Mistakes You’re Probably Making With Your Marketing Budget

When you own or manage a business, there is nothing worse than spending money on something that isn’t providing ROI. While every ethical business has a unique purpose, they all share one thing in common: to provide a product or service that creates value for its audience. Marketing is one of the best ways to ensure you are providing this value, but if your marketing budget isn’t properly managed, you may never see this purpose realized. 

When managing a marketing budget, there are several common mistakes that can lead to a negative return on investment. In this article, we’ll go over the most common mistakes we’ve seen and how to correct them.

6 Mistakes You Might Be Making with Your Marketing Budget  

As a marketing agency, we serve a large variety of businesses every day. This gives us a unique perspective on the ways businesses are run and the mistakes they might be making with their budgets. Here are some of the costly mistakes we’ve seen businesses fall to when looking at their marketing budgets.

1. Lack of Alignment  

Many businesses have had a bad experience with a previous marketing agency or in-house marketer and are reticent to trust another one with their budget. When auditing past marketing strategies, we’ve seen one primary reason for this poor experience – they were never on the same page.  

Failing to align your marketing goals with your overall business objectives is a major mistake. Yes, you are in business to make a profit but this is rarely your reason for being in business. Your business has a unique “why,” and profitability simply supports that objective. A marketing partner should understand your objective, so they know how to best manage your business’s budget. 

For instance, your goal may be to educate the public about a new, unique product offering. Before you even think about profit, you have to create awareness. If you want to make sure you are getting in front of people but your marketing partner is solely focused on new sales, you will likely be disappointed with the results, and ultimately, your marketing budget will suffer.   

2. Not Understanding Your Target Market

Understanding your target audience is crucial for effective marketing. Investing in campaigns without a comprehensive understanding of your customers’ preferences, needs, and demographics can lead to ineffective messaging and targeting. Just like in archery, if you don’t know which target to shoot at, it’s highly unlikely that you’re going to hit the bullseye. 

Understanding your target market can only come through thorough in-depth market research. A few questions you should be asking yourself: who you are trying to reach particularly? What are their age, gender, and income? What are they interested in? Why would they choose to buy your product? What motivates them to action? Why should they trust you? What do you provide that would be unique to them? Not understanding who you are targeting is a major mistake when it comes to getting the most out of your marketing budget.

3. Not Tracking What Matters

“You can’t improve what you don’t measure.” – Peter Drucker

Neglecting to track and analyze the performance of your marketing campaigns can make it difficult to determine what works and what doesn’t. Without proper tracking and reporting, you won’t be able to effectively optimize your budget. 

Before you begin any marketing campaign, you should set up the key performance indicators (KPIs) that will help you achieve your goals. These KPIs (key performance indicators) are like mini-goals that lead to achieving the primary objective we spoke about in the previous section. Specific, measurable, attainable KPIs are easier to track and manage using data tools like Google Analytics. 

That said, just watching short-term analytics without an understanding of yearly performance metrics can severely limit your ability to make good decisions. This is where a dynamic reporting tool like Google’s Looker Studio can come in handy. A combo like this can help your business best allocate your marketing budget in the upcoming days and weeks, as well as, the years and decades that follow. 

4. Putting All Your Eggs in One Basket

Dedicating your entire marketing budget to a single channel, such as social media advertising or pay-per-click (PPC) campaigns, can be very risky. Instead, it is wise to diversify your marketing efforts across multiple channels. This can help you reach a wider audience and mitigate the risk of overdependence on a single platform. With proper tracking, you can also narrow down where your marketing is the most effective and allocate your budget accordingly. 

Explore different channels, such as email marketing, content marketing, SEO, social media, paid advertising, and even influencer partnerships to maximize your budget. Remember, marketing is a marathon, not a sprint. While there are certain things you can do to get a great start, it is only over the period of months and years that you’ll really know which channel will serve you best at which time.  

5. Ignoring Past Customers

There is a line in a children’s song that goes, “Make new friends but keep the old, one is silver and the other is gold.” It’s silly, but in business, there is a wealth of statistics that support this rhyme. Did you know that getting a new customer is five times more costly than retaining an existing customer? Furthermore, an existing customer spends 67% more on average than a new customer — not to mention a host of other benefits. 

In other words, while attracting new customers is important, neglecting previous customers can be costly. If you’re truly looking to maximize your marketing budget, you couldn’t do better than allocating a portion of it to focus on customer retention. This can come in the form of loyalty programs, personalized communications like newsletters, and retargeting campaigns.

6. Aversion to Risk 

Not being willing to experiment with new strategies can be detrimental to your marketing success. It’s no secret that the world is rapidly changing, and marketing is at the forefront of the revolution. In just the last few years, we’ve seen new marketing channels arise along with new opportunities and new challenges. If you aren’t willing to utilize your marketing budget to test different channels, messaging, creative elements, targeting options, or approaches, your business could quickly become obsolete. 

As new and promising opportunities appear, it would be prudent to set aside a small portion of your budget to try new things. This isn’t to say that you should chase every trend or spend money on every new and shiny thing, but taking some calculated risks will certainly help your business maximize ROI in the long run.

Find a Partner Who Has Your Best Interest at Heart

One of the biggest fears our partners have about marketing is trusting someone with their hard-earned finances. At PHOS, we understand your concern and sincerely want to help you make the most of your marketing budget. We are passionate about your success and will work diligently to ensure your business avoids these budgeting mistakes.

Interested in discussing your marketing spend? Let’s chat.