A common struggle for marketers is the art of budget allocation – what to spend your money on for your marketing strategy to work. In this blog, we review marketing budget allocation, what’s typically included in a marketing budget, and allocation best practices to keep in mind.
There are a lot of factors that can affect the level of success of a marketing plan. 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 on how to spend your budget to see a great marketing return on investment (MROI).
The definition of marketing budget allocation is the amount of budget an organization allocates to each item of expenditure in a marketing 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 optimize marketing spend on efforts needed to reach their audience online and offline to see leads, sales, form fills, and other KPIs calculated into an ROI.
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 from many C-level CEOs, CFOs, and CMOs. It also affects marketing, sales, and accounting teams and departments.
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.
Several categories are included in a marketing budget. Here is a breakdown of what’s included when allocating spend for your marketing budget:
Not only should these categories of expenses be included in your budget, but many of these are used to help marketers reach their goals.
So how can marketers allocate their budget to spend on things that will give you the best return?
Here are the steps to follow on how to allocate your marketing budget to get the best ROI on your marketing plan:
Regarding your marketing strategy vs. marketing goals, it’s a great idea to establish your goals first, then set a strategy, including budget allocation, to reach those goals. This will help you determine what budget you need 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).
Once you determine your goals, you need to determine your budget for a marketing plan. Budgets cover a specified period, whether 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 consider the goals you’re looking to achieve.
Planning and budgeting are very closely related. Creating a marketing plan will determine how you get there to achieve your goals. Use data to determine your marketing plan.
The plan should outline campaigns and expenses to allocate your marketing budget. You can use Planful’s online marketing plan builder to streamline the process.
Today, marketing plans break down into many channels or facets of digital marketing:
More importantly, how will you use these campaigns to reach your goals?
What do you need to spend to reach your goals for certain campaigns? More importantly, what else do you need to get you there? This is where marketing budget allocation best practices come into play.
Deciding how much to spend for different channels, platforms, and campaigns will get you the results needed to hit your goals. Employees, software, trainings, freelancers, and consultants hired should be factored into your campaign-specific tracking.
Are you hitting your goals? You can use a marketing budget tracker to see how your marketing plan is progressing. Tracking your progress and measuring that against your goals will help you determine the plan’s level of success.
For certain marketing channels and platforms, you’ll likely use data from specific platforms. For example, 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.
Planful’s marketing operations dashboard is a great way to track progress and measure marketing performance.
What’s your return on investment? After allocating the marketing budget, you want to ensure that your spending is a good return on investment. Ultimately, measure marketing ROI will help determine how successful your marketing plan is progressing.
We break down some best practices to help you spend your marketing budget seeing a great MROI.
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.
Invest in platforms and channels to reach your ideal target audience. This seems simple, but it’s true for any successful marketing plan.
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.
Omni-channel campaigns are extremely important in marketing. Yes, you should invest in campaigns and strategies that bring success, but you should not put all of your eggs in one basket.
For example, if you spend too heavily on one campaign or channel, and suddenly, something happens to negatively affect that, it can greatly hurt your performance. Instead, invest in multiple integrated campaigns to see which ones work and which do not.
Marketing budget allocation isn’t just for marketing teams. Sales teams should be included in a digital 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 reach their goals.
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 to decide what to spend on and how to formulate the plan. Not only can data help with marketing planning, but it can 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 to be more successful across all channels and campaigns can help you reach your goals more quickly.
Take a bottom-up approach to your marketing, and invest more in marketing that targets the bottom of the conversion funnel. Invest in lead generation (for example, SEO, or Google Ads) to maximize bottom-of-funnel marketing. Investing in those close to converting online minimizes your risk and increases your potential marketing ROI.
Allocating your marketing budget for the right things can be tricky, but with historical data and established goals, you can create a marketing plan to spend money that will bring the best ROI.
To summarize our list of best practices for marketing budget allocation:
While these tips aim to help you, marketing budget allocation is something that you will learn with experience creating marketing plans. As you move forward with future marketing plans, we hope these tips provide some good insight into marketing budget allocation best practices.
Learn more about Planful’s marketing planning software and how it helps you allocate budgets and manage marketing goals, plans, and campaigns.
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