What is Marketing Budget? A Complete Guide

Let’s say that you have launched an amazing product, and ready to get it in front of the right people. You start running ads, boosting social media posts, maybe even hiring influencers. But soon, the costs pile up, and you’re left wondering if you are spending too much or not enough. This is exactly why a Marketing Budget is essential. But What is Marketing Budget, and how do you create one that works? 

Think of it as your game plan, ensuring that every pound spent is driving real results. So, how do you strike the right balance? In this blog, we’ll break it all down; helping you understand What is Marketing Budget, how to set one up, and how to maximise every penny for real growth.

Table of Contents

1) Understanding What is  Marketing Budget? 

2) Different Types of Marketing Expenses 

3) Steps to Create an Effective Marketing Budget 

4) Marketing Budget Example

5) What are the Four Elements of a Marketing Budget?

6) What is the 70/20/10 Rule for Marketing Budget?

7) Conclusion 

Understanding What is a Marketing Budget? 

A Marketing Budget ensures that a company neither overspends nor underspends on its marketing activities. These activities include product development, market research, advertising, salaries, communication campaigns, and agency fees.

When setting a Marketing Budget, marketers must consider:

a) The External Environment

b) The Competitive Environment

c) The Internal Environment and Capabilities

d) Internal Performance

e) The Marketing Audit

The final Marketing Budget is determined by the company's directors and executives. However, marketers are responsible for calculating promotional costs and reporting these to senior managers for approval. The following section will specifically address how marketers set promotional budgets.
 

Different Types of Marketing Expenses 

There are many ways to categorise your marketing expenses, but one common method is to divide them into two main groups: fixed and variable.
 

Many marketing strategies can elevate your business, requiring a specific budget allocation to ensure success. In this section, we will review the most essential types of marketing expenses for product promotion. Let’s explore these costs so you can include them in your budget.

1) Advertising

To capture customers' attention, resonate with your target audience, and attract new prospects, consider various types of advertising. These ads will help introduce your company to a broad audience, convey your message, and promote your product. Digital marketing offers numerous opportunities, such as pay-per-click and sponsored ads on social media platforms like Facebook, Instagram, and TikTok. 

Additionally, various marketing channels can help achieve different goals. You can send email campaigns and promotional SMS to announce upcoming releases and set up chatbots and web push notifications to inform about sales. 

Platforms like SendPulse allow you to schedule email campaigns and integrate chatbots and SMS to communicate your product’s value. For traditional advertising, allocate resources to advertisements in newspapers, television, radio, and billboards.

2) Events

Organising events incurs costs such as catering, decor, photography, marketing, equipment, entertainment, transportation, and venue hire. You can host events to launch your product, introduce a new feature, or celebrate your brand’s anniversary. 

Face-to-face meetings attract potential customers and partners, with consumers purchasing your product and partners making investments. If you plan to attend an event, you might incur expenses for display costs, registration fees, and supplies.

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3) Company Merchandise

Distributing promotional merchandise enhances brand recognition and encourages organic promotion. Promotional items include bags, office supplies, clothing, etc. For example, if you have a brand, merchandise can make you more recognisable to potential customers. 

A person who sees a T-shirt with your logo and is curious about the brand can easily search online for information about your company.

4) Tools and Technology

Developing marketing projects requires specialised technology. Marketers use design software to edit photos, produce videos and audio, and create animations. They also seek companies to help build a website where users can explore the product and its features. Your company also needs an all-in-one marketing platform to manage contacts in one place. SendPulse’s CRM enables you to collect information about your deals in one place free of charge.

5) Devices

Special equipment is necessary to create marketing materials. Examples include laptops, smartphones, cameras, printers, and video production devices. The equipment you need depends on your marketing goals. For instance, if you want to record a podcast, you might need to rent professional audio production equipment.

