6.1 Introduction
Marketing and advertising
are the most important parts of any business.
Therefore, when it is time for companies to designate a budget for these
activities, there are many factors that they should consider before confirming
any plan. Because advertising and marketing are such important aspects of a
business, they require massive budgets. In this module you will learn how
companies design their marketing budget and learn some tips that every business
should follow to stay out of any trouble.
6.2 Setting an Appropriate Budget
Setting the budget is an essential
part of marketing, and without having a plan, businesses can easily go over
budget and end up spending more than they initially planned.
Having a budget allows marketers to spend under the amount allotted, which is
the best strategy to save money in the long term. Marketing involves a number
of processes and steps including product, packaging, placement, and promotion.In order to save money on marketing, businesses should follow a defined series
of steps, which are given below:
Gather
Financial Information
The first and the most important step of setting a budget is to evaluate the
financial condition.
Every business has different capabilities depending on the size. If a
company is large, then it will likely have more money to spend on marketing.
Similarly, a small sized company will have a limited budget to spend on
marketing. If a small sized company does not assign a budget to the marketer,
then things will get out of hand, and the company will end up paying more than
they can afford.
To understand your company's finances, you first need to gather information
about your monthly revenue. The total monthly revenue amount will determine the
budget that the company can spend on marketing.
Companies should never determine the absolute highest revenue available
because monthly earnings may ebb and flow.
Therefore, companies should always organise information based on reliable
revenue, which is the lowest possible revenue that the company can make in a
month. So, if your company's lowest revenue is £100,000, then the months in
which the company earned higher than the said amount will not be considered for
the budget because that amount comes under unreliable gains.
Once the reliable revenue has been determined, the company should deduct fixed
costs from this including energy bills, renting fee, water fee, internet bill,
etc. This amount remaining from the revenue should be used to devise a budget
plan after looking into all the other parts of the business that require
budgets, such as the accounting department, human resources, administrative,
etc.
When the monthly revenue for your company is higher, you get a chance to add
more money into your marketing budget. The amount of money that you put into
marketing also depends on your marketing needs. If a company is about to launch
a new product, then it will need to invest more money into marketing and
advertising. However, if a company's only requirement is to change the
product's packaging, then there is no need to save more of the budget for
marketing purposes.
Similarly, if a company is planning to establish a new office space or is
planning to move, then the budget for marketing will be kept low. The reason
that companies need to evaluate their financial conditions before designing the
marketing budget is that they can control their spending without going broke.
Determine How You Want to Spend
the Budget
Once the marketing budget plan has been designed, it is time to determine how
you want to spend it. Without knowing what you want to do with the money, you
cannot really head in any direction. The size of your budget is the most
important factor as having too little budget means that you can only market
your brand through certain channels and that the options are limited.
Similarly, having a massive budget means that you can make a 360 degree
marketing plan to target the audience with aggressive strategies.
Based on your budget, companies can decide the right way to spend their money
and come up with a solid plan as well. Let's say a company has a limited
marketing budget, then it can only spend money on small print ads. However, if
a company has a lot to spend, then it can go for big television outlets,
magazines, outdoor advertisements, and much more.
So, once the company has the marketing budget, they know the direction that
they should head in without spending too much. Another factor that determines
where your budget should go is your past experience. If in the past you spent
money on television commercials that worked out well for your company, then go
for that. The media outlets that did not work for you in the past should be
avoided. This way, companies can invest in something that produces amazing
results for them.
Choose the Most Effective
Marketing Channels
It is not always about making use of all the channels because sometimes certain
channels are more appropriate than others. So, companies should always choose
media channels that are relevant to their products and services. If a company
wants to sell ice cream, for instance, then spending the budget on newspapers,
for example, will likely not be relevant.
Therefore, when a business has confirmed a budget for marketing, they should
look into the channels that are targeted towards their audience. Playing ads on
a channel that a brand's target audience doesn't follow is a waste of money and
efforts. When it comes to choosing media channels, businesses should hire media
planners to come up with a highly targeted strategy. Media planners are skilled
individuals who have complete knowledge about the media outlets that a
particular company should use. So, if your target audience watches certain
television channels and visits certain websites, a good media planner will add
them to your budget for maximum results.
