Creating & Managing a Marketing Budget

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  • 0:03 Your Marketing Piggy Bank
  • 0:55 Organizing Financial…
  • 2:06 Spending Marketing Dollars
  • 2:48 Monitoring the Budget
  • 4:03 Assessing Data
  • 4:41 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

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

A marketing budget can help you create and execute a marketing plan that meets your goals and objectives. In this lesson, you'll learn more about creating and managing a marketing budget.

Your Marketing Piggy Bank

Remember your childhood piggy bank? You'd drop your quarters, dimes, and nickels inside the portly pig, hoping to amass enough money to spend on something you really wanted.

Creating a marketing budget is sort of like putting all your pennies in a piggy bank and then allocating them to things you need or want to do with your marketing efforts, but on a grown-up scale and (hopefully) with a few more dollars than you came up with in childhood.

Businessdictionary.com defines a marketing budget as an ''estimated projection of costs required to promote a business' products or services.'' Your marketing budget will include items ranging from advertising and promotional materials to digital tactics and website costs.

A marketing budget is a critical tool for choosing strategies and tactics to advance your business objectives, while creating a return on the money you've invested in those strategies and tactics. Let's take a look at a few of the most important components of creating and managing a marketing budget.

Organizing Financial Information

Before you can set a budget, you need to know how much money you have to work with. This requires a solid understanding of your business' revenue, or income. Most marketing budgets work with a figure called reliable revenue, or the minimum amount of money you can make in a given period. Sure, income can fluctuate. For example, you may see that you make between $50,000 and $75,000 per month. In that scenario, the reliable revenue figure you'd use is $50,000.

After you've determined the reliable revenue your company brings in, your next step is to determine expenses. This is similar to developing a household budget where your income is the reliable revenue and your expenses are things like rent or mortgage, utilities, food, and transportation costs. Expenses for a business can range from rent and utilities to staff salaries and office supplies.

Once you figured out your reliable revenue and subtracted your expenses, you are left with income you can allocate toward different categories. Not all of that leftover income will go to marketing, however, as there are other things to think about such as adding more staff or opening a second location. Follow your business objectives here to divide the pie accordingly.

Spending Marketing Dollars

Once a portion of the overall company budget has been distributed to marketing, the marketing department must decide what strategies and tactics need to be implemented and designate money into each marketing category accordingly. This might include a percentage to building television ads, purchasing billboard space, paying for sponsored ads online or on social media, and more. What are your marketing objectives and what types of advertising and promotions will help you get there? What are the best tools to reach your target audience?

Also, take into account that the size of your marketing budget may determine what you're able to afford, so strategies and tactics may have to be chosen accordingly. A paid ad on social media will be a far cheaper marketing tactic than running a month-long television advertising campaign.

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