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How To Allocate Your Marketing Budget This Financial Year
If you had a $10,000 a month budget for marketing, how would you spend it?
Would you prioritise the use of those funds in TV advertising? Search engine optimisation? Social media? Radio advertising?
Allocating a marketing budget is not a simple task and it’s one that everyone in the office will have an opinion on. While everyone in the team wants a big slice of the pie, there’s usually not enough to go around.
We see so many brands continue to repeat historic marketing budgets and plans. They’ll use the figure allocated to them as the target to spend, and as a result, they waste unnecessary dollars on areas that simply aren’t delivering results.
This financial year, it’s time to switch your thinking about spending.
A new approach to your marketing budget
For too long, marketers have found themselves in a situation of ‘Here’s your marketing budget, go out and spend the quota.’ In 2021, this no longer seems like the right attitude.
So, what’s the right way to approach your budget? First, you should determine what initiatives work for you, then layer in the budget that works for your business and offers the return on investment (ROI).
Say, for example, that you’re investing $5000 a month in Google Ads, and you see that it’s delivering an exceptional ROI. If the capacity is there to deliver more valuable leads through this channel, you should be spending more.
It’s also important to note that setting a marketing budget isn’t a set-and-forget task that you complete at the start of the financial year. Continual monitoring of what is working (and what isn’t) is important. Plus, as much as consistency is important, so is being agile.
Digital vs traditional media marketing
In some industries, the general consensus is that traditional media is dying. While our focus here at Zib Digital is, of course, digital, we don’t believe in leaving traditional marketing entirely in the dust.
As Gartner reported, many companies are still finding a good reason to allocate about 25% of their marketing budget to traditional media. Depending on your business objectives and your target audience, traditional media can still play an integral role in your marketing strategy. There are consumers of all ages who use a mix of digital and traditional media. Yes, believe it or not, even Gen Z can be influenced by a billboard and or the humble bus wrap.
Your choice to spend your marketing budget on a mix of digital and traditional media should be made with an understanding of how your target audience learns about you and buys your product or service. This requires you to be clear about who you are trying to attract.
Measurability is also an important consideration. Unlike numerous traditional media activities, digital marketing is highly and accurately measurable. With bulk advertising buying, data can only explain broad segments. With programmatic or social media buying, you can drill down and optimise on-the-go. You’ll see exactly where your money is being allocated and where it’s working best.
The importance of a digital focus
Even if digital spending is only a portion of the total marketing spending for most businesses, a focus on digital marketing is important.
A few years ago, digital media spending surpassed TV advertising spending for the first time. That gap has continued to widen rapidly ever since. In 2019, digital ad spending surpassed all traditional media ad spend combined for the first time. In 2021, it’s predicted that digital spending will be more than double television spending.
This is in part thanks to the eCommerce boom, which resulted from COVID-19 related lockdowns, travel bans and retail closures. Years of growth were accelerated into a period of just weeks. Sales remain at an all-time high, and we’re witnessing record online competition. Now, brands must prioritise seamless omnichannel experiences in order to win new customers and keep existing customers loyal. (You can learn more about the post-COVID-19 effect on marketing here.)
The point is, if your business isn’t investing heavily in digital marketing, you’ll be left behind by your competitors. Plus, you’re missing a huge opportunity for visibility to your prospects and customers.
How marketing funds are allocated is ultimately driven by the nature of the business, the competitive marketplace, and how target customers behave throughout the buying journey.
At the end of the day, you should be investing more heavily in the areas that are giving you a return and be prepared to alter the plan.
At Zib Digital, we know your marketing investments should result in profitable sales.