As a marketer, it's undeniably critical you're fully aware of your own budget and resources, and use that information when making decisions.
For instance, let's say you're a marketer at a startup, and have decided to propose investing in Twitter Ads to the decision-makers at your company.
Of course, one of the biggest questions you'll be asked is, "How much is this going to cost?"
If you've prepared a marketing budget, you can refer back to it for the answer. A budget shows how much you have to spend on campaigns overall, and the 'Paid Advertising' section shows how much you intend to spend on social ads.
With numbers from the budget, you can demonstrate how Twitter Ads fit into the overall strategy, and prove your team can afford to make those purchases.
Additionally, when you know the revenue available for marketing efforts, you can then decide how to maximize your spending to align with your goals.
Marketing budgets are imperative to a company's success. However, if you work for a smaller startup, resources and money can be tight, making it difficult to determine how much should be spent on marketing.
Here, let's explore the typical budget for marketing teams at start-ups, so you have a ballpark to consider when determining your own team's marketing budget.
Marketing Costs for a Startup
When your company is new it can be confusing to determine an initial marketing budget. In some cases, budget decisions are top-down, inspired by competitors, or made by setting a goal. If all of those routes don't fit your startup's operations, begin with just one thing: revenue.
Startup Marketing Budget
Startup marketing budgets outline the money a new company intends to spend on marketing functions. Startups generally factor in key expenses in their budget, like advertising, content marketing, technology, and automation software.
Later, we'll explore a few more expenses to take into consideration when planning your marketing budget, but first let's talk about how you can use revenue to start fleshing out how much you can spend.
Figuring out your gross revenue and how much of that is going to go towards your marketing budget is going to be your biggest asset when figuring out how much you're going to spend.
Gross revenue is earned revenue before any deductions or wages. The estimated revenue is the number of earnings expected to earn over a period of time. Generally, startups spend about 11% of their revenue on their marketing budget.
To find your gross revenue, calculate your total number of sales. From there, you can figure out how much you're going to spend on your budget. For startups that don't have gross revenue yet, estimate how much you are expecting to make over a year and use those numbers as benchmarks.
For another resource to help calculate revenue, try an online calculator, like this one from Small Business Association. The process of building a budget based on revenue is helpful for startups because it'll give you a bird's-eye view of how much you're making, and how much you're willing to spend.
Now that we've gone over how to make a budget, let's go over some considerations to take into account once you've solidified your budget.
Startup marketing budget considerations
So, what should you even put into your budget?
Once you've got the overall budget of your company's total revenue, you can break down the costs. Think of factors that will come up naturally in a marketer's day-to-day, and what resources you'll need to make that happen.
For instance, it'd be smart to include factors such as:
Technology — When you are creating campaigns, factor in the technology you need to use, such as software to build and maintain a product page.
Research — If you haven't yet discovered your target audience, you may need to invest in market research. This doesn't have to be an expenditure if you don't have the resources, though. For instance, this post shows you how to conduct market research yourself.
Automation — Services exist to automate most of the marketing process for you, like organizing leads and website management. This can be advantageous to businesses who don't have the resources to spend money on extra hands to complete projects.
Production — In this category, note any expenses for what you need to create marketing messages, such as graphic design, photography, or videos. Instead of paying for multiple different services, you could hire a freelancer to fit these roles. They wouldn't be a permanent new addition, but could use their expertise in a pinch.
Paid Advertising — Are you planning to run ads on TV, radio, or online? This is the category where you factor in those costs. Remember, you can find figures on how much you can expect tospend on paid ads — take a look at our Advertising guide to explore prices on anything from PPC ads to social media ads.
Branding — These are assets you use to build the first impression of your company, like business cards, signs, billboard ads, or laptop stickers.
Content Marketing — This section will detail how much you're going to allocate to the content you will deliver. This is also an area where you don't need to shell out a ton — between automation services, like HubSpot or Sprout Social, and content ideas you can produce for free, you can flex your budget to fit your financial needs.
Traditional Advertising — If applicable to your business, make a section for traditional advertising methods. Paid advertising occurs mostly online, but traditional advertising refers to marketing efforts outside of that. Factors to include in this section are print, billboards, etc.
Unexpected — Things break, don't work, or sometimes take more time than projected. When you figure out your budget, be sure to plan for costs that may come up unexpectedly, such as extra fees from advertising.
Once you've chosen your sections, you can start deciding how much of your budget will be beneficial in each area. As a guide, think about your business and campaign goals. From those goals, choose the sections you want to invest the most in.
Working from your business goals helps you make guided budgeting decisions. For example, if your campaign goal is to increase brand awareness, you'll probably want to devote the most to branding, content marketing, and paid advertising.
You may not need to factor all of these expenses into your budget — or, you might need to factor all of them. It depends on the needs of your business, but remember that you can play around with free methods for most of these costs, if even periodically.
For example, if you are certain that automated software will help your startup, see what software offers free trials or free services that you can use to see if it's worth the cost for you later on..
Making a budget helps the growth of your business. Your marketing budget keeps track of your expenses and allocates funds towards essential resources. Additionally, it enables you to plan for the future based on campaign goals.
To make sure your spending is under control, having a marketing budget is critical, and gives you the reassurance that you won't put the company in danger with every marketing decision you want to make.
Originally published Mar 27, 2020 4:00:00 AM, updated March 27 2020