The past year in marketing has been one like no other, and businesses have been struggling to adapt for it. Fear not, for all is not lost – the Content Marketing Institute noted that 85% of B2B marketers had at least a moderate level of success even during the pandemic. Whether you’re a new business or an existing one, planning for the launch of a new campaign can be tricky. Now is the time to rely on data and tried and true methods to reduce the risks your business takes on as much as possible, starting with setting a marketing budget for 2021 and beyond.
Figuring out the right budget is a fine science even under normal circumstances, but with our approach tips, you’ll find it much easier to navigate as you plan for success.
#1 Use Revenue to Determine Marketing Budget
One traditional method of measuring your marketing budget is to use your revenue as a rough estimate for how much you should spend. The U.S. Small Business Administration recommends spending 7-8% of gross revenue on marketing and advertising. Meanwhile, newer companies with little or no revenue trying to scale fast have been traditionally advised to spend 12-20% of their projected gross revenue on marketing.
Using this as a benchmark can be helpful, though it’s important to keep in mind these percentages were determined during a less volatile state for most industries. While the jury is still out on how marketers and their audiences will adapt, the 2021 CMO survey noted that marketing spending is expected to grow 14.3% in the next year, with a 11.5% increase in digital marketing. Furthermore, they noted that marketing budgets had risen to the highest percentage in the firms history in mid-2020.
Extrapolating from this data, it seems that businesses turned to increasing their typically conservative marketing budgets in order to survive a volatile marketplace due to the pandemic, and for many it paid off. Following their same line of thinking can help inform your own marketing budget, although again – every business is different. This leads us to our next tip -
#2 Make Use of Self Analysis
Perform a self-assessment (or seek outsider consultations) on how your business is performing. What sort of results has your marketing budget produced in the past? If you’re launching a brand-new campaign, can you learn from case studies from other business operating similarly, or operating in a similar niche? The internet has put a wealth of knowledge, experience, and failure at our fingertips – how can you make the most of this?
#3 Plan for Future Trends
When it was at its worst, marketer optimism during the pandemic reached levels not seen since the recession. Now, it’s rebounded up to near-normals – and that’s likely due to the result of marketing and consumer spending. If you’ve spent the last year adjusting your marketing budget to cope with the pandemic, maybe the best move is to wait and see how things now stabilise. Can you track improvements that have less to do with your adjustments, and more to do with consumer mentality?
While a lot of our factors are out of our control even in a regular year, we can only plan for what we know. With vaccines mid-deployment and a new normal on the horizon, it would serve you well to plan for how things might look in H2 rather than fussing over 2020. One example is how digital marketing has increased returns – likely due to more people online for extended periods. Work from Home was the trend for a sustained period, and some businesses may permanently adapt to it. Would it serve you better to focus on remote and virtual offerings?
#4 Set Reachable Mini-Goals
Planning for the far future is usually optimal (depending on your business), but if you’re early in the fine-tuning of your budget, it may serve you much better to set mini-goals and extrapolate from there how you’re going to spend for the rest of the year. For example, if you can set a reachable goal of selling X copies within a week, you can start a small campaign and see how much you spend to achieve this. Then play with the scaling – can you spend more and achieve it faster? Can you spend less? And to what degree?
Use the data from these small-scale goals to further inform how you plan your budget for the rest of the month, then the rest of the year. At some point you’ll hit diminishing returns, but until you’ve started your campaigns it will be hard to tell if the wall is a year away or a decade.
#5 Analyze the competition
Depending on how you choose to market, what your competitors spend and how they spend it would have a direct impact on you regardless. Why not use them in strengthening your budgeting strategy, by researching how they allocate their budgets?
These numbers are (naturally) not always available, but you can use various resources to get an overview on how a specific niche is spending. For example, RivalIQ boasts metrics across 14 industries and 2,100 brands, and ContentSquare claims to have over 7 billion user sessions analyzed. Using their data as a starting point can set you up to optimise and squeeze past your competition.
#6 Weigh In-house vs Outsourcing
Outsourcing has always been big, and last year was no exception – 61% of businesses in the CMI 2021 survey said they outsourced (a 10% decrease from the previous year). The largest expenditure by far was content creation at 86%, with content distribution trailing shortly behind. When it comes to weighing the value of outsourcing, the main factors to consider are time, cost, and ROI.
How much are you spending to outsource, and how much are you getting back? If you decided to keep it in-house, how much could you make? Is your and your employees time better spent elsewhere? In addition to numbers, you should take care to consider physical and mental expenditure as well. Some tasks are so menial that marketers are better off in the long run outsourcing it, rather than struggling through it.
Overall, your marketing budget for 2021 doesn’t have to be as intimidating or challenging as it may initially appear, even in the wake of the pandemic. Thanks to pre-recognise benchmarks, data collection, and analysis - most businesses are able to get a good estimate on how they should start, before resorting to later tweaks and refinements to optimise their ROI. Following these tips should set you on the right path.
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