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Steps to Create an Effective Marketing Budget 

Creating a Marketing Budget is vital for planning your marketing strategy. Without sufficient funds, your efforts may fall short. Follow these steps to build a Marketing Budget for one or more campaigns over a quarter or year:
 

1) Set Marketing Goals & Objectives

Ensure your goals and objectives are Specific, Measurable, Attainable, Relevant, and Time-bound (SMART). Consider your sales funnel and establish both short- and long-term goals, setting Key Performance Indicators (KPIs) to track your progress.

2) Conduct Market Research

Entering the marketplace without a clear understanding is unwise. Conduct market research to understand your target audience, including demographics and customer needs. Also, analyse your competition, identifying commonalities and differentiators.

3) Develop Your Marketing Campaign

The budget will depend on the concept chosen to convey your product or service message, which must align with your company's overall strategy. Once these decisions are made, related costs such as ad materials, graphic design, and photography will become clear.

4) Choose Marketing Channels

Determine the most effective channels for your message based as per your target audience.
 

Research whether your audience responds best to social media, email, content marketing, or other channels.

5) Estimate Marketing Costs

A Marketing Budget is a forecast of anticipated spending. Once approved, you must adhere to it, so accuracy is essential. Use various techniques to estimate costs, such as revenue-based, competition-matched, top-down, and goal-driven methods, or a combination thereof.

6) Develop a Marketing Budget

After completing these steps, compile your budget with the identified resources and costs, ensuring alignment with the larger marketing plan. Resources must be scheduled appropriately so teams have what they need when they need it. 

The Marketing Budget is an integral part of the overall marketing plan and should be developed in tandem.

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Marketing Budget Example

Marketing expenses vary between organisations, depending on their approach to reaching potential customers. Some allocate most of their budget to Digital Marketing resources, while others prefer traditional advertising methods such as radio or Television (TV) ads.

However, certain expenses are common across many businesses. Here’s an example of a Marketing Budget breakdown to better understand what costs can be included:

1) Staffing, Office & Supplies

This includes the wages of marketing employees who will carry out all marketing activities. It may also cover the cost of hiring agencies or consultants for specific tasks such as paid advertising or Search Engine Optimisation (SEO).

Additionally, there is the cost of renting office space, which can be avoided by having a remote team. In such cases, most organisations will cover their employees’ internet connection fees and provide necessary office supplies such as computers, tablets, or phones.

2) Software

Marketing teams often use numerous software tools for various processes, including customer relationship management, creating and publishing digital content, managing websites, and analysing business data.

3) Website

Every business needs a website to reach potential users and sell products or services online. For many companies, websites generate a significant portion of their revenue, and for e-commerce businesses, websites replace physical stores.

Due to their impact, websites are critical areas for Marketing Budget allocation, generating expenses such as:

a) Content Marketing: The wages of employees who create digital content such as web pages, eBooks, infographics, videos, and other multimedia resources.

b) Content Management System (CMS): Software that allows users to manage website content without needing technical coding knowledge.

c) Content Delivery Network (CDN): A network of servers that ensures websites are promptly displayed to users worldwide.

d) Web Hosting: Infrastructure needed to host website data on physical servers, making it accessible on the internet.

e) Paid Ads: Digital advertisements displayed on search engines, websites, and social media platforms.

f) SEO: Software and experts required to optimise a website to improve its visibility and user traffic from search engines.

What are the Four Elements of a Marketing Budget?

The four main components of a Marketing Budget generally consist of advertising, promotions, staff costs, and technology or tools. These categories ensure funds are allocated for campaigns, team efforts, and the resources needed for tracking and optimising results.

What is the 70/20/10 Rule for Marketing Budget?

The 70/20/10 rule for a Marketing Budget advises allocating 70% to proven strategies, 20% to new or developing tactics, and 10% to experimental approaches with potential for future growth.

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Conclusion 

A well-planned Marketing Budget isn’t just about numbers; it’s about making every pound count. Now that you know What is Marketing Budget, it’s time to put your strategy into action. Allocate wisely, track performance, and adjust as needed to drive real growth. Make your marketing spend work smarter

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