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Dollars & Sense
How to Decide the Right Amount to Spend on Marketing
It’s important that you establish a detailed marketing and communications budget prior to the start of each fiscal year, and track costs (by strategy and program or project) and results AS YOU GO so that you can analyze cost vs. benefit. A comprehensive, realistic budget is a critical component of your annual marketing and communications plan and serves as a map to ensure you reach your goals.
Try to integrate the annual marketing and communications plan, with a dollar cost allotted to each strategy (direct mail, email, paid advertising, media relations, etc.) and program or project, each of which should be broken out by its various components (consulting, evaluation, printing, postage, etc.).
The Percentage Approach:
This approach is favored by those who believe that marketing and communications expenditures should directly reflect a company’s evolution and the size of its overall budget. One advantage of developing a budget based on your organizational finances is that it's organic. So spending grows as does your organization.
The average allocation is 9-12% of your annual organizational budget (start with 10%). Of course you should always make exceptions for special needs such as the launch of a new program, introducing new leadership, or tackling an urgent advocacy campaign.
The Dollar Approach:
Others consider a flat dollar approach to be more relevant (and safer) than the percentage approach since your total budget has to cover utilities, rent, taxes, health insurance, etc. Defining the dollar figure is challenging the first time around but becomes much easier once you have records of several years' marketing expenditures to work from.
Start out with a quick-and-dirty calculation based on last year's costs and revise it to reflect special campaigns, inflation, etc. Or, if this is your first year out, estimate the costs of what you think you'll be doing based on what you know today. Contact colleagues in the field and prospective vendors to get your projections as accurate as possible. Either way, you'll end up with a baseline budget.
Whichever approach you take, you'll find that a formal budget is a great aid in decision-making. But keep in mind that your budget will have to be adjusted each year to reflect increasing costs and changes in your organization, and new objectives.
Want to maximize your marketing budget? Call or email O’Neil: 866–659–0824 or sales@oneildata.com.
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