No matter what size company you have, there are certain secrets you need to understand when setting up your marketing budgets. Marketing is about more than just what it costs to run the ad. It’s also about the time and money needed to design and set it up at the outset. On the other end of things, you also need to spend time analyzing results of specific campaigns, determining ROI, and creating follow up campaigns that focus on customer retention.
If budgets are not set correctly, there can be issues with both the amount of money you are spending and the timing of your ads. Too little, spent too late, will lower your ROI and can be extremely frustrating. Here are some secrets to getting the most out of your marketing budget.
A marketing campaign is not just about one aspect or one avenue of advertisements. It is about creating a message that contains elements that inspire customers to either join your customer base or to keep buying from you.
The idea can vary from ways to create greater brand recognition to specific calls to action. An example of creating brand recognition is the video content often created by Red Bull that showcases people using their products to fuel action, a mainstay of their messaging. A call to action could be subscribing to a newsletter to a specific discount or coupon that is tied to a specific timeframe, creating a sense of urgency.
The key is although something can sound like a good idea, if you do not have the person to create the right value proposition and turn into an actual program that will create demand, you can end up wasting a large amount of money trying to get there.
The time it takes to brainstorm, design ads, and determine their best placement is also a factor in the overall cost of the project. Taking a holistic view lets you see if pursuing it is worthwhile.
A well-defined ad campaign is essential. As part of the holistic approach, you need to determine your goals, and therefore how much you can invest. What is it, exactly that you want to get from your ads?
For example, you might undertake a campaign on digital signage using a coupon code or SMS short code that invites users to visit your restaurant to receive a discount. The actual goal of the campaign is to increase the number of customers who visit your restaurant, right?
However, there is also a second objective. By adding a unique coupon or code, you are also trying to determine which ads work and how well in a specific space or medium. Yours secondary objective is testing, and another is determining ROI.
Each campaign can have its own objective, and even secondary ones, but there must be something specific you are focusing on. In this case it is getting more visitors to your restaurant. Knowing this helps you budget appropriately. You should expect a certain ROI, and your budget should not exceed that expectation.
While your objective may be simple and well defined, the campaign you need to actually accomplish that may be quite complex. For instance, a campaign to increase brand recognition in a certain area may contain several elements, or sub-campaigns.
Each of these elements is potentially complex on its own. Coordinating the timing of each portion and keeping in mind ways to track your ROI for each can suddenly add layers that may not be able to be handled by a single individual. Certain elements may require more work and therefore time than others.
These factors need to be a part of your budgeting decisions. Time is never free, and making sure you include it will keep you from “unexpectedly” going over budget.
You can’t know what is working unless you are trying more than one thing. This is why it is important to not only A/B test more than one ad, but to test them on different platforms.
An ad that does well on social media may not do equally as well as a part of a physical advertising campaign. Each requires an entirely different strategy, and in some cases modified content.
Also, the analysis that helps you determine ROI is not the same for each platform, and you need to test different methods for that as well. Marketing is about constant testing, frequent failure, and renewed efforts
This means that as a part of marketing budget you need to factor in these variations. Creating several ads on each platform and then populating them across these platforms has a cost, and one that needs to be associated with each campaign.
The critical failure is often not budgeting enough for this testing at the outset. This means that then you either go over budget or skip critical steps. Either your budget or the marketing itself will suffer as a result.
Typically, marketing budgets range from 3 to 12 percent of revenues. This means if you spend up to $120 for a return of $1,000 in revenue, you have met expectations. However, these rules do not always hold true.
For instance, some campaigns will cost you less per $1,000 revenue return, sometimes less than 3%. While this is rare, it is also part of the average calculation.
However, there are many cases where your marketing budget will exceed these numbers. If you have a new product or service launch, or if you are a startup still in the early stages of marketing, you may spend more on brand recognition campaigns that do not typically bring the measurable ROI that other initiatives do.
While you want to look for the best ROI, sometimes increasing discoverability is well worth the investment.
Creating marketing budgets can be challenging. It is tempting on some levels to set both amounts and expectations low. However, time has shown that proper timely investment creates the greatest success. It’s important to take a holistic approach and fully define objectives and the complexity of your campaign. You also need to factor in the cost of testing different ads on different platforms.
Following these tips will give you a truer picture of ROI and help you create robust and successful marketing budgets that don’t result in you spending too little, too late.