A common mistake of business leaders is building a strategy around a marketing budget rather than crafting a budget based on your strategy. The latter allows for strategic allocation and prioritization of budget. The first approach, however, can often lead to misguided decision making, leaving marketers struggling to prove ROI and therefore, making it even more difficult to make the business case for increased budget later on.
Knowing how much you have to spend on marketing is important. Knowing how to spend it is critical.
The best way to ensure that your marketing investment will be well spent is to take time upfront creating a sound, comprehensive, and strategic marketing plan. From there, prioritize the channels in your strategy and allocate budget where it’s needed most.
A marketing budget should be a component of your marketing plan, rather than a driver.
Your marketing strategy should outline how you are going to achieve your marketing goals and what it’s going to cost you.
As you and your team are defining your marketing goals and developing a strategy and budget behind it, it’s important to keep the following in mind:
Marketing is an Investment, Not a Cost
It’s not uncommon for business leaders to perceive marketing initiatives as costs or as an obligatory expense. For this reason, marketing budgets are often lumped into a sales budget, leaving marketing and sales departments to decide what gets allocated where. The result? Classic conflict between sales and marketing teams.
When creating a marketing plan for your business or pitching a strategy to your leadership team, communicate marketing spend as an investment. A purpose-driven, strategic marketing plan can produce large return on investment when it’s executed effectively. It costs money to make money. When funding is spent the right way, your return will exceed the cost.
It’s Not Just About the Money
When developing your marketing budget, it’s crucial to take labor into consideration. Time is money. And when marketing plans are executed by personnel that are inexperienced or inefficient, you’ll see minimal ROI. You could spend thousands of dollars on tools and services, but you need to factor in the time it takes for your teams to learn and use the tools that you invested in.
In the most recent CMO survey, it reports that despite large investments in analytics and marketing tools, business leaders are not able to see high ROI due to lack of trained professionals working with the tools. This, in-turn, is causing many leaders to dismiss analytics all together. In fact, according to the survey, only 35 percent of marketing leaders report they formally evaluate the value of their marketing analytics.
It is not only important to invest in the proper tools for your team, but to invest in the people and time spent working with the tools. Large investment in tools and low investment in training will waste time and resources for everyone involved. It’s about creating a balance and allocating resources (time and money) into the right people and initiatives.
Test, Analyze, and Adjust
Here at PHOS, we are the first ones to say that data is your friend. Don’t wait until the end of the year to see if things are working. Analyze your campaigns and adjust budget allocation as needed. In digital marketing, this happens on a quarterly basis and it takes skilled and knowledgeable marketers to understand what the data means and change course when needed.
This is where hiring a digital marketing agency can come into play. A digital partner can help you set goals, develop strategy, and execute your marketing plan. Here at PHOS, our team is well rounded in the most used marketing tools out there and will adjust strategies and budget allocation when needed. With digital platforms changing constantly, it’s imperative to have a team that keeps up and knows how to make the most of those opportunities.
We create thoughtful experiences that inform action, tell your story, and increase engagement.