at WebFX.
So you have a limited amount of money
and a lot you wanna do with it.
So what do you do?
You set a marketing budget.
So here's what we'll cover today.
What's in a marketing budget.
Channeling traditional marketing spend
into digital marketing.
Why a budget matters.
Things to think about before determining the budget
and how to determine the marketing budget.
So what should be in a marketing budget?
When putting together a marketing budget,
we should consider all activities that we're undertaking
to market the business.
This can be fixed operational costs
such as marketing salaries, website costs,
agency and consultant fees,
advertising expenses, membership fees, software costs,
continuing education among other things.
Channeling traditional marketing spend
into digital marketing.
There's a case to be made that traditional marketing spend
can often be more effectively channeled
into digital marketing spend.
The problem with TV, radio, print
and other traditional efforts is
that it can often be extremely passive, highly expensive
and difficult to track the results of the campaign.
The benefit of digital marketing is
you have the ability to better target
high intent potential customers,
track every effort back to revenue
and traditionally, have a much lower CPA
compared to traditional channels.
We always recommend looking into average CPA or CPL data
for digital marketing in your industry
and comparing that to your existing acquisition numbers
and continuing to invest in digital,
as long as you're seeing that profitable CPA.
Being able to consistently track the success of the spending
will increase the probability of reinvestment
and allow for the ability
to grow the prioritization of the marketing team.
So why is having a marketing budget important?
It's important to have a budget
because it allows you to set benchmarks and goals
against a budgetary outlay.
You're able to set business expectations for
what will be allocated toward marketing
and have a strong understanding of what types of revenue
will need to be driven against that budget
for those marketing efforts to make sense.
From there, you're able to
continuously optimize any marketing efforts
to maximize the allocation of that budget
in hopes of seeing the best results.
When multiple stakeholders are involved,
by agreeing upon a budget,
it allows you to have a longer-term perspective
for marketing efforts
versus having to start and stop campaigns
and having to continue to fight
for additional marketing spend.
Before you put together a marketing budget,
it's important to consider a handful of factors.
What team members are involved
in the decision-making process
and how will they be impacted by the marketing efforts?
What are my company goals for this year?
Whether that's revenue, sales, growth percentage.
Who are my competitors and what are they doing well
that I'd like to do as well if not better?
And have a clear understanding of your target market
and your specific sales funnel
to determine the channels and strategies
that will make the most sense for everyone.
And then ensure everyone is on the same page
for how the marketing campaign will be measured for success,
whether that's brand equity and your sales,
customer impressions, company growth, you get the point.
And there are a handful of ways
to define the overall marketing budget.
One way would be to simply develop a marketing budget
based on percentage of revenue.
Newer businesses should often plan on allocating
about 15 to 20% of their overall revenue,
to those marketing expenditures.
And once the business begins
to get a little more established
and build a team related to marketing
and allocation about 10%
is typically a fairly healthy range.
Another way would be simply competition matching.
What am I seeing that my competitors are doing?
Are they always at the same trade show every year?
Are they consistently spending on Google advertising?
Does it look like they're doing a ton of blogging
and are active on social media?
And what do I believe I need to spend
to stay on pace with them?
In our opinion, the best way to determine a marketing budget
would be to keep it goals-driven.
Ideally, we'd have some information about
what our target cost per new customer would be
and how many customers you need to acquire
as a result of your marketing efforts.
From there, it could be a simple formula.
If your target cost per acquisition
is about $300 per customer
and you wanna add 200 new ones,
then you should plan on allocating about $60,000
toward those marketing efforts.
In addition, of course,
you need to add any fixed cost to this number
to really determine the all-in budget
but the great thing about this method
is you can track all of your efforts
against those customer goals,
as well as the target cost per acquisition,
to really determine the efforts
that are being the most effective for you.
In conclusion, we hope that you feel ready
to put together your budget.
If you're ready to allocate your budget
to digital marketing,
give us a call and check out our website
to learn more about how we can grow your online presence.
Thanks so much.