2019 is officially here and that means it’s officially time to build out your annual marketing budget. Where should you spend your company’s hard-earned bucks this year? And just how will you prove the ROI on your investments?
In this post, we’ll take a look at several common types of marketing budget categories, their measurability, and share some tips for mapping out your budget in a way that works for you.
Common Marketing Budget Categories
Every business will have a slightly different marketing budget made up of different categories. But generally speaking, all marketing efforts should focus on one thing — growing your business.
Below are a few of the most common marketing budget categories designed to help your business grow.
No matter the size of your business, some portion of your budget should be allocated to advertising. Advertising spend has a vast range that covers digital, print and other forms, such as:
- Social media: Paid ads on Facebook, Twitter, LinkedIn, Instagram, etc.
- Search ads: These types of ads pop-up while a customer is searching for a product. Google Ads are the most common form and appear at the top of a search results list above the organic results.
- Display ads: These ads commonly appear at the top of a website’s page or are embedded into video content (such as YouTube).
- Outdoor & Environmental: Signage, such as billboards or transit banners.
- Print: Paid ads run in print publications like magazines and newsprint.
- TV & Radio: Commercials run on TV and Radio or paid product placements on TV.
- Sponsorships: Such as conferences or other events.
Strategy & Development
To be the best, you need to stay on top of industry and market trends. Which means continually educating you and your team — all of which requires money. Some examples in this area include:
- Consultant or agency fees
- Conference and webinar attendance
- Industry training
- Subscriptions to trade papers
Communications is a broad category that can include:
- Social media (organic non-paid efforts)
- Public relations
- Speaking events and presentations
- Email marketing
- Web content
- Public relations
Including website design and maintenance, collateral design and production.
The ROI of Your Marketing Budget
As any marketer knows, proving the ROI of your marketing activities is one of the most challenging aspects of the job. And it’s made especially challenging, because, simply put, some activities are next to impossible to assign with a tangible ROI.
As Marketo’s Jon Miller puts it, marketing measurability is made challenging because of four key factors:
- Knowing when to measure: the value on some activities may not result for several years, making it very difficult to prove ROI today.
- Multiple touches: it takes multiple touches to create a customer and the timeline of those touchpoints may be highly variable.
- Multiple influencers: a customer’s buying decisions may be influenced by multiple stakeholders, all with different interests and tastes.
- Extraneous variables: influences beyond your Marketing team can have a heavy impact on the success of your marketing efforts — small market trends, the strength of your sales team, economic fluctuations, etc.
Let’s now look at the measurability of some of those marketing efforts we talked about in section 1: Know Where to Invest Your Marketing Budget for the Upcoming Year
Easy To Measure
- Paid social media
- Display ads
- Search ads
- Email campaigns
Moderate to Measure
- Website content
- Organic social media
- SEO efforts
- Team training & strategy efforts
Difficult to Measure
- Print advertising
- Outdoor and environmental ads
- Speaking events & presentations
So should we toss out all those moderate and hard to measure efforts? Not quite.
Proving the ROI of content items like your blog or your organic social efforts can be a challenge for sure. But that challenge can be lessened by implementing a few tactics:
- Use a social platform (like Sprout Social or Hootsuite) to make reporting on your engagement and clicks much easier.
- Apply tracking codes, like UTMs, to all of your online content. These codes enable Google to tell you where your traffic is coming from and which marketing campaign directed them to you (e.g. email, social, etc.).
- Configure Google Analytics so that it can correctly report on your content.
Where to Spend It: Follow The 70-20-10 Rule
But how exactly should I split my marketing budget across those categories you ask? We had the pleasure of attending Hubspot’s INBOUND2018 conference and were really impressed by GE’s CMO Beth Comstock’s ‘70-20-10’ rule.
Comstock apparently follows this rule to focus her marketing resources at GE, which look like this:
- Spend 70% of your time on the ‘now’.
- Spend 20% of your time on the ‘next’.
- Spend 10% of your time on the ‘new’.
While Comstock applies these percentages to her resourcing, the same breakdown could be applied to marketing spend, looking something like:
- Allocate 70% of your budget on marketing efforts that you know work. These are your tried-and-true efforts like organic and paid social, speaking engagements, and blog copy that focus on promoting the core services or products of your business.
- While those efforts carry on, allocate 20% of your budget on achieving new goals, like breaking into a new vertical or expanding your market.
- Your remaining 10% (or less) will be reserved for those dreamy, out there initiatives (like adopting an emerging technology).
Lastly, a word on getting specific about your efforts. While it’s ok to somewhat estimate your budget, the more you can pinpoint your campaigns and activities for the year, the more accurate your marketing budget will prove itself when 2019 comes to a close.
Until then, here’s to a smart and prosperous year of marketing for us all!