By De-de Mulligan

Base Your Budget Loosely on ROI

In my experience, most CEOs are leery of marketing. They see it as a necessary evil – nothing more, nothing less. Many don’t budget more than 5% of their revenue for it and only do so to thwart off the competition.

In my opinion, marketing should have a seat at the CEOs table -- while it can seem like a soft item, (versus production costs, salaries, and the like), without marketing, there’s no awareness of your company, no branding compliance, and ultimately no sales.

Today’s blog post will focus on budget, pitch, and ROI for your digital efforts.

What is a Reasonable Budget?

The U.S. Small Business Administration, suggests your organization should spend 7-8% of your gross revenue on marketing. However, according to Gartner, many companies spend as much as 11% of their income on digital marketing.

If you derive more than 50% of your sales from e-commerce, your digital budget should be even higher.

There is another way to approach this process called zero-based budgeting. It’s a method in which all expenses must be justified for each new year. It doesn’t look at past trends – it embraces future needs and costs.

Whatever your percentage or approach, remember to include the following components:
 

• Website enhancements
• Writing and editing of blog posts
• Email campaigns
• Social Media
• SEO and
• PPC

How to Approach Senior Management

1. Fully understand your budget.
   Do a breakdown of last years and the first half of this year’s budget to determine the spending patterns. Did your actual numbers match your budgetary ones? If not, why not? Did you over or underspend in certain areas? Which ones? Why?
    
2. Measure the following:

   1. Impressions: is the number of times your content is displayed. 

   2. Cost per Impression (CPI) is calculated by taking your advertising cost divided by the number of impressions, which equals Cost Per Impression (CPI).

3. Test, test, and test some more.
   Try different headlines, postings, and advertising spend throughout the next six months. Learn from the winners and eliminate the losers. Present to management your methodical approach.

How About ROI?

Would it surprise you to learn that roughly 60% of Fortune 1000 CMOs cannot quantify the impact of their marketing efforts?

Establishing measurements during each digital campaign is the first step to success. Is the campaign successful if you
 

1. Receive one lead per day?
2. Have a 95% customer retention rate?
3. Acquire five demo clients per month?
    

ROI cannot always be linked to immediate dollars and cents. Sometimes measurements need to occur over several weeks or months.

Continuously work on drilling down on your target audience. If you are everything to everyone, you’re nothing to no one. Stay firm on your buyer personas and create PPC campaigns that will reach them. For example, how much does it really cost you if you acquire a client that doesn’t line up with your niche and brand messaging? The wrong clients take more time and customization. They end up on the wrong side of ROI.
 

Scale programs that work and abandon ones that don’t deliver. Marketers can get caught in the trap of staying too long within channels that don’t work. Measure and reallocate often.

Contact Mulligan Management Group Today!

Need help convincing your senior management about your digital marketing plans?  Give me a call at 330-472-7673 for a free 30-minute consultation!