Marketing Budget for Small Business
Marketing budgets are especially important for small businesses. Small business owners may lack the experience drawing up budgets; moreover, it’s critical that these companies keep costs as low and lean as possible as they scale.
Ironically, you need marketing to scale. Without it, it’s hard to sell your products and services. In addition to the budgeting templates provided below, check out some of our free offers and courses to mitigate your company’s marketing costs.
Yet marketing budgets can be difficult to establish for companies of all sizes. How much should a company spend on marketing?
Well, digital media makes up more than half of both U.S. and global advertising spend. This includes initiatives that cater to audiences on desktop computers, search engines, video streaming platforms, social media, and mobile devices.
Given the success marketers have seen in it, you might consider planning to spend at least half of your marketing budget on some of these digital channels.
Let’s talk about other ways to allocate your marketing budget.
As you build a budget, here are a few items you’ll want to keep in mind when planning your marketing budget allocation:
- Software: When it comes to digital and even print media, you may need software to create your marketing campaigns, or handle your daily processes.
- Freelancers: If you have a temporary campaign or want to test out a new marketing strategy, you might want to hire a short term freelancer before bringing on a full-timer.
- New personnel: When you do hire full-time employees, you’ll want to budget costs including their computer, technology, benefits, and onboarding-related needs.
- Advertising: Budget how much money you’ll spend on paid opportunities such as physical ads, native ads, sponsored content, search engine ads, and social media promotions.
- Content creation: When you create content such as videos, photos, or even blog posts, you’ll need to put paid time into it. Budget how much money will go into creating this content so you can adjust accordingly based on its return on investment.
How to Create a Marketing Budget
- Know your buyer’s journey.
- Align your budget with your marketing goals.
- Beware of hidden costs.
- Remember where your priorities lie.
- Spend your budget smartly.
- Prepare to measure ROI.
Spreadsheet knowledge alone won’t help you understand how you’ll spend your marketing money this year. Creating a sound marketing budget starts with knowing what purpose this budget will serve and which marketing teams it will represent.
1. Know your buyer’s journey.
Your buyer’s journey is the steps your audience takes as they ‘journey’ from prospect to paying customer. Knowing your buyer’s journey allows you to understand how your audience interacts with your marketing — and where to set your goals and budget to better reach your customers.
Ask yourself these questions as you define your buyer’s journey:
- How do your leads and customers typically discover your products?
- What do they need to know before they make a purchase?
- How many site visits do you see per month?
- How many leads are you generating per month, and how many of these convert to paying customers?
- What is the cost of generating new leads and then converting them to customers?
- What’s the typical value/revenue of each lead?
This process should point out what marketing tactics are (and aren’t working), where you should alter your marketing goals, and where you can focus your marketing budget.
2. Align your budget with your marketing goals.
What you spend and where you spend it will depend on what you’re trying to accomplish.
So, when starting to create your marketing budget, make sure you’re only spending money on the things required by your current marketing goals — goals set based on your audience and their journey from prospect to customer. These could include:
- Display ads to promote a new product you’re launching this year.
- Sponsored social media posts to generate followers on your new Facebook page.
- Paid search engine ads to drive traffic (and purchases) to a specific product page.
- Contract bloggers to get more organic search traffic to your company’s website.
Former Demand Generation Marketer at HubSpot and current Senior Product Marketer at Atlassian, Jessica Webb, says this about how your costs can change when focusing on lead generation vs. lead conversion: “The majority of the money you spend on paid efforts is usually calculated based on volume of clicks or impressions. Because of this, you’ll often want to put more budget toward campaigns with higher-volume offers and audiences.”
“For example, a tweet or Facebook ad promoting a lead generation offer that leans more top of the funnel will likely receive more clicks than something that falls more toward the middle or bottom of the funnel,” she explains.
Your paid advertising costs will also change depending on how wide of an audience you are attempting to reach.
“You can look at Twitter advertising as an example,” Webb says. “You have to option to target your campaigns based on users’ interests or keywords searched for. Interests are a much broader category, whereas smaller pockets of users are searching for any given keyword, therefore your interests-based audience is going to be much larger and require a larger budget.”
