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6 Steps For Creating An Affordable Marketing Budget

Tuesday, February 20, 2024

6 Steps For Creating An Affordable Marketing Budget

Businesses make use of marketing budgets to determine how much they can spend promoting products, and it determines the range of marketing activities they can undertake in a fixed period.

​I’ve always been a believer in my own saying, which is the whole: “Whoever can spend the most money to acquire a customer wins,”. Yet for smaller, newer businesses with limited resources, it’s best that you start small.

Very early on in my career, I was wisely advised, “Boy, the first thing you gotta do is avoid going broke while you’re getting rich and famous.” Had I paid close attention to those words, I might have saved myself from all the financial strife I had gone through.

I talk all about this and how to succeed with an affordable marketing budget in my book called, “The Ultimate Marketing Plan”. You can access it through this link if you’d like to learn more.

An optimized budget allocates funds to the most effective activities within your financial constraints. It prevents wasted spending while making every marketing dollar count. Today, I’ll walk you through the practical steps to build a lean but impactful marketing budget that aligns with your overall business goals.

Step 1: Align with Business Goals

Align with Business Goals

The first critical step in building your marketing budget is to clearly define your key business goals for the upcoming year. Setting specific objectives provides direction for how to effectively allocate your limited budget.

Ask yourself:

  • Where does your business need to go and what needs to be accomplished in the next 12 months?
  • Do you aim to increase website traffic by 30 percent?
  • Generate 50 new sales leads per month?
  • Double your social media followers?
  • Boost brand awareness in a new region?

Establish concrete goals around traffic, leads, sales, brand recognition, or other growth metrics.

Make sure the goals you set are ambitious yet realistic given your current business stage. One great way to achieve this is to follow the SMART guideline for goals, which means: specific, measurable, attainable, relevant, and time-bound.

Understanding your central business objectives around online presence, leads, revenue, market expansion, or other areas will inform how the budget should be distributed across marketing activities and tactics. Your budget priorities flow directly from your overarching goals.

Step 2: Audit Current Marketing

After defining your goals, take time to thoroughly audit and assess your marketing performance over the past year – if you have any – across every channel. Digital, print, events, etc. Gather data and notes on all activities to inform future budget and tactic decisions.

Carefully analyze performance numbers to identify which specific efforts and campaigns were most and least effective at delivering results.

Look at which drove meaningful progress on goals such as generating leads, increasing sales, and boosting engagement. Examine the overall marketing ROI as well as channel-specific breakdowns.

Make note of any seasonal trends or significant performance differences at various points throughout the year. For example, which activities provided a lift during summer months versus winter? Were there budget cycles that impacted results?

With this audit in hand, you can make informed conclusions about what marketing efforts worked well and deserve an increased budget and which underperformed and should get reduced or eliminated spending.

Ground your upcoming budget allocation decisions in these data-driven assessments for optimum ROI. Past performance audits shine a light on how to optimize the budget for the future.

Step 3: Identify Target Audience

Identify Target Audience

An optimized marketing budget also factors in who you need to reach with your tactics and messaging. You don’t want to go into the marketplace without a clear picture of the market.

Take time to clearly define your core customer avatar(s) based on key demographics such as age, location, gender, income level, education, interests, and their current stage in the buyer's journey.

Drill down even further to understand specific media consumption habits and preferences of your target audience(s) that will inform budget decisions.

  • What social platforms and publications do they frequently use?
  • How do they behave in the digital/mobile environment?
  • What influences their purchasing choices?
  • Through which marketing channels and tactics do they prefer to engage?

Gaining an intimate understanding of who your audiences are and how they consume information should guide budget planning and resource allocation. For example, if research shows your audience is highly active on Instagram, budgeting for visual social campaigns there would be strategic. Or if email newsletters rank highly in surveys, invest in growing your list and segmentation.

Taking time to thoroughly define your core customers along with their media mix habits allows you to budget in ways that are tailored and relevant. Don’t neglect the competition either, as they are vying for the same customers.

Identify the competition, list what you have in common, and think of how you can differentiate yourself. Marketing budget optimization stems from knowing exactly who you need to reach and knowing how to do it.

Step 4: Set Budget Framework

A marketing budget is basically a forecast of how much you think you’ll spend. Now armed with a clear understanding of your goals, marketing audit findings, and target audience – you can decide on an overall annual marketing budget amount.

Determine what is reasonable yet still sufficient to make an impact. Most small businesses allocate between 6-15% of their projected annual revenue toward marketing activities. Then establish an initial percentage-based budget framework across core categories:

  • Paid advertising - 20-40%
  • Content production - 15-25%
  • Website hosting, maintenance, SEO - 10-15%
  • Social media promotions - 5-10%
  • Public relations - 10-15%
  • Events/Tradeshows - 5-15%
  • Offline advertising - 5-10%
  • Promotional items - 5%
  • Other - 5-10%

Ensure your preliminary percentage distributions align logically with your established business goals, past campaign performance, and your audience's media consumption habits.

