As we head into the home stretch of 2020, the holiday season will be a crucial recovery point for many companies across all industries. It shouldn’t be surprising then that we’ve chosen to circle back and talk about how to establish a marketing budget this late in the game. With the challenges the economy has faced since the start of the year, it’s crucial that we help Boston businesses remain agile and responsive in their marketing decisions and help them to establish both long- and short-term strategies.
In this discussion, Boston’s premier online marketing services provider GoingClear will provide first an overview for businesses to follow in order to carve out an appropriate marketing budget for their long-term goals that leaves enough short-term flexibility to remain agile and responsive to opportunities in the short-term. We’ll then cover proper allocation across marketing initiatives and why it’s important to remain focused on marketing even in the face of a recession.
Getting Back to Marketing Budget Basics
When business is good, and the revenue is rolling in, it can be easy to allow a certain level of bloat and innovation to creep into our budgeting, especially when it comes to the extras, the risky projects, and the questionable initiatives that may or may not give you the ROI you need from them. However, it’s years like 2020 that force businesses to make the hard decisions when it comes time to write the budget for the following year, as we are reminded that we have to create practical and sustainable plans that will support the business even in the hardest of market conditions.
With the lessons of 2020 fresh in mind, there isn’t an organization in business right now that wouldn’t benefit from revisiting their budget for the coming year to ensure they’ve allocated properly for the marketing and advertising initiatives that will help support their recovery.
Why is Proper Budgeting Crucial to Your Success?
Taking the time to reevaluate and adapt your marketing budget to your organization’s planned fiscal stance now means that you’ll build out a strong foundation for future budgeting. This approach provides a number of advantages:
- A planned budget keeps the entire organization on track with spending and prevents overspending and under-performance from impacting other projects.
- Using historical performance allows you to set realistic benchmarks and goals for the coming year. As your organization thrives or struggles, these analytics can be revisited and adjusted so that the overall allocation to marketing remains scaled to your goals.
- Short-term achievements through effective budgeting can support long-term annual growth targets.
How to Establish an Informed Budget
The overall budgeting process includes moving parts from numerous departments and an overarching strategy built around supporting the growth and mission of an organization. Because of the role your marketing and advertising budget will play in supporting that growth, it’s one of the most critical budgeting activities and at a minimum should involve these critical steps:
- Establish the customer journey and build your sales cycle around supporting that path.
- Know your cost to support your advertising efforts. This touches many other departments – controllable costs such as materials acquisition and staffing as well as non-controllable facility costs, and other categories in-between – and should be created collaboratively with those who will ultimately be impacted by budgeting decisions.
- Boost brand awareness by establishing brand-level goals.
- Gain a deep understanding through analytics of the market niche you operate within and your demographic targets.
- Determine effective strategies that best match your goals and target audience while supporting your product or service.
- Map out the costs for executing the appropriate mix of strategies on a monthly and annual level.
Are You Budgeting the Right Proportion of Revenue Towards Marketing?
When creating a budget, best practices dictate that the targeted revenue stream should be divided up between primary business “buckets.” Marketing and advertising fall under controllable expenses, and industry is one of the biggest influences over what percentage of revenue should make its way into the marketing bucket. For industries focused on sales and growth, especially start-ups and small-sized businesses, it follows that the marketing and advertising budget should be set anywhere from 11% to upwards of 25%. A somewhat aggressive approach at the top end of the range, the goal is to drive revenue and sales conversions that in turn fuel further advertising and subsequent growth.
Holding the Course When You Create a Marketing Strategy for 2021
You might have noticed above when we talked about the marketing spend in terms of the budget, that we referred to marketing and advertising as controllable costs. From a budgetary point of view, marketing and advertising are costs that should shift and adjust to the volume of sales. Unlike fixed costs such as rent and some utilities, controllable costs can be cut out altogether.
And in the second quarter of 2020, when the pandemic hit the United States like a tsunami and entire portions of the population quarantined or sheltered in place, vast swaths of the economy did just that. The marketing and advertising industry suffered heavily in the second quarter, as businesses considered their marketing budgets acceptable losses and hunkered down. This resulted in months of profitability to be wiped off the ledgers and forced marketing agencies to shift tactics in order to prove their worth.
What we’ve learned in the months since, though, is that many Boston businesses held the course and maintained marketing initiatives, finding other ways to cut costs and reduce spending. It’s these businesses who maintained and even some growth throughout the year as they kept their focus on building customer relationships and providing value in different ways through their marketing channels. They’re now ahead of the curve as the marketing industry has settled into a new approach of focusing more on a brand’s value and credibility, as these are the metrics that have emerged as most important to consumers in the new economic landscape.
GoingClear Helps Boston Businesses Build Strong Marketing Budgets Focused On Long-Term Success
In the months to come, companies will have to take an agile approach to their marketing and advertising strategies in order to remain fluid enough to navigate the uncertainty in the economy. However, it’s still crucial to also develop a long-term strategy for balancing short-term profits against long-term goals and challenges. For our Boston clients and prospective partners who are struggling to gain their footing, GoingClear is here to provide our budgeting guidance and advice. You can schedule a consultation with our team to find out how we can best assist your brand.