Crafting a marketing plan and its associated budget for any company is a tricky, but vitally important, task. Companies large and small struggle with the endeavor each year, and creating the first marketing budget for a startup is even harder. The most effective marketing budgets are part art, part experience, and part data-driven.
If it’s the first marketing budget you’re sharing with your executive team, I recommend you create “stretch”, “mid-range” and “low” budget versions. Give an expected ROI, lead numbers, and funnel implications for each version. Nine times out of ten, the “mid-range” version will be approved unless your company is trying to be very aggressive or is launching new products or serves.
Here are 5 parameters to consider when drafting your company’s marketing budget:
1. What are the goals and expectations from the C-level and sales for lead generation? Make sure both understand how the marketing budget is tied to the expected number of leads. If they want to give you the “low” budget, but have very high lead expectations, stand your ground. If you don’t, you’ll suffer the consequences when the leads don’t pour in as they expected.
2. In addition to lead generation, is it also important to focus on branding building, brand enhancement, or reputation management? These soft tactics can add to the budget quickly, but are often important to a long-range strategy.
3. Where are your prospects looking for information? If your prospects are easy to reach via online channels or email, your budget can certainly be less than those who mainly look to industry analysts or peer-reviewed journals.
4. Is your company selling to business, consumers, or the government? If selling to a niche business vertical or the government your marketing budget is typically smaller than one trying to reach a large diversified consumer base.
5. Is your target audience national or local? Local services companies, such as IT integrators, can often manage effectively with a budget that’s only 1-2% of expected revenue because social marketing and low-cost online advertising works well in targeting prospects in specific geographic communities.
Once you have answers to the questions above, draft your three versions and pitch your plan. Once your plan is underway, remember the best marketing budgets are solid guidelines, but can’t be set in concrete. You should review your budget at least quarterly and make adjustments based on return on marketing investment metrics.
