A marketing budget is an important tool for allocating a firm’s resources and controlling what is spent on specific marketing projects throughout the year. But sadly, they are often the first thing to be cut from a firm’s budget.
Marketing budgets are usually created in association with a firm’s marketing plan, and are based on the previous year’s budget results. However, setting up a budget for the first time can be demanding, particularly for those who have to produce numbers for something that has never been done before. Below are a few suggestions of what firms should consider when creating a first time marketing budget.
- Research specific costs
Every firm needs to spend sufficient time researching the costs associated with the components that make up the marketing program. Develop a specific cost for each of the items in individual programs i.e. advertising, brochures, website development etc., and use this cost data to compute the total cost of the program.
- Set realistic numbers
Set down what you can actually achieve with the money you have. The size of a marketing budget is usually based on some percentage of the firm’s gross revenue and agreed upon with the partners or the senior people in the firm. Once the percentage is approved, the detailed budget that is developed should provide a reasonable estimate of the costs the firm will incur for the marketing projects being implemented.
- Consider strategic plan
Ensure that your budget is in sync with your firm’s overall strategic plan. Budgeted marketing programs should be directed at the areas where a firm sees its growth and expansion.
- Monitor and adjust
Set a budget but be prepared to be flexible. Budgets are nearly always based on estimates and forecasts about how the plan will unfold in the future. Once the marketing budget is approved, keep in mind that events rarely turn out as anticipated. You will need to monitor the marketing expenditures against the budget and make adjustments in response to changes throughout the year. Communicate this information regularly to the appropriate stakeholders along with clear explanations for any variances that occur. Failure to communicate is one of the main reasons why marketing budgets get chopped.
- Budget for success
A budget is important for ensuring a firm directs marketing resources to the areas where they will be most effective and controlling the costs associated with specific marketing projects. To achieve this, a budget needs to be realistic, consistent with the firm’s strategic plan, flexible and closely monitored. Paying careful attention to the results achieved for dollars spent and communicating to stakeholders throughout the year can make the marketing budget a valuable tool for evaluating current and new marketing programs, and ensuring your marketing dollars get results.