Work Backwards Into Your Marketing Budget

In my last article I outlined how much a typical business should factor in to their marketing budget, (if you missed it you can read it at However, in summary, you take between 5% and 10% of your target revenue for the coming year and that's your budget. OK, so that's the simple part, but with that established how does one decide exactly how much to spend and on what?
When working with clients on their marketing budgets I always work backwards into it. You start at a macro level (look at the big picture) and work backwards until you are looking at a micro view (looking at the many small details). Deciding on your target revenue is the most critical macro element and is indeed the first step of working backwards.

The next thing is to identify "who is my customer?" By identifying this you will begin to establish how you are going to reach them. An extreme example of this is selling 1950's Rock and Roll compilation CDs. You would spend most of your marketing funds in more traditional media and not so much on the web, as the percentage of "web-savvy" people of that generation is well below the average.

Once you know who is most likely to be your customer, you can start to establish how you are going to reach them. You may decide to only use your own marketing materials, such as leaflets and your website, but it's still important to understand your customer. Knowing your customer will tell you how you need to design the leaflet, what information to include and where to distribute them.

This is even more important if you decide to spend money on advertising. Whether you advertise in newspapers/magazines, radio or any other medium is purely a function of the size of your budget. The more difficult decision is which magazine, radio station, etc to advertise in. If yours is a B2B company then perhaps there are specific publications for that sector. If you know your customer, you can even start to plan what incentives and give-aways you are going to run.

But in some cases there is no single customer, so what do you do then? You pick a customer-type that you want to attract and target them. If you sell men's clothing, you may stock everything from jeans to suits, but which type of sale do you want to make? Once that's decided you will be much clearer about how and where you are going to market yourself.

With your customer identified you now need to write out all the potential activities that are relevant for your business and budget. For instance we would all love to advertise on TV, but for most businesses it is not appropriate and far above our budgetary capabilities, so don't even write that down. Don't forget new mediums, such as online advertising and don't forget that your website is THE most important marketing medium you have. If it's not up-to-scratch then don't spend large sums of money on expensive advertising if the experience people have when they reach your website is poor.

Now you need to plan out the year. Take into account any seasonal aspects to your business and apportion chunks of your spend to each quarter accordingly.

With your quarterly spend and list of potential marketing activities identified, you simply need to match them up. If you have identified that your customers read a specific publication, then you may decide to spend a larger proportion of your budget advertising there, but how many ads does that translate to each quarter?

The golden rule here is "consistency". You don't want to put all your eggs in one basket but equally don't place a single advert in a big magazine just because you have the budget. If you can't afford to run a series of ads on a reasonable schedule then don't run any or run them in a lower-cost publication.

Working backwards into your marketing budget will provide clarity and peace of mind to you and will protect your spend against rash decisions and pushy advertising sales people. Finally, if you are not sure which publications or radio stations your customers enjoy then there are companies out there that can help and most don't charge anything for their services as they make their money from the magazines and radio stations when you advertise with them.

Franco De Bonis is a marketing professional with a unique view on the world of marketing and co-owner of The DG Group. Franco has worked in the field of sales and marketing promotion for over 20 years and was most recently the global marketing manager for Creative Labs, a world leader in personal digital entertainment. Franco's 'Sanity Marketing' philosophy peels back the layers on both traditional and online marketing to focus specifically on the ROI of an activity rather than branding and production of materials and also on available resources and budgets to achieve the ROI goals rather than on what 'should' be done.

As global economies have flat-lined, the world of digital marketing has accelerated and within this new era of marketing lie the solutions to many of the problems businesses face in expanding their revenue and customer base. Franco's passion is in exposing these new 21st century opportunities that can make a real differ

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