With marketing budgets now accounting for an average of 9. 5% of company turnover and increasing every year, it is more important than ever to use the budget in a targeted and effective way. This article shows you how to plan your marketing budget wisely and get the most out of your resources.
Reliable planning of marketing budgets - an impossibility?
At the beginning of the year, companies and the self-employed are spoiled for choice. Should more money be spent on advertising in newspapers or would it be better to invest in email marketing? Should the new Google Ads campaign finally be launched or should the reach of social media channels be expanded? The choice of marketing measures often seems limitless and the budget too tight to implement all these measures. The distribution of the marketing budget is therefore not always easy to estimate. It is precisely the consideration of competitors, the assessment of the economic situation and the interaction with the target group that make marketing budget planning appear even more complicated. This often leads to miscalculations that can be easily avoided with the strategic use of a budget plan.
These mistakes in the planning of marketing budgets are now history:
Mistakes when planning marketing budgets: overlooking individual costs
The purpose of the budget plan is to provide as complete a picture as possible of the distribution of the individual budgets. This provides an overview of the overall situation. This also makes it easier to understand the distribution within an area. It is annoying if important costs are forgotten in the planning of the marketing budget and suddenly have to be readjusted within the individual marketing measures. When planning, first record all marketing tools that you want to use for the next period or that you are already using.
This also includes:
Customer magazines
Social Media Marketing
Letter and e-mail marketing
Trade fair appearances
Sponsoring
Customer events
Smaller amounts are also often neglected in the calculation. When drawing up the marketing budget, think about travel costs, design costs, publication costs and the like in addition to pure marketing costs.
Before you start planning your budget, get an overview. Which marketing measures are suitable for your company? Also think about the less obvious costs involved.
Mistakes when planning marketing: Missing the target out of caution
The marketing department often has a dubious reputation in other departments. An area in which only money disappears, no progress can be seen and no turnover is generated, they say cynically. The opinion is that marketing should not cost anything. Therefore, for fear of making the wrong decisions, the following is done: too little is invested. Too little money is budgeted for the individual marketing measures in order to achieve the marketing goals set. Yet marketing is one of the most essential areas for increasing a company’s profits. See the marketing budget as an investment that pays off in the long term. Therefore, base your marketing budget on your goals and not on previously set budgets.
Invest your budget with your marketing goals in mind. Make sure that these can be realistically achieved and don't skimp on quality.
Mistakes when implementing marketing: lack of success monitoring
To save time, many companies and self-employed people use the previous year’s results as a guide. A rough estimate is made as to whether more or less money needs to be planned for the marketing budget next year, and then the work is done. The results achieved in the previous year are often not sufficiently evaluated. Without clear statements about whether the budget used has had an effect, the investment is of little use. This leads to money being spent on less efficient measures, even though there are better alternatives.
Take a close look at the results of your marketing measures from the last period. Which were successful and which were less so? This will help you avoid repeating mistakes and make the best use of valuable resources.
Mistakes when implementing marketing: short-term planning with fatal consequences
Who hasn’t experienced this? You hear from acquaintances that they have achieved huge success with strategy XY on Facebook and think to yourself: I want to do that too! So a lot of money is invested in the promising campaign in the short term, often with little success. Short-term measures or cheap discount campaigns may sound tempting, but they are useless if they do not achieve the planned effect. Long-term planning helps to keep an eye on the goals and align measures accordingly. This leaves enough time to compare offers and find the best value for money.
Plan for the future. Precise budget planning at the beginning of the year prevents short-term investments from leading to unnecessary costs. This allows measures to build on each other, complement each other and achieve a greater impact.
Marketing budget planning in four steps
Precise planning is particularly important for small and medium-sized companies. After all, the marketing budget should be used as profitably as possible without wasting resources. This can be achieved with an efficient marketing budget plan. With these four simple steps, you can implement your own budget plan, regardless of size, turnover or target group.
Precise planning of the marketing budget
Start by looking at the figures for the previous period to get an overview of your financial situation. The actual analysis forms the basis of the budget plan and shows you where you currently stand with your company. The recommended benchmark for the marketing budget is 2.5 – 4.5 % of turnover. This means that the corresponding percentage for the marketing budget, including personnel costs, is determined based on turnover. However, if only the budget for products and material costs is of interest, the personnel costs should be deducted from the total. The result is the budget that is available to achieve the objectives and can be distributed among the various items.
Objectives with foresight
Marketing objectives are derived on the basis of the as-is analysis, which reflects a snapshot in time. These should be clear and already contain concrete key figures for measuring success. An example of a company’s marketing objective could be: Increase sales from X % to Y %. This ensures that the success of the objective is measurable and can be evaluated. Marketing objectives are much more likely to be implemented on the basis of concrete objectives. Setting marketing targets is a very important part of budget planning. They determine the direction in which the company wants to develop in the next period.
Strategic distribution of the budget
Every company sets itself goals that it would like to achieve. Do you keep these in mind when selecting marketing measures? Which marketing measures will bring you closer to your goals? More important than using a wide range of marketing tools is deciding on the most effective ones. It helps to be aware of the needs of your customers and business partners. Which marketing tools are best for reaching your customers? This will help you find the marketing tools that best suit your business goals. Base your budget on these and the associated expenditure. The measures should be set out in concrete terms so that the costs can be clearly identified. Plan not only which marketing tools you want to use to reach your customers, but also when, how often and for how long. For example, it is much more accurate to calculate three Facebook ads and one ad in a trade magazine than to plan the expansion of just one social media channel. Also calculate the personnel required to implement your marketing strategy. Prioritize the marketing tools according to their importance. For very time-consuming services, it may also make sense to outsource these and hand them over to experts. Such external services should also be included in the budget planning. If you take these costs into account, you will soon have an accurate overview of your budget allocation.
Performance measurement made easy
In order to build on your successes in the next period, it is important to gather information about the marketing budget. Only through the evaluation can it be checked whether the investments in the marketing measures have also brought the corresponding success. This allows the measures to be optimized and improved and to achieve the best possible performance in the next period. KPIs (Key Performance Indicators) are a good benchmark for this. These are key figures that can be used to recognize the progress of your objectives. One example would be the bounce rate of your website, where you can see how long visitors stay on your website.
Conclusion
After these four steps, you will have a better overview of the costs for the individual marketing measures and will also have implemented a precise distribution of the marketing budget. An ongoing performance review not only helps to keep track of the actual costs, but also creates the best basis for the next budget planning. This gives you an enormous time advantage and allows you to pursue your next goals step by step.
