How to Plan Your Marketing Budget

what should your marketing budget be and
where should you spend it to get the
most return that's exactly what we're
covering today and by the way this
process works whether you're working
with a budget of 10 million dollars or a
thousand dollars okay how much is the
typical marketing budget well according
to deloy's annual CMO survey the 2023
average marketing budget is 13.6 of a
company's total budget as a percentage
of Revenue that is 8.7 but of course
it's not quite that simple because
marketing budgets vary according to
whether you're marketing to businesses
or consumers and whether you're selling
products or services for example B2B
product companies tend to allocate 7.8
percent of their revenue to marketing
compare that to b2c product companies
who spend 15.1 percent of their revenue
on marketing usually that is quite a
wide Delta but your marketing budget can
also vary according to your industry for
example in healthcare you might be
spending 18 of your revenue on marketing
whereas in energy might only be spending
one percent but of course the most
important question whatever your budget
however big or small it is is where do
you allocate that budget to get the best
return on your investment Shinobi are
you ready for a seven step marketing
budget planning process
that's yes first thing you got to do
when you're planning your budget is set
your goals now this is usually more
Revenue but not always there may also be
sub goals underneath a more Revenue
Target like website traffic or market
share or brand searches some of our
clients for example will give us an
annual revenue Target but then
throughout the year they'll have many
targets around new products or services
that they might be launching now this
goal setting process is best done with
your stakeholders or your boss whether
this is directors of the company or the
board and don't be afraid to push back
on any goals that aren't realistic you
might be set for example a goal to
double the revenue through the marketing
but if you've only got a budget which is
two percent of your revenue and you know
from the stats earlier that that's way
less than your competitors then you
might need to push back they're asking
for Ferrari performance with Smart Car
fuel economy
thank you
and you're good you're really good but
even you are not a magician step two is
to analyze your current performance for
low hanging fruit now in digital
marketing we're mainly doing this in two
areas traffic and conversions for
example exposure ninja will open Google
analytics and we'll just have a look at
the website's performance we're looking
for traffic channels that are performing
well or poorly and we're looking at the
conversion rate of the website in this
website for example we can see the
organic search and paid search are both
driving the most traffic to the site but
if we go over to the conversion rate we
can see that there's a big difference
between the conversion rate of these two
channels now what we would do here is we
would analyze the paid search conversion
rate to see if there's anything that we
could do to increase it further in this
case it's fairly High anyway so it's
unlikely that we're going to get it all
the way to 12 but let's say that we
could increase it another one or two
percent that might get us part of the
way to our goals very quickly and quite
cheaply meaning that we then have more
budget to allocate to bigger more bold
projects later on and that's why we're
analyzing performance and looking for
low hanging fruit at this stage of the
marketing budget we're looking to see
whether there are any quick tweaks that
can be made relatively cheaply to get us
at least part of the way to our goals if
there are great that frees us up budget
to spend on more expensive but
potentially higher return on investment
things later on now you'll also want to
work out your cost per lead or cost per
sale per marketing channel here if you
can this will help you identify which
channels have the most potential for
growth and are performing best for you
if you want extra bonus points then work
out your average lifetime value per
customer per Channel this can be really
instructive for example there's one
business I know where they have a
marketing channel which doesn't generate
them a huge volume of leads but the
leads it does generate them are really
valuable and about six of the top 10
most valuable customers ever for this
business have come through that channel
now if we were just analyzing marketing
channel versus marketing channel based
on the lead volume we would say let's
drop this channel it just isn't
performing as well as the others but as
soon as we realized that 6 out of 10 of
their most valuable customers have come
from this channel we say actually this
might not be delivering high volume but
it's delivering really high quality so
we're going to keep this as part of our
marketing priorities and we want to
allocate budget there over the next year
step number next is to do some
competitor analysis yes we ninjas love
competitor analysis so much we even do
it in our marketing budget planning the
main reason we're doing competitor
analysis at this stage is we want to
understand where our competitors are
allocating the most marketing budget we
want to know what their priorities are
if we're talking about digital marketing
there are some very cool ways that you
can understand how how much your
competitors are spending on each
marketing channel to build up a bit of a
picture of their priorities for example
if you use ad Clarity you can see how
much your competitors are spending on
