If you have a B2B company, you know just how critical it is to market your services in a way that can reach your target audience most effectively… but how do you determine your marketing budget? That’s the million-dollar question!
There are several hidden factors that can affect your marketing budget. As B2B marketing experts, we’ve seen many executives and higher-ups have little to no idea how to approach budgeting for marketing!
In this article, we’ll give you a breakdown of all the factors that affect a company’s marketing budget so that your business will know what to expect when tackling it one day.
Let’s get started!
1. Startup costs
Before you can get started on marketing, your company will need to invest in a number of foundational subscriptions, assets, and processes that will make marketing your business possible. These are considered one-time investments and startup costs.
Every time you are starting a campaign, there are assets that need to be created, accounts that need to be set up, and strategies that need to be defined. For that reason, starting up with marketing for the first time is always going to be a bit more expensive than maintaining your marketing efforts.
An example of startup marketing cost is the cost to build and design your website! In theory, you’ll only need to do this once. But it will take investing in buying your website’s domain on a website like GoDaddy, purchasing a subscription for a hosting site like WordPress or Squarespace, and any other one-time plugin downloads that you need to run your site effectively. You only do it once, but it may cost you thousands of dollars upfront. These types of expenses are done once and should be factored into your larger marketing budget.
2. Hard budget limits
Before jumping as high as you can, you ought to know where the ceiling is! Every business has its monetary limitations. What are yours? Knowing what this hard limit is should give you an approximate idea of how to parse out your marketing budget across different campaigns.
If you can spend no more than $5,000 monthly on all marketing campaigns, then you should probably spend a little less and leave a bit left over for testing and other possibilities.
After all, it’s tough to get marketing right the first time around! You might be flexible and have a range you can spend but ultimately, there is probably a limit on how many resources your business can invest in marketing altogether.
3. Desired end goal
Hard to shoot a basketball without a net, right? Before you start marketing at all, you’ll need to understand what your desired end goal with marketing is. Without considering that goal and its general scale, you won’t be able to create an approximate marketing budget that’s anywhere near accurate.
So, ask your business team: what do you want to get out of your marketing budget? Once you understand what your goals are, you can factor this into your marketing budget.
4. Hiring externally vs internally
So you know your goals… Who’s gonna get the job down? The answer to this question will largely impact your marketing budget. You might need digital marketing but you are not sure what your budget should be.
What does it cost to hire someone internally? This price may be vastly different than what it costs a marketing agency to do. Hiring agencies might end up being much more cost-effective because your company doesn’t have to pay for any of the other overhead costs associated with internal hires.
When it comes to having a marketing budget, decide how much money you have and the results you hope to achieve. Then compare it to what it would cost to hire an internal team to get it all done.
5. Ad spend
Advertising definitely needs its own spending. You’ll want to consider this as its own line item when factoring in your marketing budget. You might be wondering… can we skip the advertising altogether? As marketing experts… we can unequivocally say NO! Advertising is not optional. You must invest in AdWords, Facebook Ads, retargeting, and beyond if you really want to maximize your digital marketing efforts.
When considering this budget, understand that much of it will be a ‘testing’ budget. If you have a desired goal, or a return on ad spend (ROAS) that you’re looking to achieve, you’ll likely need to have a testing budget well in advance before your company will be able to hit that number. After all, marketing is all about testing. Success doesn’t happen overnight.
You might be running a branding campaign that will have branding key performance indicators (KPIs) that you measure (views, engagement, etc). You might be running a direct response campaign where you are measuring KPIs like leads, emails, qualified appointments, or proposals.
Decide what you are willing to test with for the first few months and set forth!