If you’re a marketing manager, this is probably a busy time of the year. Soon you’ll need to present your marketing budget for the coming year to your executive team. But if crunching numbers is not your strong point, and you are concerned about where you put your spend, this might be causing you some sleepless nights. Well, don’t panic! With our foolproof method, you’ll be able to draw up a marketing budget for your company with the best of them.
What’s more, it’s not simply your spend, or your budget plan, but defining the best marketing campaign and strategy that goes with it, that is probably on your mind. What software you are using, what tools; what you can do that is free and where to put your money, understanding what already brings your leads and revenue, as well as what you can do better to achieve your goal. Well, don’t panic! As we said, we’ve got all the answers….
1. Calculate your overall marketing budget: the objectives-based method
When it comes to putting together a marketing budget, there are several schools of thought. The most widespread belief says that your marketing budget should be some arbitrary percentage of last year’s turnover. The proponents of this method vary the amount of the budget according to what stage of the product life cycle your solution is in for its given market. But this way of thinking, which goes hand-in-hand with traditional marketing techniques, seems to have had its day.
In the age of digital marketing, it’s now much easier to accurately measure the impact of each investment. Working backwards from your projected turnover, you can then estimate the annual marketing budget you will need in order to meet your goals.
- Annual projected turnover: 24 million
- Average sales revenue per customer: 24,000
- Annual sales volume target: 1,000
- Average number of qualified leads needed to make a sale: 5
- Number of qualified leads needed to reach the sales target: 5,000 (5 x 1,000)
- Ratio of contacts / qualified leads: 5/1
- Number of contacts required: 25,000 (5 x 5,000)
- Cost per contact: 50
Still following? Even those down the back? So, you now know that you need to generate 25,000 contacts during the year. If each contact costs you an average of £50, your marketing budget will therefore be £1.25 million (50 x 25,000). As a result, your marketing budget in this example will represent 5.21% of your projected turnover.
2. How to allocate your budget
Once you have determined your overall marketing budget based on your objectives, you now need to allocate it to the different areas of expenditure.
All too frequently, some marketing managers simply take the budget from the previous year and make minor changes to it: a little more here, a little less there, and abracadabra here’s the marketing budget. But we’re sure that you can do better than that!
Start by asking yourself the right questions. What marketing actions do you need to undertake in order to generate 5,000 leads in the coming year? In principle, you’re spoilt for choice:
- Content marketing
- Paid search
- Email marketing
- Paid advertising
- Social media marketing
The answer to this question will obviously be different according to whether you are a young, innovative SMB or a large, well-established company. Your business sector and market structure will also influence your choices. There is also the question of trade shows next year and how that will play out – normally a source of leads for many businesses. So it may mean that you need to invest even more heavily in your digital strategy.
You could also start to think about short term goals vs long term and which digital methods, channels and costs are most effective in terms of ROI. When creating a marketing plan and thinking of your campiagns – establish your goals: how much traffic, leads and MQL‘s do you want to see per month, per quarter and per year. Are you looking to establish your brand, get leads and revenue or to push out marketing campaigns with specific outcomes in sight?
In a B2B activity where buying cycles are complex and the targeted group of customers is very specific, implementing an inbound marketing strategy is the most effective way to reach your targets. Inbound marketing costs 62% less than outbound marketing techniques and generates 3 times more leads. It’s a digital strategy that certainly shouldn’t be overlooked when it comes time to allocate your marketing budget. It is cost-effective, controlled by you and a long term strategy that creates new business for your company and helps establish a trusted brand. You can also complement this with paid search techniques to boost the visibility of your content.
03. Our recommendations for an inbound marketing strategy
If you decide to plan an inbound marketing strategy exclusively, your budget plan will be allocated to 4 main areas of expenditure.
1. Website (30%)
Have you ever tried using inbound marketing without a website? No? Good.
To both attract and convert visitors for your company, you obviously need a website. But you’re going to need software, tools, vision, goals in order to get some ROI. Let’s start with your website. It needs to be more of a Rolls Royce than an old Mini!
- Technical: The technical aspect of your website must be flawless. For example, users will quickly be frustrated by page load times that are too long and they will penalize you for it. The same goes for a website that is not responsive and which doesn’t work on all devices.
- Design / UX: Your website should also make visitors want to both stay and browse and to come back to it at a later date. You should take as much care with the design and UX of your website so that your prospective clients can chart an easy course through your site to find what it is they are looking for.
- Conversion: Finally, your website isn’t just there to look pretty. It must be specifically designed, or redesigned if necessary, to convert visitors into leads. In other words, your website must be designed for inbound marketing and should include calls to action, online forms, landing pages, and website popups.
All this obviously has a cost in terms of the skills and time required which will have an impact on your budget.
2. Creating and amplifying content (30%)
The content you create is the raw material of your digital inbound marketing strategy. This is what will attract visitors to your website and enable them to be converted using compelling calls to action and landing pages.
You need to invest time and money in your content – before, during, and after its actual creation.
- Content strategy: You can’t improvise when it comes to creating content. You need to take a strategic approach to content marketing: who are the specific buyer personas you are targeting? What problems do they face and how will you deal with them? From what angle? Whether you do this in-house or outsource it, you will need to factor these costs into your marketing budget. You may have more content than you realise already on your site?
- Writing: the process of writing content, either in-house or using an external provider, must also be accounted for in your budget. Good content, created by professionals who understand the problems your customers face, obviously costs more than generic content that isn’t targeted to a specific audience.
- SEO: Standing between internet users and you are search engines, specifically Google. If you want to ensure your content ranks well in search results, it needs to be optimized with this aim in mind. You might need the help of an SEO specialist to do this.
Amplifying content: Once you have created content, it needs to be visible. You can also plan out your social media, email marketing – the more you share it, the more likely that it will be found by potential customers.
3. Lead Nurturing (20%)
The content on your website generates contacts that you then convert using inbound marketing techniques. If that’s the case for you, then, congratulations, you’re on the right track!
But not all of the leads you generate will turn into customers with a simple click of your fingers. You will need to “nurture” many of them with content until they are ready to buy: this process is called lead nurturing.
- Additional content: In the lead nurturing stage, you will also create targeted content for leads who are not yet ready to buy, taking into account the demographic information you have about them, their behaviour, and their position in the buying cycle.
- Marketing automation: Marketing automation software enables you to deliver the right content to the right person at the right time. This lets you maximize the number of leads you turn into customers in both the short and medium-term.
A content marketing strategy is one of the cheapest ways you can create a long term marketing strategy that will produce traffic and leads. In terms of ROI, it is the most profitable plan you can choose. And in order to reach your goals, all you need is your website, some good ideas, to know who your customer is and their pain points. It will also support your brand in the long term, as you will be seen for your expertise and trusted by your future clients.
4. Paid advertising (20%)
In theory, paid advertising is not an integral part of an inbound marketing strategy. And you can do without it if you have limited means at your disposal.
On the other hand, if you can afford it, it would be a shame not to make some use of it. Paid search, Google Ads, and social media ads are all paid techniques that let you target specific prospects, and help further amplify content when you need it. Attracting new people to your site is part of how to get revenue, but you need to be focused on which media, your target market and to have messages in your ads and campaigns that will speak to your customer’s pain points. You can become a customer-focused website, rather than product-based.
Still stuck trying to draw up your marketing budget? Wondering how you can effectively allocate your budget between the different areas of expenditure? We’ve put together this template to help you work it out!