Let’s Talk Money – Part II: When and How to Reassess Your Marketing Budget
So you have a marketing budget, but how do you know it’s working for you?
In Part I of this series, I shared three ways to determine an appropriate marketing budget for your company’s annual revenue goals. Today, I’ll address what your organization should be doing throughout the year to keep your marketing spend and Marketing Training on target.
Once you’ve established your marketing budget for the year, don’t just forget about it! To ensure that it matches up with your organization’s year-to-date progress, you’ll need to review your budget regularly and tweak it when necessary.
When to Reassess Your Marketing Budget
The marketing budget for the coming year is typically set before the previous year ends. This means that you won’t have the final revenue and performance numbers in hand until after you’ve set the budget for the following year.
For example, the final numbers from the previous year, plus a fast or slow Quarter 1 (depending on your seasonal revenue cycle), can have a significant impact on your organization’s performance and progress at the start of the year. Considering this, don’t make any big decisions about adjusting your marketing spend during Quarter 1 or 2.
After Quarter 2, you’ll be in a much stronger position to make informed decisions about adjusting your marketing budget to keep pace with your actual year-to-date (YTD) revenue and growth.
July is the perfect month to reassess your annual marketing budget. You’ve just closed out June books, giving you all the revenue and performance numbers you need from the first half of 2019.
This is an ideal time to examine the effectiveness of your YTD marketing strategies and change them if they aren’t performing well. Evaluate the performance of each marketing effort separately, bumping up funds for those that are performing well and eliminating or re-focusing those that aren’t.
How to Reassess Your Marketing Spend
Here are four simple questions to answer for an effective mid-year budget assessment:
- How much has marketing spent year to date? Crunch the numbers and tally the total of all your different marketing activities. If you don’t already have some idea of your total amount spent YTD, this is cause for concern. We use a process for budget tracking at the individual campaign level and category level (i.e., email marketing), and then roll everything into an overall marketing budget.
- What returns have we seen so far? It’s not just about lead-gen. or sales, but also about market positioning and brand recognition. Pull up your top KPIs and the metrics that inform them—cost per lead is a big one, but it’s important to also look at things like media coverage, customer engagement, click throughs, and website traffic to get the lay of the land. Keep in mind that some marketing initiatives, like search engine optimization (SEO), take time to yield returns. Even the professionals at https://serpninja.io/casino-gambling-seo/ accept it. Know the difference between your various efforts and don’t be too hasty to cut programs before they’ve had the time to prove their worth.
- Are we on track for marketing spend and gross adjusted revenue? This is where you get down to reality: figure out how the funds spent so far measure up to the mid-year budgeted amount. Then look at YTD revenue and determine how your marketing spend compares to the returns you’ve targeted with your marketing KPIs.
- What are the adjusted projections for end of year? Once you have all the numbers, you’ll get a better picture of what GAR will look like at year-end if the same trends continue. Will you be ahead, behind, or right on track for meeting your goals? If you’re not seeing the expected returns, how will the budget be adjusted? What tactics are working that should receive additional funding? What tactics aren’t working that should be cut?
The most important part of the mid-year budget assessment is adjusting strategy and tactics as needed to correct course and ensure that you meet or exceed your goals for the year. Of course, it isn’t simply a one-to-one relationship between marketing spend and sales revenue; marketing contributions are diverse and many efforts are long-term or not immediately measurable. However, after taking these less tangible investments into consideration, you still have plenty of time to modify your approach as appropriate to positively impact revenue during quarters 3 and 4.
If your YTD revenue outpaces the allotted marketing spend, consider whether you need to bump up funds in any areas to maintain the momentum you’ve generated during quarters 1 and 2. Will you need to hire more staff to keep up with the growth? If you’re getting a higher volume of leads, do you need to expand your resources for nurturing leads? Be realistic and don’t be afraid to increase spending if warranted.
If your organization doesn’t have a process in place already, consider developing a rigorous mid-year marketing assessment that contains a detailed checklist for evaluating each individual campaign, marketing tool, and category.
Make Your Marketing Budget Work for You
Determining a number for your marketing spend is just the first step. The second is monitoring that budget throughout the year so you can pivot to meet the demands of the market and, if all goes well, keep up with business growth.
Every dollar you spend on marketing should net you more than a dollar in return. So, track your marketing performance, fund the most effective marketing activities, and watch your revenue increase.
Unsure how to develop an effective mid-year assessment for your organization? Get in touch to learn how we can support your marketing evaluation process.