5 min Read

Navigating Your Business’s Marketing Budget in 2024

As we gear up for 2024, the world of marketing is still grappling with the age-old challenge highlighted by John Wanamaker – figuring out where our advertising money is well spent. Proxima’s eye-opening estimate of over $37 billion going down the drain in digital marketing emphasises the urgency for businesses, especially the Small and Medium-sized ones (SMBs), to get their marketing budgets in check.

No need to panic though. This easy to understand guide will help you learn how to avoid the common pitfalls of budgeting and make sure your marketing budget for 2024 is as effective as it can be to ensure a break-even, if not profitable time ahead. It’s time to take a cue from Wanamaker and get strategic. Let’s walk through some proven and practical strategies to make sure every dollar you invest, contributes to your business’s success. After all, in a world where the stakes are high, a well-thought-out plan is your best defense against wasted budgets and uncertain outcomes.

Understanding Customer Needs for Your Marketing Budget

Firstly, it’s essential to align your marketing budget with your customers’ needs. Your budget should reflect an understanding of what your target audience seeks, which can vary widely depending on your industry and market position. This initial step is pivotal in ensuring that your marketing efforts resonate with your customers and yield the best results.

To align your marketing budget with customer needs, start by reviewing past results. Analyse which campaigns were most effective and consider increasing the budget in those areas. Stay informed about market changes, including competitor activities and evolving customer expectations. Also, assess your team’s capabilities and allocate budget for training or outsourcing where necessary to meet these evolving needs.

What Are Your Business Goals?

Aligning your marketing budget with your business goals is a key step. This involves setting clear objectives for your marketing campaigns and ensuring that your budget allocation directly contributes to these goals. Whether it’s increasing brand awareness, boosting sales, or entering new markets, your budget should be a reflection of these targets.

Aligning your marketing budget with business goals requires collaboration with stakeholders across your organisation. Utilise technology to link marketing spend to organizational goals and evaluate current investments to identify growth opportunities. Setting specific audience-based goals, informed by data insights, will ensure your marketing efforts are focused and effective. This strategy not only aligns with your business objectives but also optimises the impact of your marketing spend.

Cracking the Code: Calculating Your Marketing Budget

In 2023, according to this Gartner report, the average budget for marketing spend from total revenue was 9.1%. This number has gone down since the previous year at 9.5%. However, moving past the pandemic this number is expected to increase. So what does this mean for you and your company? Well, when it comes to setting your marketing budget, there are a couple of popular methods you can consider:

Percentage of Sales Method: This traditional approach involves allocating a percentage of your projected revenue to marketing. For most SMBs, this ranges from 5-10% of their annual revenue, although it can vary based on factors such as industry, business lifecycle, and growth goals.
Objective and Task Method: This method involves identifying your marketing objectives and then determining the tasks required to achieve them. Each task is assigned a cost, leading to a comprehensive budget that is closely tied to your goals.
Affordable Method: At the end of the day, businesses should only do what they can afford to do without risking the company. In this approach, companies determine their advertising budget based on available funds. If there are insufficient funds, the company might opt to forego advertising altogether. This method is often favored by small companies and startups.

Understanding ROI In Your Marketing Budget

Navigating the complexities of Return on Investment (ROI) is a critical aspect of formulating your marketing budget for 2024. An accurate forecast of ROI not only ensures efficient allocation of resources but also guides your strategic decision-making process.

By employing a blend of analytical techniques, you can gain a deeper understanding of your past investments’ impact and how they shape future financial planning. Here are some key methods to untangle and forecast ROI:

Historical Data Analysis: Analyse the ROI of previous campaigns, offering a roadmap for future budgeting decisions.
Customer Lifetime Value (CLV): Understanding CLV is instrumental in estimating the enduring impact of your marketing initiatives and validating your financial commitments.
Attribution Modelling: Utilise various attribution models to discern which marketing touchpoints are most effective in driving conversions, enabling a more strategic allocation of your budget.

Incorporating Digital Marketing in Your Marketing Budget

SMBs should tailor their digital marketing budgets based on the specific requirements of PPC Google and social media campaigns. Whether opting for in-house management or partnering with agencies, it’s important to align these costs with your overall marketing strategy and objectives. Here’s a breakdown of what to consider for PPC Google and social media campaigns:

PPC Google Campaigns:

The average cost-per-click for Google Ads in Australia is around $3.20 AUD, but this can vary significantly depending on the industry.

Daily ad spend for a campaign can range from $50 to $5,000 AUD, offering flexibility based on your budget and desired reach.

For management of Google Ad campaigns, expect to pay between $1,000-$3,000 per month, depending on the level of expertise and support you require.

Social Media Campaigns:

Social media marketing costs vary by platform and agency type. It’s important to estimate the cost in line with what your business can afford.

For an in-house social media marketing team, the yearly cost ranges between $65,000 – $120,000 AUD. This includes finding, training, and retaining talent, as well as setting KPIs and goals.

Working with a full-service social media marketing agency can cost between $2,000 – $22,000 AUD monthly. However, these costs can vary greatly depending on a company’s needs and industry. These agencies provide comprehensive services, including managing your social media presence across various platforms, creating and maintaining websites, creating and managing paid ads and more.

Final Thoughts

Crafting an effective marketing budget for 2024 is a balance of financial acumen, industry awareness, and understanding your target audience. Embracing the dynamic nature of marketing and staying open to adaptation is key to thriving in the competitive digital landscape. Remember, these budget ranges are just starting points. Your unique business needs and goals will ultimately determine the ideal budget for your campaigns.

Looking for help to enhance your marketing budget for 2024? Whether you’re struggling with budget revisions or seeking the expertise of a savvy marketing agency, we’re here to make your journey easier. Connect with us today, and let us help you make the best out of your marketing strategy.