Assign a Budget to Creative
Aspects
Marketing includes a number of procedures that need to be taken care of within
the same budget. Apart from deciding the right media channels for promotion, a
company should also assign a budget to other creative elements including
product design and packaging. If you plan to organise events, then assign a
separate budget for that, too. There are many other things that are included in
the marketing budget such as promotions, public relations, contests, website
creations and maintenance, and trade shows.
This means that the marketer needs to write down all the necessary marketing
elements for your business, and then devise a budget that can be divided
amongst all the elements. Marketers need to make sure that the budget includes
all marketing elements without missing out any. The strategies that did not
work for the company in the past can be avoided, and the ones that worked
should stay.
Add Up All The Costs
Now that the marketer has a clear picture of what needs to be done, it is time
to evaluate and add up total costs. If the total costs exceed the allotted
budget, then the marketer needs to remove certain elements from the plan.
However, if the total costs add up to be within the budget, then the marketer
has a chance to add more money into an element or two that are the most
beneficial to the company.
When designing a marketing budget for
your firm, every business needs to ensure that they know what they want to
achieve.
This means that without a marketing goal, the budget that the company will
design will not be as effective. When the marketer is aware of the goals that
they have to achieve, they know exactly which areas they need to target and how
much they really need to spend to meet their desired objectives.
FACT
The average UK SME owner will be putting around 16% of their 2018/19 on
marketing, according to a study by performance marketing network affilinet.
Source: telegraph.co.uk
6.3 Working Within a Budget
No business can have an unlimited
amount of money, which is why a budget is necessary.Without designing a plan for staying within the budget, businesses may spend a
lot more than they initially set out for. Therefore, every marketer needs to
implement certain strategies to ensure that they are not overspending. This
means that once the marketers have a budget in hand, they need to devise a
solid plan that includes the exact amount of money that they can spend on a
particular media channel, so that when they are finalising their plan, they are
still under the budget.
However, if marketers start to plan out their strategies without taking note of
their allotted budget, then they will end up missing out on several strategies
due to the shortage of money. That's the reason marketers need to evaluate how
they want to spend every pound of their budget. Here's how to do it:
Design a Game Plan (Goal)
The first and the most important thing that marketers need to do is to design
their marketing goal. Not every business has the same goals, however. Some
brands might want to increase their sales, while others want to expand their
reach. Therefore, the budget for every brand is different depending on its
objectives.
This means that when you have a large sum of money, you can go after two goals.
If you have a small amount of money with you, however, then you only get a
chance to focus on one goal. Apart from the amount of money in your budget, you
also need to consider your priorities. The company that you are working with
might want to increase its sales. If you are working for such a company, then
you need to put the entire budget on working towards the improvement of sales
instead of going in multiple directions and ultimately wasting money.
However, if you are working with a new company that is looking to introduce
itself in the market, then you need to take a different approach with the
budget and the marketing plan. A new product launch or a new brand is looking
for awareness. This means that when working with the budget of such a company,
you need to invest money into branding and product awareness campaigns instead
of trying to sell the product.
Determine which Advertising Channels
You Want to Use
Again, when it comes to allocating the budget to different channels, the thing
that matters the most is the budget itself. If you have a good budget provided
by the company, then you can think about using it on multiple channels.
However, if you do not have enough money, then you need to closely look at the
different advertising channels to pick only the ones that are the most useful
to your client at the moment.
With the budget in hand, the marketer needs to decide the channels they want to
target for their clients' marketing and advertising needs.
Some of the traditional media
channels that marketers may use include the following:
- -Radio
- -Magazines
- -Facebook Ads
- -Facebook
- -Digital Radio
- -Bus wraps
- -Billboards
- -AdWords
For the marketers who are working with smaller brands and smaller budgets, they
can save a lot of money by making use of online media channels to promote their
advertising and marketing campaigns. Online channels such as websites, social
networks, etc. are highly cost-effective for small businesses that have a
limited budget.
Monitor Results
Once the campaign has been launched, it is important for marketers to track
results. Result monitoring is most beneficial to those marketers who are
working on much smaller budgets. After finding out about the effectiveness of
each of the channels used, marketers can determine the impact of their
campaign. This will also allow marketers to come to know about the channels
that worked and those that did not.
Once you find out about the strengths and weaknesses of your campaign, you can
design better strategies in the future. So, when the marketer receives the
budget for the next month, they will know exactly which channels they need to
target and which strategies they need to use to make the campaign successful.
