Of course, marketing teams may only have a limited budget, to begin with. For that reason, they must look ahead and create a streamlined plan for each year. Let's discuss four key steps you can take to develop a smart marketing budget for 2022 and every year after.
Analyze Your Previous Yearly Budget
First of all, it's a good idea to examine your previous year's marketing budget as a baseline for projected allocations in the future. Dig into your documented metrics to discover which tactics worked well and which ones were underwhelmed. For instance, did your PPC spend yield a high conversion rate? Did your social media marketing generate increased brand awareness? Is your content marketing helping your website to climb in the SERP (Google’s response to searchers’ questions, also known as Search Engine Results Pages) rankings?
After you finish your analysis, scrap the tactics that didn't work in the previous year. Take those freed resources and think about where they can be put to good use. Which campaigns will you deploy in 2022? Which marketing mishaps do you specifically want to avoid? At this point, you may want to start brainstorming ideas for allocating your resources differently — but don't set any ideas in stone until you complete the next step.
Establish SMART Goals
As is well known, SMART goals are objectives that are Specific, Measurable, Attainable, Relevant, and Time-based. Framing your marketing budget in terms of SMART goals is an excellent way to ensure that your spending stays on track and aligns with what's truly important for your business.
Here are just a few examples of SMART goals that you may want to consider:
- Increasing your number of subscribers by 20%
- Generating 15% more leads
- Improving your conversion rate by 5%
- Becoming more visible as a brand, as evidenced by a 30% increase in social shares of your content
Whatever you decide to set as your SMART goals, they need to be objectives that you can easily measure. They should be realistic. They should also be directly or indirectly relevant to your bottom line and not include "vanity metrics" that look good on paper but don't move the needle in lead generation or sales.
Consider Your Sales Cycle Activity
As you develop your SMART goals and look for ways to achieve them, you must consider your sales cycle activity — e.g., your sales funnel. Your funnel will determine to a large extent where you'll spend your budget since any "bottlenecks" in the funnel should be addressed promptly and effectively.
A sales funnel typically contains four distinct stages:
- Awareness
- Consideration
- Decision
- Action
Suppose most of your consumer base is unaware of your brand or doesn't understand how your product can address their pain points. In that case, you'll likely want to allocate more marketing dollars to the awareness stage. Then again, if most of your consumers get to the consideration phase but don't progress to making a decision, then you may want to allocate more resources to get them to convert.
The bottom line is that you want to look for weaknesses in your sales cycle and use at least part of your budget to fix them or reduce their impact on your customer's journey.
Understand Your Market
Finally, it's a good idea to periodically review your understanding of the market. Are your current buyer personas still up-to-date in terms of customer needs and wants? Do your target customers have different or higher expectations than they did the last time you developed those personas? Have your audience demographics changed? Are there opportunities open to you to target new audience segments?
Collect consumer data from first-party or external sources, and then analyze that information to see if you need to change your approach. You may find that a portion of your budget should go towards an improved understanding of your core audience.
Developing a Smart Budget that Will Drive Your Marketing ROI in 2022
It's vital to create a clear, focused, and realistic budget for your marketing efforts in 2022. Use your previous year's activity as a baseline, establish SMART goals, examine your sales pipeline for any bottlenecks, and review your understanding of the market. You'll be in a prime position to achieve exceptional results in the year to come.
Of course, creating and executing an effective marketing budget may not be one of your business's core competencies. If not, why not consider partnering with an experienced media partner? They can help you avoid unnecessary costs, stay focused on improving your ROI, and utilize resources in the most efficient way possible. With their resources at your disposal, you'll be able to optimize your budget and see a positive impact on your bottom line.