How to Determine the Perfect Marketing Budget for Your Company

Whether you run a small business or a multi-million dollar corporation, marketing is essential to your profitability and growth. Yet many small businesses don’t allocate enough money to marketing or, worse, spend it haphazardly. Marketing budgeting is a complicated but important process. Marketing budget is a very important metric to set the right goals for your business

While the marketing industry is filled with strategies and ideas, it’s easy to get flustered by all the things you “should” be doing to help your company grow. Ultimately, it all comes down to planning and budget.  So let’s pull back the velvet curtain on what pricing really looks like and what you can actually expect for your dollar spend.

The first question we ask a new client is, “Do you know what your budget is?”  Usually, that’s when we see the client’s eyes get as big as saucers as they reply, “I have no idea! That’s what I thought you were here for.”

How to Calculate your Marketing Budget

To understand the recommendation, first, let’s define ‘marketing budget.’ Your marketing budget refers to all costs for marketing, advertising, public relations, promotions and anything else you might blanket under that very wide-cast net called ‘marketing’ on a day-to-day basis: for example, Google AdWords, social media, print ads, sponsorships, collateral and even tastings.

As you’ll see below, the ideal budget depends on your current marketing foundations. BUT, as a general rule based on the latest research, expert opinions and years of marketing experience, we say:

Many businesses allocate a percentage of actual or projected gross revenues – usually between 2-3 percent for run-rate marketing and up to 3-5 percent for start-up marketing. But the allocation actually depends on several factors: the industry you’re in, the size of your business, and its growth stage. For example, during the early brand-building years retail businesses spend much more than other businesses on marketing – up to 20 percent of sales.

Over the past five years, we’ve developed what we call “marketing math” to help clients define exactly what they should be spending on marketing:

New companies: For companies that have been in business for one to five years, we suggest using 12 to 20 percent of your gross revenue or projected revenue on marketing. (Companies less than a year old, tend to need to ramp up before spending marketing dollars.)

Established companies: For those companies that have been in business more than five years and have some market share/brand equity, we suggest allocating between 6 and 12 percent of your gross revenue or projected revenue.

This budget should be split between:

1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.)

2) the costs of promoting your business(campaigns, advertising, events, etc.).

This percentage also assumes you have margins in the range of 10-12 percent (after you’ve covered your other expenses, including marketing). If your margins are lower than this, then you might consider eating more of the costs of doing business by lowering your overall margins and allocating additional spending to marketing. It’s a tough call, but your marketing budget should never be based on just what’s left over once all your other business expenses are covered.

Marketing, Budget

Chicken and egg marketing

I need to grow my brand to make money, but I have no money to help do that.  Sound familiar?  We call this chicken and egg marketing. I’m here to tell you, to establish a brand you have to crack many, many eggs.  That’s why it’s so critical that startups and established brands alike are well funded.  It’s like building a house: It’s almost always going to take more time and way more money than expected. If you aren’t well funded, make sure your dollars are spent wisely and tied tightly to specific deliverables.  There is nothing worse than spending every penny you have to build something the wrong way only to have to start over again. So do it right the first time.

How to Spend Your Marketing Budget

If you are marketing from a fairly static annual budget, you’re viewing marketing as an expense. Good marketers realize that it is an investment. – Seth Godin

Set Marketing Goals

The first step toward marketing budget allocation is determining your marketing goals for the year. We recommend at least three S.M.A.R.T. goals with predefined success measures tied to each.

Here are some common ones:

  • Increase website traffic—measured by unique visitors per month
  • Increase targeted leads to the website—measured by web visits from our geographic service area
  • Grow new business or develop new division—measured by total leads and sales revenue

Check Your Marketing Foundation

Next, examine your marketing foundation. Do you have the foundation in place to reach your goals?

Check your brand, website, communication pieces and reporting systems. Questions to answer:

  1. Do you have a clear, up-to-date brand that properly identifies your company and consistently generates the same brand image as consumers?
  2. Does your brand have a consistent look and feel across all media?
  3. How does your website compare to the competition? Tip: Google “catering [your primary region/city]” e.g., “Catering Las Vegas,” and compare.
  4. Are there any barriers in your prospects’ path toward becoming customers?
  5. Do you have the tools and systems in place to measure the success of your marketing investment?
  6. Do you have a solid and solidified strategy for business development and marketing related to it?

Fear of missing out

This term applies to marketing just as much as it does to your Saturday night plans.  There are certain unalienable marketing rights of passage that you must spend time and money on so you don’t miss the brand boat:

  • Branding
  • Website
  • Social media
  • Advertising
  • Content
  • Events

Now obviously the mix and dollar spend on each of these will differ significantly based on your product or service but resign yourself to the fact that each of these will take a sizeable bite out of your budget.

