A common struggle for marketers is the art of budget allocation - what to spend your money on in order for your marketing strategy to work.There are a lot of factors that can affect the level of success in a marketing plan. In order to have a great marketing plan, you need to spend your marketing budget on campaigns and platforms that will bring you a good return on investment. That’s where marketing budget allocation comes into play. Marketers that strategically spend budgets can execute your plan and bring the ROI you expect to see.
In this blog, we highlight marketing budget allocation best practices to help guide you in how to spend your budget to see a great MROI.
What is Budget Allocation?
The definition of budget allocation is the amount of budget an organization allocates to each item of expenditure in a financial plan. Essentially, it is a limit of money that employees cannot exceed when charging expenses in a specified amount of time.
For marketers, budget allocation is the maximum amount to spend on a marketing plan. Marketers need to spend their money on efforts needed to reach their audience online and offline to see leads, sales, form fills, and other KPIs, calculated into an ROI.
The importance of budget allocation in organizations
There’s no question that budget allocation is a critical part of a marketing plan. Marketing budget allocation is a needed skill for businesses and typically combines input many c-level from CEOs, CFOs, and CMOs. It also affects marketing, sales, and accounting teams and departments.
What’s Actually Included in a Marketing Budget?
As previously mentioned, marketing budget allocation includes everything needed for marketers to reach their target audience and increase their ROI. This means all expenses, including advertising budgets, employee salaries, and the tools and software needed to aid marketers in this endeavor.
There are several moving pieces that are included in a marketing budget. Here’s what's included when allocating marketing budget:
- In-House Marketing Employee’s Salaries
- Vendors & Consultants
- Public Relations
- Events/Trade-show cost
- Training & Conferences
- Additional revenue generation tactics
Not only should all of these expenses need to be included in your budget, but many - if not all - of these things are used in some capacity to help marketers reach their goals.
How to Allocate Marketing Budget
So how can marketers allocate their budget to spend on things that will give you the best return? Here are the steps to follow when allocating your marketing budget to get the best ROI on your marketing plan:
Set Your Marketing Goals
When it comes to your marketing strategy vs marketing goals, it’s a great idea to establish your goals first, then set a strategy, including budget allocation, on how to reach those goals. This will help you determine what budget you need in order to achieve your desired goals. What do your company stakeholders wish to accomplish? What does a marketer need to do to show the true business value of their marketing efforts? Determine the marketing plan length, and set SMART goals (specific, measurable, achievable, relevant, and time-based).
Determine your budget.
Once you determine your goals, you then need to determine what your budget is for a marketing plan. Budgets cover a specified period of time, whether it be monthly, quarterly, or yearly. Knowing how much you should spend on marketing can help determine the budget of a marketing plan. Budgets can be set based on past data, but should really take into consideration the goals you’re looking to achieve.
Outline Your Plan.
Planning and budgeting are very closely related. To achieve your marketing goals, creating a marketing plan will determine how you get there. Use data to determine your marketing plan. The plan should outline campaigns and expenses to allocate your marketing budget. Plannuh helps you build out your marketing plan.
Today marketing plans could involve many channels or facets of digital marketing:
- Email marketing
- Social media
- Public relations
More importantly, how will you use these campaigns to reach your goals?
Allocate marketing budgets
What do you need to spend in order to reach your goals for certain campaigns? This is where marketing budget allocation best practices come into play. Deciding what to spend and how much to spend for different channels, platforms, and campaigns will get you the results needed to hit your goals. More importantly, what else do you need to get you there? Employees, software, trainings, and even freelancers and consultants hired should absolutely be factored into your campaign-specific tracking.
Track Your Progress.
You can use a marketing budget tracker to see how your marketing plan is progressing. Are you hitting your goals? Tracking your progress and measuring that against your goals will help you determine the level of success of a plan.
For specific marketing channels and platforms, you’ll likely use data from specific platforms. For instance, Facebook advertising has data on clicks, conversions, and spend. In addition to your ad spend, including the costs that come with manpower, tools, and other costs needed. You can track your success on a weekly monthly, quarterly, or even yearly basis - whatever is appropriate for the length of time your marketing plan is.
Plannuh’s marketing performance dashboard is a great way to measure your progress tracked against marketing ROI.
What’s your return on investment? After allocating the marketing budget, you want to make sure what you’re spending is bringing a good return on investment. Ultimately, tracking marketing ROI will be helpful in determining how successful your marketing plan is progressing.
5 Best Practices for Marketing Budget Allocation That Will Set You Up For Success
Now that you know how to navigate the bourgeois allocation process, we want to fully prepare you for what to expect. Here are some of our best practices for allocating marketing budgets.
1. Allocate your budget based on where your audience is
This seems simple, but it’s true for any successful marketing plan. Invest in platforms and channels to reach your ideal target audience. Knowing your audience inside and out will help you choose marketing channels to reach your audience. Persona research and the buyer’s journey will help you best understand how to allocate your marketing budget to reach your target audience.
2. Diversify your strategy
Yes, you should invest in campaigns and strategies that bring success, but you should not put all of your eggs in one basket. Omni-channel campaigns are extremely important in marketing. If you invest too heavily in one campaign or channel, and suddenly, something happens to negatively affect that, it can greatly hurt your performance. Instead, invest in multiple integrated campaigns and see which ones work and which ones do not.
3. Sync with Sales Teams
Marketing budget allocation isn’t just for marketing teams. Sales teams should be included as part of a marketing plan to help you reach your goals. When marketing and sales collaborate on budget allocation, they can create a plan that puts both teams in the best position to succeed and better reach their goals.
4. Leverage Data
When approaching marketing budget allocations, data should be used throughout the process. When you create your marketing plan and allocate budgets, data will provide the insights needed to make decisions on what to spend on and how to formulate the plan. Not only can data help with marketing planning, but it can also be used to track your progress. Over time, you may find that some campaigns and strategies are more successful than others. For those campaigns that are not effective, don’t be afraid to call it a loss, and end the campaign. Changing your plan and reallocating your marketing budget on more successful channels and campaigns can help you reach your goals more quickly.
5. Prioritize Bottom-Of-The-Funnel (BOFU) Marketing
Take a bottom-up approach to your marketing, and invest more in marketing that targets the bottom of the conversion funnel. By investing in those close to converting online, you minimize your risk and increase your potential marketing ROI. Invest in lead generation, SEO, and Google Ads to maximize bottom-of-funnel marketing.
Allocating your budget on the right things can be tough, but with historical data and established goals, you can create a marketing plan to spend money that will bring the best ROI. While these tips aim to help you, marketing budget allocation is something that you will learn with experience creating marketing plans. We hope these tips provide some good insight into marketing budget allocation best practices, as you move forward with future marketing plans.
Learn more about Plannuh's marketing planning software, and how it helps you build and manage marketing goals, plans, and campaigns.