3. Beware of hidden marketing costs.
One of the great advantages to having and maintaining a budget spreadsheet is that it helps you avoid those end-of-the-quarter or end-of-the-year freak-outs when you realize, “Whoa … what did I spend all that money on?”
In many cases, unanticipated costs can force marketers to fork over cash that they didn’t plan on spending. Product marketing offers a perfect example. According HubSpot’s VP of Marketing Meghan Keaney Anderson, it’s easy to forget that successfully marketing your products and services requires more than just promotion.
“When people allocate budget for product marketing, they tend to think in terms of product launches and promotional activities,” Anderson explains.
“That’s certainly an important part of it, but another area of focus to remember is setting aside resources to conduct research and message testing long before the product ever goes to market. Having conversations with customers about the pain points your product will ultimately address is critical to shaping the messaging and having a successful launch.”
4. Remember where your priorities lie.
Marketing is overflowing with add-ons and extras, upsells, and “premium” versions. One of the best ways to assess what’s nice to have versus what’s absolutely necessary is to (you guessed it) organize all of your expenses.
By keeping tabs on where your budget is being allocated, and cross-checking that spending with the results you’re getting, it will be much easier to figure out what should keep getting budget and what should get kicked to the curb.
For example, let’s look to the world of public relations. In PR, there are countless tools to which you can allocate budget, which could leave you overspending where it doesn’t matter — and underspending where it does.
“Tools abound to help PR practitioners not only create and distribute great content and find and target key stakeholders, but to ultimately measure reach and effectiveness,” says Nathaniel Eberle, HubSpot’s former Director of PR & Brand and LogMeIn’s current Director of Global Brand Management.
“The key is making sure you’re laser-focused on who you’re setting out to reach and influence, then ensuring that your budget supports how they’ll most likely want to receive (and share) your key messages.
“As the media and digital landscape evolves at breakneck speed, continually reassessing the tools, services, and programs you’re employing is a great way to determine real-time ROI of your overall spend. Today’s measurement tool may be worthless to you tomorrow.”
5. Spend your budget smartly.
When you open up these budget templates and check out all the various expenses detailed in them, don’t fret if you can’t tick every box. I’m not advocating for an “always spend more” approach to marketing.
I’m advocating for an “always spend smart” approach. The expenses listed out aren’t mandatory — they’re just meant to guide your thinking and to help ensure that you haven’t overlooked any hidden costs.
6. Prepare to measure ROI.
When you put a certain amount of money into a certain area, you’ll want to determine if your budgeting helped you or hurt you as you plan out future budgets. The best way to do this is by measuring ROI — or return on investment.
If you’re the money you spend on one item results in your company making more in return, you may want to increase budget in the next year. If your money went nowhere, you should examine your budget.
8 Marketing Budget Templates You Need to Manage Your Marketing Spend
With the 8 Free Budget Planner Templates to Manage Your Marketing Spend, you’ll be able to manage all of the moving pieces of your budget at a monthly and quarterly level.
Use the Excel version of the templates to keep all of your budgets in one place. When you download the zip file, you’ll find a separate file for each marketing team, as well as a Master Budget Template to maintain a high-level view of your overall expenses.
Interested in sharing your marketing budget across a larger team? Try the Google Sheets version of our templates to share access with other Gmail users. For the Google Sheets templates, each team budget is found in a separate tab of the same Google Sheet.
No matter which version you choose, each budget is optimized with the same line items, tips, and graphs. Read on to learn how to use each budget template.
1. Master Marketing Budget Template
While it’s helpful to have individual budget templates for specific marketing departments and activities, it’s also nice to be able to take a step back and see the bigger picture.
The Master Marketing Budget Template lets you do just that: It’s the place where you can collect the totals from the other seven templates in the bundle and see all of your expenses in one place.
2. Product Marketing Budget Template
This template will guide you step-by-step through the process of budgeting for a product launch. From determining product/market fit, to running user testing sessions, to promoting your finished product, our Product Marketing Budget Template will help ensure you don’t overlook any important expenses.
