Posted: 29 Dec 2020 Contributor: Hannah OBrien
A Pragmatic Guide To Planning Marketing Budget in 2023
The impending recession has many businesses looking for ways to reduce costs, however, one place they shouldn't be looking is their marketing budget.
Small business owners may have had their revenue increase by an impressive 87% in 2022, but profits fell by 4%. The reason? Inflation has forced businesses to increase costs. The good news is that your marketing strategy can help you gain traction in an uncertain economic climate.
Today's market environment has become difficult to navigate due to its dynamic nature. Creating a marketing budget for 2023 with a persistent economic downturn in the consumer base may be difficult to pursue.
Despite this, Deloitte's annual CMO survey found that the annual budget is expected to increase by 3.9% over the previous year due to the focus on business strategy. In a HubSpot survey of 1,000 marketers regarding marketing budget, about 48% said their budget would see an increase for the year 2023.
Why 2023 Needs a Marketing Budget
ROI (return on investment) and your marketing budget go hand in hand. A marketing budget will determine how much you want to spend and how you will spend it. Ignoring capital and how to use it is the number of companies that fail. Without a good budget and marketing plan, any business can find itself unable to pay back debts and financial institutions.
A structured budget will help you organize and monitor and manage your money, ensuring that every expense is paid properly. Be sure to check the following areas before setting your marketing budget:
- Market Research And Industry
- Competitive Analysis
- Market Analysis
- Internal Market Performance Index
What does this include?
A typical marketing budget will include all the costs you can expect to pay for any type of advertising you do.
- Printed materials, design, and production
- Continuous website development and maintenance and search engine optimization
- Social media campaigns
- PPC banners
- Content marketing
- Targeted online display advertising
- Email marketing
And the proposed budget?
The amount of marketing budget you will use varies by company and company size. You need to know exactly what you have to sell and who will buy it so that you can create a marketing plan to get the message out.
Marketing is critical to the growth and profitability of your business. Many companies fail because they don't allocate enough money to their marketing. When done right, marketing will pay off a thousandfold.
Marketing Budget Spending Across The Industries
The budget allocated to marketing has increased over the past 12 years, accounting for 8.7% of total revenue in 2022. That's more than 5% growth since 2011.
B2B product companies allocate, on average, about 7.8% of their revenue to marketing, while B2C services spend 6.5% and B2B services 5.9%. B2C products allocate the highest revenue at 15.1% of total revenue.
Small businesses also spend. In a survey of 85 small business owners and marketers, 52% said they spent between $5 and $15,000.
Marketing budget decisions remain mostly company-specific. To get more specific information about your business, let's analyze the marketing budget by the different industries.
Deloitte recently conducted a study showing the percentage of revenue companies should spend on marketing. This is the data:
- Finance, Insurance, and Real Estate: 8%
- Media: 10%
- Education: 3%
- Packaged Goods: 9%
- Consumer Services: 6%
- Energy: 1%
- Healthcare: 18%
- Mining: 3%
- Manufacturing: 13%
- Service Consulting: 21%
- Retail Wholesale: 14%
- Technology: 21%
- Transport: 6%
As a marketer, you must use these percentages as benchmarks, especially for companies with low marketing budgets. If your company is hesitant to spend money on a marketing strategy, this is your team's chance to shine.
Once you have convinced line managers of what you need to achieve your best strategy, you will be able to easily convince others in your company and make your company a brand for how the rest of the team should be marketed.
Tips to Plan a Marketing Budget in 2023
Creating a marketing budget is an important part of planning your marketing campaign. Without money allocated to your budget, your efforts will be in vain. Below is a process to follow when creating a marketing budget for 2023:
1. Set marketing goals and objectives
Your goals and objectives must be wise. For a marketing budget, you need to think about your marketing space and set short- and long-term goals while setting key performance indicators (KPIs) to track your performance.
2. Do market research
You don't want to enter a market without a clear understanding of the market. You need to do market research to understand your audience. This includes demographics, customer needs, etc. But don't ignore the competition as they run for your customer group. Identify competitors and list what you have in common with them and how you can differentiate yourself.
3. Develop your marketing campaign
Budgeting depends on how you choose to send information about your product or service. This information should be consistent with your overall business plan. Once you've made these decisions, related costs will become clear, such as advertising materials, graphic design, art or photography, etc.
4. Choose a marketing channel
Your message will be more effective in specific channels depending on the audience you are trying to reach. This requires research to determine if social media, email, or content marketing is influencing your audience, to name a few.
5. Marketing strategy
A marketing budget predicts much money you expect to spend. But once the budget is set, you'll want to stick to it, so your plan must be accurate. There are many methods to help you estimate your sales price, including based on revenue, benchmarks, upside down, and objective targets.
6. Develop a marketing budget
Once you've gone through these five steps, you can start investing in the funds and funds you've decided on. These will need to be integrated into a larger marketing plan. For example, resources will need to be aligned with schedules so that members have what they need when they need it. The marketing budget is part of the marketing plan and will grow together.
Setting up a marketing budget is important for every digital marketer and, if you haven’t already, you need to start building one ahead of 2021. Planning out a budget helps you save money you would otherwise be wasting on online campaigns, and optimize the ones you already have running.
At a time when businesses need all the help they can get, having a defined marketing plan with clear goals helps align everyone at your company and generate profitability, even during a down economic situation. If you do need any support with your online marketing, reach out to experienced professionals who can help you navigate these tricky situations.
This blog post is Last updated on March 13th, 2023.