Monitoring campaign effectiveness is quite easy for online marketing as
compared to traditional marketing channels. Due to the availability of numerous
tools and techniques, it is easier to track results of a digital marketing
campaign. By using online tracking and monitoring tools, you can find out about
the number of customers that viewed your ads and how many of them purchased
goods.
Tracking traditional media channels on the other hand, requires immense
tracking, monitoring, and research. However, once you get the final results,
you can examine them in order to come up with a much better strategy for the
next advertising and marketing campaign.
Make Improvements to your Campaign
Based on the Results
After evaluating the results of the campaign, marketers need to implement
revised strategies to their marketing plan. The results will give marketers a
clear idea of what they need to do with the budget.
Consider this
scenario:
You look at the results of your previous marketing campaign, and you notice
that the spots you had on the radio did not work as well as you wanted. With
this upcoming marketing campaign, should you spend a lot of money on radio adverts?
Probably not. However, your results show that your billboard ads worked
extremely well, so what should you do there? Consider keeping the billboard
ads, and take the money spent on radio advertising to either choose a new
channel or improve the billboard campaign.
Remember, it is not always necessary to work on the same campaign or
with the same channels. Based on the brand's goals and budget, you can devise
new strategies and target new media channels.
Keep a Hang of the Hidden Costs
When devising a marketing and advertising plan and campaign, marketers need to
be very careful when adding up all the costs. Sometimes marketing and
advertising campaigns are quite detailed. Therefore, even when marketers think
that they have covered all the costs, there are some hidden costs from ads when
played on certain channels, too, so make sure that you have enough wiggle room
when planning out this budget.
That is the reason it is important for marketers to always keep a track of
every activity in their marketing plan. Because sometimes, even the smallest of
things end up costing a lot of money, leaving marketers vulnerable.
Make Use of Online Marketing
When all else fails, there is always internet marketing to fall back on.
Marketers who are working with small budgets have to be very careful in
choosing media channels that are appropriate for the budget. Therefore, for
small companies, it is always best to opt for digital channels that often
require no money at all.
Small businesses can run campaigns on social networks to spread awareness and
increase their sales for very little money. There are a number of affordable
marketing methods on the internet, including Pay Per Click advertising and
Facebook Ads. Companies with a small budget can always go for online marketing
platforms that are extremely cost-effective. However, if the company's target
market does not make use of online platforms, then they can make use of the
most effective media platform instead of spending money on multiple channels.
Target Small Market Segments
Marketers are provided with a specific budget for designing and implementing
marketing strategies. Therefore, it is important that they are only targeting
those people who are most likely to buy. This is especially true for those
marketers who have small budgets to work with.
This means that marketers only need to target those who will be affected by
their campaign the most. By targeting a greater audience, marketers will only
end up wasting their budget on the people who are not interested in buying. So,
marketers need to evaluate and choose a market segment that is small, yet
highly accurate, which will help them save lots of money and provide them with
great results.
Spend More Money on Highly Targeted
Channels
When it comes to staying under the budget, marketers need to choose media
channels wisely. Because there are numerous media channels available, it does
not mean that marketers have to make use of all of them in their campaign. The
choice of media channels depends on the budget that they receive from their
clients and the effectiveness of these channels.
This means that when designing the marketing plan based on the assigned budget,
marketers need to ensure that they are only targeting the most effective
platforms. By choosing only highly targeted media channels, marketers can get
successful results. The best way to target appropriate customers is to target
those channels that they are available on. If the target audience for a brand
is youth, then the marketer will make use of digital channels that are popular
amongst the youth. By applying a more focused strategy, marketers will not only
be able to stay under the budget, but also target the most suitable audience.
After considering each of these points, a marketer is all set to design an
effective marketing plan that stays under the budget. The reason that there is
a defined budget provided to the marketer is to ensure that they do not
overspend. When there is a specific budget, marketers are able to devise a plan
that fits in it and is more effective. They also target only the most effective
platforms instead of heading in all directions. This is also great for saving
time.
Module Summary
Sticking to a budget is imperative when it comes to marketing and advertising your
company's goods and services. You can easily stretch your marketing budget when
utilising these methods, and you can get the most for your money and budget.
Not every channel will work for your goods and services, so doing some
research, trial and error is always a good idea to find the perfect channel for
you to stick to your budget and bring in more profit.
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