Did you know that B2C businesses spend more on marketing than B2B businesses?
Data shows that businesses dedicate significant resources to help market both their business and the various products they offer. With millions of businesses around the world competing for market share, marketing has never been more important.
There are a variety of different approaches you can take when marketing your business. These various approaches can have a major influence on your marketing budget for the year. This is why it’s important to understand all your options before finalizing your marketing plan.
Thinking about creating a marketing budget for your business? Below is a complete marketing budget guide to help you get started.
Marketing is an essential part of running a successful business. This is because marketing is the process of building awareness and driving attention to your brand or business. The added attention plays a pivotal role in providing value to the business as it can help generate sales.
Marketing activities can build value for your business both directly and indirectly. Marketing can help drive traffic and sales directly to your business. Alternatively, marketing can be used to build brand value for your business over the long term.
There are tons of different marketing strategies you can use to grow your business. Traditional marketing included marketing materials such as flyers, pamphlets, and adverts on radio and television. However, the modern economy has evolved the way we market products and services.
This is because the economy itself has evolved to rely more on the internet and social media. The recent evolution has seen businesses scramble to evolve their marketing campaigns to remain relevant today.
As mentioned above, digital marketing is the natural evolution of the marketing industry. While some traditional marketing still exists, most businesses prioritize digital marketing to maximize their reach online. This is effective as digital marketing leverages the power of the internet and social media to reach billions of people with the tap of a button.
Digital marketing is the term given to all marketing-related activities that are made possible through the internet and online-based technologies. These marketing-related activities can range from sponsored posts on Instagram to influencer marketing on YouTube.
The main difference between traditional marketing and digital marketing is accuracy. Digital marketing relies on platforms that have access to tons of user data. This enables the platform to match adverts with potential customers that will be interested in the ad itself.
In the past, advertisers would need to take out an ad in the local newspaper in the hopes that potential customers will see it. People that aren’t interested will still see the printed ad, but it would be a complete waste for them. Digital marketing changes this as the ads you see are linked to you and not the platform itself.
In this way, two different people can view the same page and receive different ads depending on their own likes and dislikes. This improves the accuracy of the marketing campaign so that you can save time and money while boosting your business in the process.
The Importance of Marketing
Marketing is an incredibly important investment to budget for. This is because the market is filled with millions of businesses that are all competing for attention and sales. In this way, having great marketing can add value to your business and set you apart from the competition.
The main purpose of marketing is to inform your customers about your products and services. At the end of the day, how can they buy things that they don’t know exist? This is why your marketing campaigns should always be both informative and engaging.
Marketing should always highlight your product, service, or brand. In this way, you can help influence the buying decision that customers make. Marketing to highlight your product or service is simple and direct, but showcasing your brand can help build brand value.
Brand value is an important asset that you can use to build your business. This is because the value associated with your brand is automatically transferred to every product or service you have. This can help boost awareness and sales of your entire product range at once.
In this way, marketing can help create demand for your product or service. This is why many brands choose to launch marketing initiatives weeks before the actual product becomes available. The initial reception can help them see how much demand they should prepare for.
Even massive companies like Apple launch massive marketing campaigns a few weeks before actually launching the new products. The marketing campaign can help build awareness for the new products and even create some hype and anticipation before the official launch.
What is a Marketing Budget?
In simple terms, a marketing budget is the amount of money set aside for all marketing-related activities. This is an essential part of the annual budget as marketing is directly related to sales. The budget should outline how much money the business plans to spend along with how they plan to actually spend it.
What Should Your Marketing Budget Include?
Marketing budgets should ultimately indicate the total amount that the business plans to spend on marketing. However, this should be broken down so that you can understand exactly what’s being spent where. The budget should include expenses such as sponsored content, paid advertising, search engine ads, domain renewal, marketing software, and even marketing staff.
A great way to break down the budget is to categorize them by the platforms that you use. If you plan to run paid ads on Facebook, Instagram, and Twitter, create a section for each social media platform. Then you can list all the marketing-related activities you have planned for that network.
In most cases, you may decide to run paid ads, sponsor content, and promote products through an influencer all on a single platform. At the end of the day, you’ll be able to see how much you spend on marketing for that platform and how many sales came from there. This can help evaluate if it was worth it.
Marketing Budgets by Industry
When it comes to setting a marketing budget for your business, it can help to understand the market averages. However, different industries typically spend different amounts on marketing throughout the year.
These figures are percentages based on the annual revenue of that company. By basing the marketing budget on annual revenue, you can easily scale the budget according to the size of the company. Here’s a quick look at the marketing budgets and strategies in various industries.
