Cost effective marketing


When a business develops a marketing strategy, the first thing it needs to keep in mind is budget. Margins are incredibly vital to an organization and knowing your marketing budget is critical to maintaining those margins. Understanding your budget and where your strengths and weaknesses lie are just the basics. Do the research so you are well aware of your capabilities. 

It’s also important to realize that, if it were this simple, every business would be able to see a positive return on ad spend (ROAS). Each company needs to figure out their own unique answer to a cost-effective marketing budget. Every company has its goals, audience, competition and spending capacity to consider. It’s important to take all these factors into consideration when developing your budget.

Setting a marketing budget is something we specialize in, and we’ve found three budget-setting strategies that deliver the marketing results our clients are looking for at a price they can afford. Utilizing these strategies can help a company determine its current position and help develop the best possible budget that fits its specific goals.

1. Competition-Driven Budgeting

In the business world, your competition can seem daunting, but it can be a great asset if you use it to fuel your strategy. If you can go above and beyond what your competitors are spending, you can stand out comparatively.

In this day and age where everything is digitized, it’s possible to develop an accurate estimate of which marketing channels are delivering the best ROAS for your competition, giving you a great starting point, and allowing you to develop your budget more effectively.

With a rough estimate, being able to outdo the competition will allow you to be more visible and have a better chance to convert, in turn seeing more sales. There will obviously be outside variables to consider (the quality of your creative and the accuracy of your media targeting to name a few), but with these being equal, deeper pockets will result in a big win for your company.

2. Finding Wisdom Within

While basing your budget off of your competitors is a good strategy, looking within is equally as important. At the end of the day, it’s your marketing budget, and you need to figure out what’s best for your current situation. A common recommendation among marketing managers and consultants is a marketing spend of 7-8% of gross sales, but you shouldn’t feel limited by this loose guideline. This number can be influenced by numerous factors such as the industry, profit margin, competitive landscape and, most importantly, your business goals.

A strategy we use is to figure out the percentage that you’re currently spending and determine how fast you’re growing (or if you’re growing at all). If you want to see increased growth, increasing the percentage of gross revenue going towards advertising is a general answer. However, depending on the situation, you might want to make the most of the market that you’re established in, therefore you decrease your marketing budget to increase your margins.

You won’t find a perfect answer to increasing or decreasing your budget, and it’s up to you to determine how spending specifically affects your company. Spending needs to be smart, and if you spend effectively you will create demand.

3. Goal-Oriented Budgeting

All approaches to setting a marketing budget should be driven by your business goals, but if you really want to achieve specific metrics, pick those metrics first and set your budget to match.

If you don’t know where to start with your marketing budget, start small and work from the ground up. Being able to pick out appropriate goals and work towards those first is the most effective way to set a cost-effective budget. It’s always better to do a few things well as opposed to doing a lot of things poorly. Assessing your current situation and budget in order to reach a set of goals promotes more productive work.

With the resources we have today, it’s much easier to set goal oriented marketing spend. Pick out your current top priorities and don’t try to overwhelm yourself. With a grounded assessment of your total available budget, you will be able to realistically reach the goals set. Make sure to fully accomplish your first set of goals, and you will be in a new position and ready to reassess.

Guiding Principles for Your Marketing Budget

Your budget needs to be considered carefully, as companies sometimes pour millions into bad creative and ineffective channels that never see any results. Return on ad spend is a great starting statistic to measure how efficient your marketing dollars are. All marketing dollars are not equal, and getting a good bang for your buck is the gold standard. Doing the proper research and getting the specifics goes a long way in advertising.

One thing to keep in mind for newer businesses is that you will most likely need to spend more of your revenue on your marketing budget in order to establish your place within the market. Whether it’s entering a new market or expanding your product/service offerings, spending more can help break through the entry barrier that many new businesses struggle to cross. Your ideas may be fantastic, but they’ll be dead in the water if no one has the opportunity to learn about them.

You need to be able to regularly assess your marketing results and constantly reexamine your budget, because simply adjusting the spending amount will never be the best solution. Working with your advertising team to develop new approaches is crucial, and you shouldn’t let your budget restrain your endless potential.

     About Innovative Advertising

Innovative Advertising is a full-service marketing firm and digital advertising agency, with offices in Greater New Orleans and Nashville. We partner with B2C, B2B, and non-profits to create completely original design, digital, advertising, public relations and media solutions. Following a disciplined approach, our team conducts analyses and optimizations of these cross-platform brand development efforts to create sound marketing solutions with demonstrable results.