It’s the time of year (already!) to start thinking about your marketing budget for 2019. During the last quarter of each year, marketing teams create new tactical plans and update strategic marketing plans. Planning in this way means you have a clear vision of what you want to achieve – and how much budget you will need to get there.
Having a clear vision of (and sound reasoning for) your goals and budget will keep your marketing plans on target, and will also help if you need to have your marketing budget approved.
Which marketing channels work for you?
For the last ten years and for the majority of companies, marketing budgets have remained relatively consistent or increased compared to the previous year. In 2019, marketing budgets are expected to remain consistent with 2018 levels or possibly see an increase.
But how do you define your marketing budget? There is no ‘one size fits all’ answer to this; every company is different, wants different outcomes, uses different channels, and has different priorities.
The essential thing to know is where and how your company maximizes ROI.
Use the data you’ve gathered from the previous year to figure out which channels work for you. Also consider any channels that you haven’t tried but you would like to test. What you budget for 2019 and where you spend it will depend on your goals and using the channels that give you the best results.
Where to spend your 2019 marketing budget
Digital marketing has become a crucial investment for businesses around the globe to stay relevant, top of mind and provide users with engaging content. Businesses now allocate nearly 50% of their marketing budget solely to digital platforms, at the expense of traditional advertising.
This spend on digital platforms is forecasted to increase still further over the next few years. Forrester forecasts a digital marketing spend of $118 billion by 2021, which in itself is an increase from its original forecast of $103 billion by 2019.
Looking within digital itself, video is becoming more of a focus and priority as businesses use its power for engaging and entertaining customers, providing visual content in easy to digest chunks. Online video budgets have grown 114% since 2014 and the trend looks set to continue with video forecast to have the steepest increase in ad spending.
This means that figuring out which digital channels, including social media, make the most sense to you and your industry is an essential step in the budgeting process. In terms of social media, Instagram is currently the fastest growing channel to invest in, but Facebook still remains on top in terms of active and engaged users.
Setting your 2019 marketing budget
Once you have defined your marketing goals and made data-driven decisions about which channels work best for you, there are a few ways in which you can set your 2019 marketing budget:
- Base your 2019 budget on what you spent in 2018. Increasing or decreasing your budget based on the previous year’s spend is a simple approach, but may not provide the accuracy you really need.
- Build your budget in line with your planned marketing activities. This is much more tactical and will be more accurate because it relates directly to your plan. It also means that you are better able to prioritize your spend.
- Take a percentage of your top-line revenue. Deciding on a percentage that would work for your business depends on your goals. For example:
- If your goal is to maintain market share and you don’t have big growth plans, you could take 5-6%.
- Consider taking 7-9% if your goal is to increase market share and you have moderate growth plans.
- If you want to really drive your market share and have ambitious growth plans, you may want to take 10% plus of your top-line revenue.
- Combine the first three methods. This is common practise, because a combination of approaches can provide a more accurate budget estimate.
Tracking your marketing budget
Having set your marketing budget, it’s important to revisit, maintain and keep track of it. There are always costs or opportunities you won’t have anticipated (it’s a good idea to include a contingency for when this happens), and you’ll get a really good idea of your ROI. That means you can tweak your spend along the way to make sure you’re really maximizing your results, whether that’s spending more or cutting something completely.
Managing your marketing budget on an ongoing basis means that the data you gather is more immediately useful. This data will not only help you assess how well your marketing plan and budget is working in the current year, but also enable you to build a more accurate plan and budget for 2020.
While there are different ways of setting your 2019 marketing budget, and different channels to spend it in, one thing remains the same: you need it. Your marketing investments are a priority in turning over profitable sales.
If you need help setting your 2019 marketing budget and defining your marketing plan, let’s chat.