Build Your Marketing Budget: Ready, Aim, Fire!
By Jonathan Ward
There are many approaches to building your marketing budget. Marketing consultants would say 3%-5% of gross revenues. Your accountant would say to increase your marketing budget by 3% every year – or often a decrease!
So, what’s the best way to arrive at a marketing plan and budget? It’s simple. Your marketing expenditure needs to align with your corporate objectives, bearing in mind your brand recognition and product marketing strategy.
Here is a straight-forward approach to build a budget that is appropriate for your company’s size and goals.
1) READY: Make sure you have the resources and the right reasons for marketing to a particular segment – oftentimes, companies make the mistake of spreading their marketing budget too thinly across many markets (health care, universities, etc.). Start by listing the core markets in which your company or particular product has had success. Be careful of the assumption that if your competitor is having success in a given market, your company will too. If you want to duplicate a competitor’s success, you’re better off defining markets in which you can establish a leadership position either by being first to market, or by simply identifying products that fit customer needs better in a given market. For instance, valet parking is a natural for the hotel industry. However, because it’s so easily identifiable, you are guaranteed to have the most competition. Creative strategists would look to a new market that could really use a valet management solution that no one had ever targeted.
2) AIM: Establishing a marketing budget is started through introspection. Define the markets in which you’re already established and analyze the realistic viability of increasing market share. If you think you cannot significantly increase success in a given market segment, a maintenance strategy is best – supported by continued sales efforts. Then, honestly identify your company’s and/or product’s core benefits. Now review what your customers and prospects already know about your company within a given market or industry. Establish what you would like everyone to know about your company or given product. The gap between what customers know about your company and its strengths (your brand), and what you wish everyone knew is called your branding gap. The gap is widest for new industries you’re trying to penetrate and/or new products you’re launching, and smallest for markets in which you’ve already had success. The wider the gap, the more resources (marketing dollars) will be required.
3) FIRE! Pretend you have unlimited resources (within reason) to build a perfect marketing plan, and then scale back to fit your budget goals. What I often do is build a marketing plan around each market I am trying to penetrate. Start with the markets in which you know you need to have a strong presence. Be sure to mix costly efforts, such as exhibiting at trade shows and media buys, with guerilla tactics such as a customer road show, e-mail marketing, public relations, “webinars,” speaking engagements and directory listings. The goals are consistency and variability. For instance, if you commit to attending a show as an exhibitor, you should make a commitment to going every year. Because if you attend one year, and not the next, you could be inadvertently providing your competitors with ammunition that you are pulling out of a given market – even if untrue! Gaining market share in an industry simply takes time, consistency and unwavering commitment.
When you’re done planning for all the markets you wish to penetrate; now you can carve out or cut back efforts across the board in order to get the budget down to what you can actually afford. If after cutting back you still are not within your budget range, you might need to eliminate new (and more risky/uncertain) markets you hoped to penetrate.
In other words, if you do not have enough resources from your core business to have a real impact in a new market, you are better served to focus on your core business until you can fund a significant launch in a new market. Customers expect consistency, so try not to spend a ton on marketing efforts in a good year and then next to nothing the next, as your marketing spend will start to become a reflection of your fiscal success.
In addition to your tactical marketing plan, I recommend that you build a communications map highlighting the messages you plan to deliver with each execution – much like an outline – spread out over time.
For my clients, I try to establish the three or four key things I want my customers to know about my company and/or products by the end of the year or campaign, and then use individual executions to drive each point home.
This can really help when writing and developing outreach materials of all kinds, because you realize you do not have to say everything about your company in every execution. For instance, one advertisement could focus on your great product support, the next on new products, and the final on a customer success story.
Laid out over time, your prospects will establish an overall picture that includes your key products, your ability to service your clients, and the proven ability of your products to achieve customer success. One execution cannot paint this big a picture, but three or four messages, spread over time, can build a solid and fairly complex brand identity that will really help your salespeople bring in business.
Jonathan Ward, President of Onward Marketing, can be reached at email@example.com.
Article Abstract from October, 2008