3. Content Budget Template
The budget required for creating and promoting content can vary greatly from organization to organization. For example, while some organizations keep most of their content operations in-house, others rely more heavily on freelancers and contractors. And while some use many different software products, publishing tools, and services, others take a much simpler approach.
Our Content Budget Template is designed to cover as many content-related bases as possible. So, if you see any expenses listed that don’t apply to your organization, go ahead and delete them. (That’s the beauty of Excel spreadsheets: You can customize them to your specific needs.)
4. Paid Advertising Budget Template
Paid advertising: Does it really qualify as an inbound marketing tactic/channel? That is a loaded question, my friends, and one that I don’t have room to answer in-depth in this post.
What I can tell you for sure is that you can do paid advertising in an “inboundy” way — i.e. by targeting specific buyer personas and using paid advertising as a supplement to your organic efforts to help drive awareness and conversion opportunities.
Measuring the effectiveness of your paid advertising campaigns is also paramount to doing things the inbound way. Using our Paid Advertising Budget Template, you can keep tabs on your monthly (and quarterly) ad spending, and then cross-reference the amounts with your lead-generation metrics to determine your cost-per-lead.
5. Public Relations Budget Template
Public relations expenses amount to more than just paying for press releases. From reputation monitoring software, to traveling (e.g., to events and trade shows), to applying for awards, there are many PR costs that can be all too easy to overlook.
To ensure you’re accounting for all of your organization’s PR-related expenses, check out our Public Relations Budget Template.
6. Branding & Creative Budget Template
In order to produce high-quality, innovative graphics, videos, and other content, the branding and creative teams of today need more than just Photoshop … a lot more. One of the largest — and often most overlooked — expenses is storage.
If your organization is producing a lot of video, storage is especially important. Because as it turns out, when budgeting for video storage, you shouldn’t be thinking on a megabyte (MB) or even a gigabyte (GB) scale, but on a terabyte (TB) scale. FYI: 1 terabyte = 1 trillion bytes. You can keep track of all your storage costs (and other branding and creative costs) using our free template.
7. Website Redesign Budget Template
Budgeting for a website redesign can be seriously tricky. With so many moving pieces to consider, there is a lot of room for underestimating or miscalculating costs. We created our Website Redesign Budget Template so you can keep all of your redesign-related expenses in one convenient location.
Unsure if your current website is right for a redesign? Check out this HubSpot research report: Does Your Website Make the Grade? Chances Are, It’s Barely Passing.
8. Event Budget Template
When planning an event, the associated costs can seem obvious at first. There’s the venue to consider, of course. And the P.A. system and microphones. And then the costs associated with booking and bringing in presenters/performers. That’s pretty much it, right?
For example, does the venue come with tables/chairs, or will you have to rent those separately? Do you want your attendees to wear name tags, and if so, will you be printing out the name tags ahead of time or will attendees be writing their own names on blank tags?
If the latter, have you factored in the pens or markers you’ll need to accommodate that? As you can see, planning for an event can lead you down many rabbit holes.
Use our Event Budget Template to stay organized.
Sample Marketing Budget
With your chosen template downloaded, it’s time to consider which digital channels to allot a budget for. Hint: There’s no right answer — it’ll depend the market research you do to figure out where your specific audience spends most of its time.
If you find your buyer prefers learning and consuming content in the form of video, for example, you might invest more of your money in YouTube advertising.
Advertising Budget Example
Here’s a small sample budget for a quarter’s worth of expenses by a hypothetical company that has decided to invest heavily in video marketing. This template was created using the Master Budget Template, the first template listed in the section above.
Based on the figures above, video advertising’s total expenses for the quarter exceeded budget by $20, while full-time recruitment’s total expenses exceeded budget by $2,400. This means the company is trending over budget for the first three months of the year.
Why might this happen? Perhaps a pay-per-click (PPC) campaign on YouTube received more clicks by viewers than expected, and a sharp video-savvy job candidate negotiated a higher salary.
Based on the difference between this company’s planned spend and actual spend, their budget template produced the following graph:
Go now, and plan wisely — your marketing staff is counting on you.
Editor’s Note: This blog post was originally published in December 2015 and has been updated for comprehensiveness.