The energy sector is responsible for putting fuel in our cars and turning the lights on at home. Since there’s not much consumer competition in the sector, the average energy company only spends around 1% of its budget on marketing to businesses, governments, and communities.
The education industry spends around 3% of its annual revenue on marketing. Universities, colleges, and executive training organizations advertise on social media platforms to help engage with the right audience.
Banking and Finance: 8%
The banking and finance sector spends around 8% of its annual revenue on marketing. Banks typically advertise their savings accounts while other financial companies are active on social media to educate and encourage people to invest their money. This is an effective way to build relationships with your customer base.
Consumer Goods: 9%
Consumer goods are incredibly important to our daily lives. The consumer goods industry spends around 9% of its income on marketing every year. The industry primarily focuses on informing people about sales and new products for them to try.
The retail sector spends around 14% of its income on marketing each year. This industry was one of the first to migrate to digital marketing as they primarily leverage platforms like Instagram and Facebook. Some businesses even run their online store on these platforms, making it even easier for people to find and buy items online.
The healthcare industry spends around 18% of its income on marketing every year. Health insurance companies tend to spend more than the rest of the healthcare industry, highlighting the benefits of their scheme.
Business Services: 21%
Business services typically spend around 21% of their annual revenue on marketing-related activities. This includes sponsored posts, paid ads, and even search engine optimization. This can help businesses find you whenever they’re in need of your services.
The technology sector is one of the biggest sectors in the modern economy. This sector spends around 21% of its annual revenue on marketing as it’s essential to sell its products and services. Companies like Apple and Samsung leverage digital marketing to build brand value for their business, selling more products in the process.
Marketing Budget Tips
When it comes to creating and managing a marketing campaign, there are a few things you should keep in mind. Here are a few key marketing budget tips for business owners.
1. Know Your Customer
The number one rule when it comes to marketing is to know your customer. If you’re selling cars, there’s no point advertising to people that aren’t old enough to drive. In this way, understanding your target audience and creating a marketing strategy to deliver to them can help improve your overall conversion rate.
2. Diversify Your Budget
When it comes to creating your budget, diversify your marketing investments. This means investing in more than one platform at the same time. By diversifying your marketing activities, you can maximize your reach and drive more traffic to your website.
3. Stay Agile and Adapt
It’s important to stay agile with your marketing budget. This is because marketing is often directly related to sales. In this way, if your marketing is resulting in increased sales, you may want to increase the marketing budget before the end of the year.
The opposite is also true if you seem to be investing in a platform that’s not working out. Your budget should be allowed to adapt to remain efficient and effective.
4. Prioritize Scalability
Scalability is incredibly important when planning out your budget for the year. This is because you need to make sure that your business can always adapt to demand whenever it appears. Having this scalability built into your budget can help you make the most of the increased demand but can also let you scale down when needed.
5. Partner with an Agency
While many of these platforms offer simple marketing tools, working with an agency comes with a host of benefits that you can’t ignore. This is because a marketing agency has the skills and experience to know how to create a marketing budget and strategy for your business.
Marketing agencies employ experienced professionals that have all the knowledge needed to help you build your business. This can save you tons of time but can also be the more effective option. This way, it can help make you money in the process.
Grow Your Business with Digital Marketing
Digital marketing is one of the best investments you can make to grow your business. From marketing on social media to optimizing your entire website for search engines, there are tons of things you can do with your marketing budget.
Most platforms also let you scale your marketing campaign according to your budget. This allows you to start small and gradually increase your marketing budget over time.
Ready to improve your marketing campaign? Contact us today to set up an in-depth marketing review. Our experienced team will analyze your current strategy to see how we can help you grow online.
Owner and Chief Marketing Officer, Jason Hall, and his team specialize in creating brand awareness / traffic and lead generation / marketing funnel and conversion optimization, while utilizing the appropriate marketing channels available within your industry. With diverse clients throughout the world, Jason's team is well connected within many industries to assist with your marketing strategies. With no long term contracts and various levels of service, Jason's team will increase the quality of your online traffic, leads, and sales.
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Located in the heart of the Emerald Coast - Destin, FL, founder and Chief Marketing Officer, Jason Hall, and his team specialize in creating brand awareness / traffic and lead generation / marketing funnel and conversion optimization / and PR campaigns, while utilizing the appropriate marketing channels available within your industry.
With diverse clients throughout the world, Jason's team is well connected within many industries to assist with your marketing strategies. With no long term contracts and various levels of service, Jason's team will increase the quality of your online traffic, leads, and sales.