Bringing together the data from these credible sources in the marketing community should help you determine how much to spend on marketing, and where to apply those investments.

At LookinLA, we know your marketing investments should result in profitable sales.

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3 Website A/B Testing Tools

A/B testing is becoming more and more common as teams realize how important it is for a website’s success.

[vc_row][vc_column][vc_column_text]The Web is a huge, competitive marketplace with very few (if any) untapped markets, meaning that being successful by offering something unique is rare. Much more common is that you’re competing for the business of your customers with several other websites, so attempting to convert every visitor into a customer or upselling/cross-selling your services better could make all the difference to your bottom line.

Due to this, the market for A/B testing tools and CRO (conversion rate optimization) tools is growing exponentially. But choosing one can be quite a time-consuming challenge, so in this article, I’ll compare the best A/B testing tools to help you decide which is most suitable for you or your team.

A/B testing is about experimenting with visual and content changes to see which results in more conversions.A/B testing often follows usability testing as a means of testing a solution to a flaw in the user experience identified using metrics like bounce rate in an analytics tool like Google Analytics, and thanks to the depth and quality of A/B testing tools available now, A/B testing is accessible to designers as well as marketers and developers.

 

1. Optimizely

Optimizely is one of the leading — if not the leading — A/B testing and CRO tools on the market today. It offers analytics tools to suit users of all levels and a multitude of A/B testing tools. (You could think of it as the Google Analytics of A/B testing, with a much simpler user interface.)

Consider this scenario: You have an eCommerce store built with Magento. You’re aware that in certain cases it may benefit stores to add a one-step checkout solution instead of the standard multi-page checkout, but you’re not sure if your store fits that use case. You need to test both options and compare the results with/without the one-step checkout experience. You know that running two versions of the checkout simultaneously requires changes to the code, which is a complex matter.

With Optimizely, you can send a certain amount of your users to a totally separate checkout experience to collect conversion data. If the experiment yields negative results, you delete the experiment and the original checkout web page still exists and works fine. No harm was done.

With their Web Experimentation tool, which offers an easy-to-use visual editor to create A/B tests without requiring a developer (optional), the ability to target specific user types and segments, and create experiments on any device, Optimizely has all your bases covered.

Although you can run A/B tests without a developer, your variations can be more targeted (for example, your variations can go beyond color, layout and content changes) if you have the skills and/or resources to develop custom experiments with code. By integrating your A/B tests into your code, you can serve different logic and test major changes before pushing them live.

Also, if your product extends beyond the web, Optimizely works with iOS, tvOS and Android apps. Optimizely’s Full Stack integrations make it possible to integrate A/B tests into virtually any codebase, including Python, Java, Ruby, Node, PHP, C#, Swift, and Android.

2. Google Optimize

Google Optimize is a free, easy-to-use tool that integrates directly with your Google Analytics Events and Goals to make A/B testing quick and easy! It’s ideal for traditional A/B testing, focusing on comparing different CTA (call to action) elements, colors, and content.

Developers aren’t required for implementing Google Optimize since it’s as simple as adding a line of JavaScript to your website and then customizing your layout with the visual editor. With this, you can change the content, layout, colors, classes, and HTML of any element within your page.

It’s not as sophisticated as Optimizely, since it doesn’t allow you to create custom experiments with code/developers, but it’s free. It’s great for those starting out with A/B testing. For each Google Optimize experiment, you’ll need to specify which Google Analytics Goals or Events will be the baseline for your A/B tests. For example, if you were A/B testing a product page, you could use an “Add To Basket” event that you’ve defined in Google Analytics to evaluate which of your variations converts the best. The Google Analytics report then gives you a clear indication of which variation converts best. It’s ideal for those on a low budget!

Just don’t get carried away, as Google famously once did, by testing 40 different shades of blue to see which converted best!

3. Unbounce

Unbounce focuses on landing pages and convertible tools. Convertible tools use triggers, scenario-based overlays and sticky bars to A/B test offers and messages to learn when, where and why your visitors convert. An example? If a user tries to leave your site, they’re shown a discount code in a modal or a sticky header, and a test will determine which is more effective.

Landing pages can be an amazing way to validate your ideas, build excitement around a new product, and/or re-engage dormant customers. The problem with them is that they can result in false positives. If you get very few conversions you may feel like your idea is invalidated or demand for the new product doesn’t exist, when in reality users were just unimpressed and/or unconvinced by the landing. Unbounce helps you to determine what your landing is missing.

While you can choose from over 100 responsive templates designed for many markets, goals, and scenarios, and then customize it with your own content using their drag and drop UI, you can also integrate Unbounce with your own design, making a terrific solution for designers and marketers who need to collaborate. Unbounce also works with Zapier and Mailchimp, so data can be transferred across the other apps and tools that marketers use.

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Author: Jamie Murphy
Source: sitepoint.com

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