Allocating an Integrated Marketing Communication Budget

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Marketers have a wealth of options in selecting platforms and tactics to distribute their message. In this lesson, you'll learn about various ways you can allocate an integrated marketing communications budget.

Selecting Pieces of a Pie

You've just sat down for lunch at your favorite corner diner. You place your order with the waitress and continue looking over the menu. The dessert options are mouthwatering: pecan, pumpkin, apple, and cherry pies! Which one (or two) will you choose? And, how much will it cost?

Examining the various pieces of an integrated marketing plan is a similar concept. There are myriad choices that would be a great addition to your overall objectives. But, how do you pick? And, how much will each cost?

There are many options to an integrated marketing communications budget.

What Is Integrated Marketing Communications?

The concept of an integrated marketing plan is a direct result of how varied the marketing landscape is today. It seems like every day a new option is added. An integrated marketing plan, simply, is the new way marketers must approach their communications and messaging to create a cohesive experience for consumers approaching their brand, business, or organization. Integrated marketing encompasses all types of marketing tactics including paid advertising, public relations, social media marketing, direct marketing, and sales promotions, employing each with a singular purpose that meets a company's goals and objectives. Some experts believe that integrated marketing is not just about the methods of communication used, but also how well you incorporate your audience into those methods and tactics.

A comprehensive integrated marketing plan can be costly, of course, and you may not be able to afford to use every marketing tactic that you would like. You need to make some important choices and that's where your media budget comes in.

How Is a Media Budget Determined?

Consider your household budget. You've likely designated spending categories for your rent or mortgage, car payment, utilities, and food, based on the amount of money you make at your job. A marketing budget is very similar. You pick the items you need most to fit your goals and objectives and then set a spending limit for each category, typically based on gross revenue, the amount of money made from the sale of a company's products or services.

With an integrated marketing budget, you're setting more than just an overall budget amount. You're funding a marketing plan of all the various tactics (paid advertising, public relations, social media marketing, direct marketing, and sales promotions) and setting a budgeted amount for each category. You may not always use every tactic, or you may be able to use some tactics without any expense. Regardless, each tactic you select should be taken into account and a budget number assigned to it.

There are two general approaches to determining a marketing budget: by percentage or by dollar amount.

The Percentage Model

Most marketers use the percentage model, where a budget is determined as a percentage of the organization's overall budget (which could include rent, utilities, taxes, and more). That number could be 10 percent, 20 percent, or more based on your business's revenue, and could grow annually as sales expand. The pitfall of a percentage-based approach is if sales are slow and you're just starting out, you won't be able to meet your marketing goals. The old saying 'you have to spend money to make money' could apply here.

The Set Dollar Model

The other approach relies on a set dollar amount. That's when you say you're going to spend $50,000 on marketing this year, regardless of any other total budget numbers. The dollar method can be a bit trickier because it sometimes requires you to estimate costs, if you don't have a marketing budget history to serve as a guideline.

How Do I Allocate an Integrated Marketing Communications Budget?

Whether you choose a percentage approach or a set dollar approach for your integrated marketing communications budget, breaking down each is fairly simple and straightforward. Let's look at two possible examples for the two fictitious companies, Big Bucks Inc. and Your Favorite Store Co.

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