Crystal Bristow
Marketing & Industry Awareness Committee Member
Jenkins Electric Co.
Building a marketing budget is a great way to manage expectations across your organization for the tactics and activities that are going to drive your company’s awareness and sales support throughout the year. The marketing budget gives a clear window into what your sales and leadership team can expect and provides the framework for productive conversations when new opportunities arise. Before you establish your marketing budget, there are a few questions your organization needs to consider to ensure expectations are clear and your budget will cover your plans for the year.
What’s included in your marketing budget?
What tactics and expenses are included in your marketing budget may be the most important question to ask yourself. This will differ by company and marketing manager, which makes sense, but can be a slippery slope if everyone in your organization doesn’t share the same expectation.
Tactics that are typically included in a marketing budget are logos and branding, company and product literature, social media posting, publication advertising, marketing partners such as agencies, freelancers, Google AdWords and SEO partners and media spending.
Tactics that are subjective and can be categorized in marketing or company overhead include website maintenance, associated fees for web plugins, transaction fees or hosting fees. Trade shows is another category that in some organizations merits a separate budget, which can encompass company attire (polos), travel, booth fees and giveaways at the show. Also, consider product branding. Where do the expenses associated with decals for your company trucks, on-product branding or uniforms fall? While these aren’t traditional marketing items, they all contribute to your overall brand impression when customers visit your shop or your company performs onsite customer work.
How you categorize these items doesn’t impact their budget, but it does impact your ability to plan for and budget for each one appropriately, helping you avoid any major budgetary surprises throughout the year. Once you establish what is and isn’t included in your marketing budget, remain consistent with your budget and tracking.
What tactics are you going to handle internally vs. using an outside partner?
In our industry, we understand the value of trusted and proven experience; it’s one of the main reasons we all belong to EASA – the ability to tap into knowledge when we need it. Often, we forget the value of experience as it relates to marketing and assume that a marketing manager can do it all.
Quick pause here – If you don’t have a dedicated marketing manager that’s ok, just make sure you have someone leading the charge who is given the time and support to think through the marketing for your company.
While many marketing managers wear several hats, there is occasionally a need to bring in a subject matter expert. The best examples of this include website developers, video production teams, Google AdWords or SEO specialists and professional printers.
When building a marketing budget, review your planned tactics and evaluate what can be handled internally and what you’ll need to outsource to a trusted partner. This can have a major impact on the budget, as outside partner fees vary based on timeline, scope of project, ongoing need and complexity of project. There are many reasonable partners for outsourcing creative services, but without a budget, it can be tough to move tactics forward that are outside your skill set.
Do you have a game plan for unexpected expenses?
Establishing, tracking and sticking to your marketing budget is commendable and takes time and energy but even with all that preparation the unexpected does arise. Hopefully, the unexpected is a result of positive momentum in your business – the need to attend an additional trade show, the addition of product lines, services or even new companies that need marketing support that wasn’t foreseen at the beginning of the year.
I recommend setting aside a small percentage of your budget for a slush fund. A small but useful amount of dollars that are reserved for the unexpected and can be tapped into when needed. Without this cushion, you could be in a situation that forces you to choose between a planned activity and an unexpected expense.
If your unexpected expense is big enough, it may be time to consider adding additional funds, but that process will likely require company leadership approval.
What should you budget for marketing?
Let me level with you; there is no magic marketing budget number. It’s subjective year to year and company to company. If you’re just starting to build a marketing budget, a range between 2-5% of revenue is a good place to begin, but if that number is too expensive or unattainable for your company, try something smaller that you can commit to comfortably. Don’t stretch yourself to hit an arbitrary percentage that you may have to pull back mid-year. Start small, and if more funds are available and your tactics are performing, you can always add more.
If you’re seasoned at budgeting for your marketing expenses, it may be time to review your percentage of revenue or the success of the tactics you are implementing. Are your marketing activities netting the results you were looking for? Is it time to try a few fresh ideas?
As you reevaluate your commitment to marketing, these questions should help you align your organization and expectations to dedicate a marketing budget or expand the one you already have. Good luck and stay consistent.
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