their display video and social media ads
here I am looking at monzo's ad spend on
these channels over the last few
quarters and I can see that their spend
on video has gone all the way up to 1.4
million dollars before coming right back
down to 35 now that tells me they
prioritize something didn't work too
well and then they brought it back down
I might want to feed that info into my
marketing budget planning later on but I
can also see the ads that they're
running and I can see how many ads
they're producing I.E how much are they
spending on Creative as well as the
quality of that creative there's a big
difference between an ad campaign that
is based on professionally shot creative
and one that is mainly using user
generated content Style videos that
people feel film on their phones one is
not necessarily better than the other
but one is definitely higher budget than
the other and by the way if you think
this tool looks pretty cool you're right
it is you can get a free trial of it by
going to exposure.ninja forward slash
wow now you'll also want to check out
how much your competitors are
prioritizing surge both paid and organic
and you can use a tool like SC ranking
or semrush which I'm using here you can
get free trial of that as well at thank
you ninjas.com so I can stick in my
competitor see how much they're spending
across their paid surge which keywords
they're targeting whether they're mainly
focusing on brand phrases or whether
they're competing for other commercial
phrases and I can see the landing pages
that they're building as well all of
this helps me to identify how much of a
priority is this to them I can see their
ranking for a lot of branded terms so I
might put in a filter to exclude any
keywords including their brand and then
I can see all of the non-branded terms
that they're targeting ranking for and
the pages that they're using to rank for
those it's a good idea to take a look at
their link building activity to
understand are they putting loads of
time energy and money into building
links and what sort of links are they
building that will give us an indication
of how much budget is going into this
take a look at their website are they
publishing loads of content on their
blog and if so what sort of quality is
this is it focused on new customer
acquisition is it focused on Recruitment
and is it engagingly presented or is it
like this
you can also take a look at them on
social media how often are they posting
and does it look like they have a lot of
budget going behind their content on
social and by the way in this section
you're not looking to copy your
competitors necessarily you're just
trying to understand where are they
putting their marketing budget where are
their top priorities and if you want
some help analyzing your competitors
digital marketing activities then you
can request a free website a marketing
review from the team here at exposure
ninja just go to exposureninja.com
review okay so you've got your goals
you've analyzed your current performance
for low hanging fruit and you've had a
look at what your competitors are
prioritizing so it's now time to work on
your marketing channel priorities
usually your marketing channel priority
should be a mixture of large flywheel
channels and small flywheel channels let
me explain large flywheel channels are
those that take a bit of time and energy
to get going but once they're going they
can build off a huge amount of momentum
so SEO content marketing building
organic communities on social media
starting a podcast cost using video
marketing doing automated email
marketing campaigns all of these
activities take time and energy in some
cases weeks months or even years to
really build up traction but the great
thing about them is once they have that
traction they can be pulling in leads
and sales for months or even years even
after you've stopped doing them now you
want some of these channels in your
marketing budget because these are the
ones that can provide real sustainable
long-term scale but you also want some
small flywheel channels these are ones
that are quite quick to get going things
like paid search ads paid social ads
influencer marketing campaigns email
broadcast campaigns telemarketing Live
Events these are things that you can get
up and running relatively quickly and
they can be very scalable you can push
them up and down according to your
budget and according to your priorities
now the downside on these small flywheel
channels is that once you stop them the
effect tends to disappear appear and can
disappear relatively quickly but there's
still a really useful component of any
digital marketing campaign now remember
at this stage you're not assigning
budgets you're just choosing your
priority channels let's do a couple of
examples example one you're a B2B
supplier of branded plushies your large
flywheel marketing priorities might be
SEO and content marketing because you
want to get ranks for people searching
for Unique branded plushies or corporate
plushies or unique company merchandise
or phrases like that your small flywheel
channels might be paid search because
you also want to run ads for those
phrases or you might want to run some
LinkedIn ads to people in the companies
who may be interested in buying these
because they may not have thought that
they needed a branded Shinobi plushie
until they actually see one example
number two let's say that you're a
luxury women's wear fashion brand while
some of your large flywheel channels
might be things like social media on
Pinterest you may have seen that
contestants are doing really well on pin
interest and this is going to be a