This high-level budget framework acts as a guide for digging into specific tactics and campaigns within each bucket in a way that drives impact. It provides an initial roadmap grounded in your marketing objectives and realities. Details can be strategically overlaid onto this foundation.

Step 5: Identify Affordable Tactics

Identify Affordable Tactics

With your overarching budget framework set, the next phase is brainstorming specific affordable tactics and campaigns across channels that thoughtfully map back to your goals, audience, and allocated budget percentages.

For example, consider cost-efficient paid ad approaches on the most relevant platforms for your audience using tightly defined targeting and bids. Develop creative content production strategies leveraging repurposing existing assets, influencer collaborations, and other cost-effective approaches.

Plan website enhancements that genuinely improve the user experience and support goals such as lead generation. Design social campaigns tailored to leverage each platform's unique strengths and audience nuances.

Define an earned media strategy focused on maximizing existing owned assets such as reports, data, or news. Carefully evaluate events and sponsorships for high value based on audience access and relationship-building.

And finally, use highly targeted direct mail or print ads in niche industry publications. Structure contests, giveaways, partnerships and activations centered on conversions rather than just reach.

To make up for the limitations of your budget, you need to brainstorm outside-the-box ideas for engaging your audience in memorable yet affordable ways. The focus should be on high-impact tactics tightly coupled with your established goals while also having clear cost definitions that fit budget constraints.

For paid channels, scale spend judiciously based on what historical data says works best with your current resources.

Step 6: Add Campaign Details

Flesh out campaign details across channels over a 12-month schedule. Map out month-by-month plans tailored to seasonality, typical budget cycles, and logical campaign sequencing.

Start by assigning each tactic to one of the budget categories you defined earlier. Indicate target spending amounts and key performance indicators for each initiative selected. With these basics in place, you should thoughtfully spread major campaigns and promotions across a monthly timeline, sustaining momentum while remaining within your specified budget thresholds.

For foundational activities that require ongoing investment such as website hosting, baseline content production, social community management, SEO, etc., front-load and allocate budget upfront. These necessities for the marketing engine need to be accounted for before discretionary activities. For bigger budget items such as a major trade show presence or large promotion, identify the most strategic, high-impact timing – don't spread big campaigns too thin. Pepper in some flexibility to capitalize on emergent opportunities as they arise.

As you compile details, maintain a sharp eye on estimated costs for each planned activity or program and ensure they align with budgeted amounts. This detailed month-by-month plan of record guides near-term spending decisions and required trade-offs throughout the year. But also maintain room for refinement as you track performance and evolving needs.

Key Takeaways For Building A Lean Marketing Budget

Key Takeaways For Building A Lean Marketing Budget

Building an optimized marketing budget on limited resources starts with anchoring it firmly in your concrete business goals and growth targets. Conducting a thorough audit of previous efforts will inform smarter future resource allocation.

You need to take time to intimately understand your target audience's media habits and channel preferences. With goals and insights in place, establish an overall annual budget amount and percentage distributions across core marketing activities. Brainstorm specific affordable tactics and campaigns tailored to your audience profile and budget segments available.

Then, map out integrated plans across a 12-month timeline scheduled according to seasonality patterns and overarching priorities you've defined. Implement strong governance processes to track activities with extreme detail, course-correct underperformers, and optimize based on learnings. Maintain flexibility so you can smartly capitalize on unforeseen opportunities as they emerge.

If you get this process right, you'll get your results in the form of a lean marketing budget with your money distributed strategically across the right blend of affordable tactics – personalized to your unique goals and target audience.

Aligning resource allocation to audience insights, keeping individual efforts cost-efficient, and executing within a governed framework will lead to maximum marketing ROIs, even with a limited investment. An optimized budget tailored to your realities provides the most impactful formula for growth.

Last Remarks

Limited resources? Don't see limitations, see opportunities. In today's dynamic marketp lace, crafting a high-impact marketing budget isn't about throwing money at problems, it's about surgical precision and laser-focused execution.

Forget "stretching" your budget; optimize it for maximum impact. Every dollar has a potential ROI, and your job is to unlock it. Conduct a deep dive into your target audience, understanding their desires, pain points, and media consumption habits. Then, identify the tactics with the highest conversion potential, aligning them with your core business goals.

Is it brand awareness? Lead generation? Sales? Be clear, then be ruthless in focusing your resources on tactics proven to deliver in each arena.

Remember, in the realm of marketing, agility is king. Embrace data-driven decision-making, constantly refining your approach based on performance metrics.

Ditch what's not working, double down on what is. Optimize, iterate, and adapt – treat your budget such as a living document, evolving alongside your market and audience.

Finally, infuse your marketing with professionalism and confidence. Present a polished brand image, deliver high-quality content, and cultivate genuine connections with your audience.

In a crowded marketplace, authenticity and professionalism are differentiating factors that elevate your brand above the noise.

If you’d like to learn more about how to create an affordable marketing budget, affordable marketing strategies, and marketing tips for small businesses, I highly suggest you register for our NO B.S. Newsletter. Just by doing that, you’ll gain access to exclusive Behind-The-Scene walkthroughs for some of our most successful campaigns!

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