A marketing budget is a list of costs that a business incurs to promote or advertise its products and services. It may include the cost of a logo, website design, signage for a new location, local advertisements in print and online, direct mailers, sponsorships, event marketing expenses and more.
The first step in creating a marketing budget is to determine the marketing goals you want to achieve. For example, do you want to increase brand awareness? Gain more customers? Do both?
After establishing marketing goals, it’s time to select marketing tools that support those goals, like popular marketing tactics or paid marketing media. With marketing budgeting software, small business owners can work quickly and efficiently to find marketing tools that will support marketing goals.
Once marketing tools are selected, the next step is to organize marketing tactics into marketing activities. This ensures that all marketing activity costs are under one budget line item for easy visibility and accountability.
Next, you’ll want to calculate the estimated cost of each marketing tactic or marketing activity in your business plan.
Once you have all marketing activity costs calculated, add them together to get your marketing budget. Then compare that number with your marketing goals and marketing tools list to determine whether the marketing budget is adequate for achieving marketing goals.
If it’s not, consider how much more money will be needed to meet your goals or which marketing goals need to change based on the marketing budget.
The marketing budget is a marketing plan’s financial component and lies at the heart of marketing planning. It represents revenue, profit and cash flow for marketing activities, which enables marketing managers to calculate return on marketing investment (ROMI).
When done correctly, a marketing budget can help you create better budgets for sales and production as well as marketing, because marketing is the engine that drives sales.
For some small businesses, marketing budgets are based on revenue forecasts for new products or marketing programs. For these types of marketing budgets, marketers typically focus more on incremental marketing results rather than total revenue for measuring marketing ROI.
Marketing budgeting requires a strong understanding of how to identify marketing goals, conduct marketing research, identify marketing opportunities and how to drive sales using marketing strategies.
A marketing budget helps small business owners understand where their marketing dollars are going. It also provides them with the foundation needed to track marketing results while making continuous marketing improvements that improve marketing ROI.
If your small business is just starting out or lacks marketing resources, marketing budgets can be difficult to create. However, there are marketing budgeting software systems that help small businesses organize marketing goals and marketing tactics to identify marketing budgeting needs so they can allocate marketing dollars effectively.