priority for you you might also want to
prioritize content marketing and SEO to
get some style guides ranked on Google
then for small flywheel channels you may
want to run some influencer campaigns
and back them up with paid social you
might want to schedule some email
marketing blasts throughout the year to
promote your new collections so it's a
really good idea to have a combination
of large flywheel channels and small
flywheel channels it's not always easy
to pick your priority channels so again
if you want some help doing that then
request your free website and marketing
review from the team here at exposure
ninja just go to exposureninja.com
forward slash review and we'll be sure
to give you some pointers step number
five is to start assigning budgets to
your priority channels now here you need
to work out how much each Channel needs
in order to succeed and yet the answer
is always going to be more so at this
stage you might find that actually
rather than having your budget spread an
inch deep at a mile wide you might want
to condense the number of channels that
you're able to prioritize to make sure
each one has has enough budget to
actually get some traction now hopefully
from your data analysis earlier you'll
know your cost per lead and your average
customer value per channel so you'll be
able to feed that data in here and work
out how much growth you can expect from
each of the marketing channels in your
plan now it's not going to be an exact
science because it's not always easy to
predict growth for example at en our SEO
clients on average see a 30 to 40
percent organic traffic increase each
year that they do SEO and content
marketing with us but if they're a tiny
site when they first come to us I.E they
have fewer than 1500 visitors per month
that yearly increase goes all the way up
to 80 percent per year and of course if
you need help projecting the revenue
increases from each of your marketing
channels then you can all together now
request your free website and marketing
review from the teammate at exposure
ninja if you qualify we'll build you a
plan which will show you some
indications of what you should be
expecting from each Channel okay okay so
you've got your budget and you've got it
allocated to your priority channels step
number six is to review and adjust this
budget though because in the words of
Prussian field Marshall helmuth Von
multca kind operations plan right MIT I
finals
or no plan of operation extends with any
certainty beyond the first encounter
with the main enemy forces or no plan
survives first contact with the Enemy so
what does this mean for marketers isn't
it obvious other than the failure of the
education systems teach English people
other languages you planned your budget
you embarked on your plan and then stuff
happened some of it was good some of it
was bad that's why at exposure ninja we
review all of the campaigns that we're
running quarterly in a process called
the qcc or quarterly campaign checkup in
this we ask our teams what happened what
were we expecting and what actually
happened have the business priorities
changed I.E are there any new products
or services that we need to be pushing
and is what we're doing still the best
use of the marketing budget you see
we're constantly asking what else could
we be doing with this budget that may
get an Roi now that's not to say that
we're flitting from flower to flower
relentlessly without giving anything the
time it takes to actually get traction
we have to be patient but that patient
has to be balanced with a constant sort
of skepticism is this really The Right
Use of that budget marketing budget can
only be spent once now that's not to say
that we throw everything out each
quarter ripping the tiny little
seedlings out before they've had a
chance to take root but you have to
balance patience with reviewing is this
what we're doing right now the best use
of our marketing budget and are things
working the way we had expected we have
each of the teams at exposure ninja
answer a series of questions to help us
identify what's working well in their
channels and what could be working
better we then have a meeting with all
of the campaign team to work out what
our priorities are going to be for the
next quarter based on this analysis the
final step is to think about agencies
versus in-house now obviously I work at
exposure ninja so we do have a position
on this but even so sometimes I will
admit it's better to hire in house but
one of the main things that agencies
have going for them is the ability to
switch between different marketing
channels relatively seamlessly let's say
that you're working on organic search
content marketing and pay-per-click but
you don't necessarily know which
pay-per-click channel is going to be
best for your business well if you're
working with an agency you can switch
between LinkedIn ads Google ads Facebook
ads Pinterest ads Amazon ads all
relatively easily but if you're hiring
in-house you might need to hire
different people each time you switch
those channels higher in-house fire
in-house an agency can also help you
validate certain channels for example
you might not know whether Amazon ads is
going to be a good channel for you but
an agency can help you test it get a
good approach and then if it turns out
to be really effective for you and
scales to the point where it makes sense
to hire someone in-house later on you
can do that and of course agencies can
help bring expertise from different
Industries and different companies to
help you get those flywheels moving just
that little bit faster thanks for
subscribing and see you next time