5 Ways to Optimize a Marketing Budget
Our optimization guidance is focused on established businesses, but a general rule of thumb for the entrepreneur readers is to allocate 15 to 20 percent of your gross revenue to marketing. For established companies, generally those that have been in business more than five years, we suggest allocating between 10 and 15 percent of your gross revenue, although increased or decreased spend may make sense depending on the industry and market.
The bottom line is that for a business of virtually any size or age, marketing should be a significant piece of your budget. Importantly, however, it will only achieve the desired results if you’re using it right. If your marketing budget isn’t producing results, there are a few things you can do to optimize it.
1. Practice Patience
Avoid the temptation to cut your marketing budget if you don’t see immediate results in reaction to perceived worsening general economic or specific market conditions. Marketing budgets almost always take the brunt of organizational budget cuts, and this is almost always a mistake. Harvard Business Review has studied how businesses perform through several recessions and found that companies that cut their marketing budgets tend to fare worse and recover more slowly than those who maintain and reallocate their spending.
Patience does not mean inaction, however. Reallocating spend to optimize marketing results can include pivoting messaging to align with observed target audience trends and behaviors, shifting budget to emergent or newly relevant platforms, or creating an experiential campaign to meet your target audience in a novel and unique way.
2. Smartly Segment Your Audience
To make the most of your budget, you need to know exactly who your ideal customer is — the kind of person that has a problem you can solve, wants to solve it, and is ready to make a purchase. Take the time to spell out the characteristics of your ideal customer in the form of a buyer persona, then focus on categorizing and appealing to personas where they want to be communicated with and by the means they generally prefer.
When the audience is understood as an external phenomenon, and categorized smartly to facilitate targeted marketing actions, the business is equipped to meet the audience at their point of need with the right message. This combination of knowledge and actionable segmentation means marketing efforts and dollars spent have maximum impact whether you’re talking about digital media, traditional media, experiential marketing, or all of the above.
3. Be Selective About Your Channels
Every customer is different, but there are patterns in their overall behavior. Over time, you’ll notice that your audience uses some platforms more than others. Don’t be afraid to abandon the channels that aren’t performing so you can focus on the ones that generate the best returns.
Keep in mind that not every channel lends itself to every brand, so don’t overreach. Twitter is much more interactive and fast-paced than Facebook. Instagram is much more visual. LinkedIn users expect more copy and professionally produced posts. If your brand doesn’t fit a given channel, don’t use it.
4. Use an Integrated Marketing Approach
Integrated marketing is a strategic approach that coordinates all aspects of marketing of a brand, including owned media channels, like the company’s website, paid media channels, and earned media, such as favorable public relations coverage. Integrated marketing is something nearly every marketer talks about, but very few are executing well.
When integrated marketing is done well and authentically, it’s your secret weapon. We’ve found that more than 4 out of 5 people cannot recall any memorable story related to a brand. The 1 out of 5 will recall an established and wholly integrated brand. Why? Because the message is unified, the brand is consistent, and it isn’t afraid to repeat it’s core values and messaging ad nauseum.
When your brand sticks, the need to spend increasing amounts on varied and disparate campaigns and channels is diminished. The focus can now be put squarely on optimizing spend where the message is resonating most potently.
5. Test and Measure
It may go without saying, but constant vigilance around marketing performance is key. When introducing new marketing ideas, doing so with an A/B testing option available can help eliminate competing creative ideas and prioritize what’s working. Regular paid media performance evaluation using both ROI measures and independent analytics data is invaluable to making the right ad spend decisions. A test, measure, adjust and repeat routine is vitally important to maintaining an optimized marketing budget.
The Next Step
Utilizing the tips above will move your marketing budget optimization efforts in the right direction, but it’s not the be-all-end-all. Marketing budget optimization may be higher priority and preclude other efforts like conversion rate optimizations, but these more granular tactics make significant impacts on marketing results, too. The true secret to marketing success is that it takes a constant effort to maintain relevance with the audience, and that in part means professionally optimizing every facet of the marketing strategy, including your budget, on a regular basis.