Most B2B companies agree that marketing is super important for business success. However, it is not enough to decide to invest more money in marketing because of its effectiveness in increasing sales or brand recognition.
You also need to determine how much money is enough and how to distribute the funds effectively to maximize the efforts of the marketing and sales team. To achieve this, it is necessary to create a digital marketing budget.
What is digital marketing budget and why is it important?
It is a document that details the money that a company intends to invest in actions related to digital marketing during a certain time (quarter, semester, or year).
You can include multiple line items to classify the expenses associated with those actions. Among these may be the creation of content, email marketing, online advertising, specific marketing software, etc.
Today, most of the marketing budgets of companies are focused on digital. And it is that thanks to the boom, this has become the best way to promote yourself.
So why should the business invest in marketing? Traditional marketing offers one-way communication and also tends to interrupt potential customers, so it is not as effective today.
Making a marketing budget is useful for your company because it allows you to:
- Dedicate more resources to the actions that work best.
- Know what funds to allocate to each action and resource.
- To establish objectives.
- Have a historical reference to assess future changes.
- Control the costs of the marketing department.
- Plan for the long term.
Keys to calculate the marketing budget:
To establish a B2B digital marketing budget, it is necessary to consider several factors.
In principle, it is key to work closely with the sales and finance departments, as their teams will give you a better idea of the purchasing process, as well as the financial status of the company.
Analyze previous marketing strategies
This may not apply to your company if you are just starting in business. However, if you have been in the market for a while, likely, that you have already implemented certain marketing strategies.
Whatever the marketing actions implemented, you must analyze their performance.
It is crucial to identify the tactics or channels that improve the results that were delivered or those that did not work as expected.
Know the reality of the company
To create a marketing budget that works, there are several things you need to know. On the one hand, you must know what human resources you have, since you cannot outline a large marketing plan if you have a small team.
It is also essential to know the company’s current sales cycle. If you know how long a deal takes, from opening to closing, for example, you can determine how it uses its money to drive sales.
You also have to be clear about the average size of the offer and the revenue objectives of the company.
Align the marketing plan with business objectives
Once the previous point has been analyzed, you must establish what the company’s objectives are to make the marketing plan and the budget adapt to them.
How many new customers do you expect to have? What retention rate are you looking for? Answering these questions will not only give you direction and purpose but could even help you get more budget. Once you know which actions to prioritize, you need to create the line items for the budget.
Some options could be online advertising, purchasing software, articles promoted in online media, graphic design, etc.
Calculate the funnel
Whether you decide to work with a traditional funnel, or with account-based marketing, it is essential to fully understand the purchase process and identify which channels or actions you should keep, activate, or eliminate from your marketing strategy.
It is also important to know how much each lead costs. To do this, you’ll need to examine your marketing channels to make sure you have an accurate number for each one.
Consider operational costs
Once you know which items to invest in and which ones are priorities, you must evaluate your resources.
Do you have the necessary equipment or will you have to hire new staff? Are you going to outsource some services as a marketing agency or to an external consultant? You should consider this to add it to the marketing budget beforehand.
Measure and Monitor ROI
Creating a digital marketing budget is not a one-time task; it’s an ongoing process that requires regular measurement and monitoring. To ensure that your budget is being used effectively, you need to track the ROI of your digital marketing efforts.
Here’s how to measure and monitor ROI effectively:
- Set Key Performance Indicators (KPIs): Determine the KPIs that align with your marketing goals. These may include conversion rates, lead generation, customer acquisition costs, and revenue generated from digital marketing campaigns.
- Use Analytics Tools: Implement analytics tools like Google Analytics, marketing automation platforms, and CRM systems to track and measure the performance of your digital marketing campaigns.
- Attribution Modeling: Understand how different touchpoints contribute to conversions. Attribution modeling helps you identify which channels and campaigns are driving the most value.
- Regular Reporting: Create regular reports to review the performance of your digital marketing campaigns. Compare the results against your KPIs and adjust your budget allocation accordingly.
- A/B Testing: Continuously test different elements of your campaigns (e.g., ad copy, landing pages, email subject lines) to optimize performance and maximize ROI.
- Evaluate the Customer Lifetime Value: Consider the long-term value of a customer to your business. A successful digital marketing campaign may lead to recurring revenue and customer referrals over time.
By consistently measuring and monitoring ROI, you can make data-driven decisions about your budget allocation. If certain channels or campaigns are consistently delivering a high ROI, you may choose to allocate more resources to them, while scaling back on less effective strategies.
How much to allocate for the marketing budget?
Beyond the factors or parameters to consider for the creation of this budget, you may want to have an estimated idea of the actual amount that you should invest in the marketing strategy.
Also, don’t forget to check the other useful and interesting articles here.
