Contents
- What is a marketing budget?
- Why plan a marketing budget?
- What factors influence the size of the marketing budget?
- Main expense items
- Methods for planning a marketing budget
- Economic indicators in budget calculation
- Common mistakes in budget planning
What is a marketing budget?
A marketing budget is a strategic plan for the expenses necessary to achieve specific marketing goals of a company. This budget covers various areas, including costs for advertising, PR, research, product development, testing, and customer service. Typically, companies create their marketing budgets on an annual basis, and this task is usually handled by the marketing director or marketer.
Why plan a marketing budget?
Effective planning of a marketing budget helps solve a number of management tasks:
- Planning and controlling expenses;
- Efficient allocation of resources and focusing efforts on the most effective promotion methods;
- Formulating the goals of the marketing strategy and criteria for effectiveness;
- Justified decision-making;
- Monitoring the performance of the marketing department.
What factors influence the size of the marketing budget?
The size of the marketing budget depends on numerous factors, including:
- Company size: The budget of large international corporations differs significantly from the budgets of small regional firms.
- Level of competition: The more competitors in the market, the higher the costs for promotion and sales.
- Goals and objectives: Expanding sales geography or developing a new product requires additional financial resources.
Main expense items
The budget structure depends on the specifics of the industry and the needs of the company. Main expense items may include:
Internet promotion
- Website development and maintenance;
- Promotion on social media;
- Creation of landing pages and chatbots;
- Contextual and targeted advertising;
- Email marketing;
- Collaboration with bloggers and online media.
Offline advertising
Expenses for advertising in traditional media, including radio, television, print publications, and outdoor advertising.
Promotional campaigns
Costs for conducting thematic promotions, tastings, collaborations, and contests.
Event marketing
Participation in exhibitions, festivals, and organizing key events such as anniversaries and presentations.
Marketing research
Expenses for focus groups, surveys, and market analysis.
Methods for planning a marketing budget
There are several methods for planning a marketing budget, each with its own advantages and disadvantages:
- Percentage of revenue: Simple calculations, but does not take external factors into account.
- Based on competitive parity: Helps mitigate the risk of falling behind competitors but may not consider the uniqueness of the company.
- Task and goal-based method: Accurate calculations, but requires significant time for analysis.
- Based on the budget of the previous period: Helps identify mistakes but may not account for new strategic goals.
Economic indicators in budget calculation
Various economic indicators are taken into account when planning the budget, such as:
- Customer Acquisition Cost (CAC): Allows assessment of the effectiveness of advertising campaigns.
- Advertising Expense Ratio (DRR): Reflects how much money is spent on advertising to earn 1 ruble.
- ROMI: Return on Marketing Investment.
Common mistakes in budget planning
Many companies make mistakes when planning their budgets. These include:
- Not accounting for revenue and its seasonality;
- Choosing ineffective promotion channels;
- Incorrect allocation of the budget among channels;
- Ignoring production and sales department capabilities.
Successful preparation of a marketing budget requires careful analysis, planning, and constant control to achieve set goals and improve the effectiveness of marketing activities.