I remember the first time I put together a marketing budget. I did not feel ready for the task. I was overwhelmed at the thought of dictating how much my company at the time was going to spend. What if I forgot something? What if it cost more than I anticipated? What if I was wrong?
What I failed to realize that first time is a marketing budget, like a marketing plan, needs to be fluid. It's meant to be a guide, not a mandate. Sure, you want to stick to a budget. (After all, that is the point of having a budget.) But, you also need to be able to adapt your agency marketing budget as the year goes on.
Setting a Budget
To stick to a budget, you first need to create one. (If you already have a budget, skip down.) As you work on your agency marketing budget, remember that marketing is an investment in future growth. You may see some campaigns with quick results while other projects take more time.
Create a Marketing Plan
Before you can create a budget, you first need to know what's in your agency marketing plan. Don't be intimidated. To create a marketing plan, you need to answer three questions: 1. Where is your agency now? 2. Where do you want to be a year from now? 3. How do you plan to get there? (Read this post for more about how to create an insurance agency marketing plan.)
Put Numbers to It
Now that you know what you want to accomplish in the next 12 months, you can assign costs to each project or campaign. Put a number to every marketing tactic you would like to do. Use your past agency marketing efforts to estimate what you will spend on each line item.
After you have numbers for everything, prioritize your wish list. What items must you do? What projects or campaigns are necessary to maintaining your current operations and revenue? Then work your way down your list of projects.
It's not easy to assign specific amounts for each project. But, if you have exact numbers, you are more likely to stay within your budget. Plus, by forecasting each project’s budget, you will notice costs you wouldn't otherwise see. Uncovering these unforeseen costs will help you stay on track because you can now plan for them.
Your budget will help you prioritize your marketing projects and campaigns. This makes it easier to identify which projects to delay if it looks like you're going over your budget.
After you have completed it, decide if you're comfortable with the total. If the total is a little too high for you, you will need to look at what is on your list and make some choices. Identify the projects you are willing to postpone and cut them from your plan and budget.
Sticking to a Budget
While I did say it needs to be fluid, it is also important to stick to your budget. Overspending by too much can have a negative impact on your agency. If you find it a challenge to stay within your agency marketing budget, here are some tips.
- Break It Into Smaller Budgets
Sure you can say you're going to spend 5% of revenue on marketing. But, that doesn't give you any idea exactly how you're spending that money.
Split your budget into smaller budgets. How much are you going to spend on your website? How much on local marketing, e.g., sponsorships, local events, etc.? How much on online advertising? How much on radio, TV or print advertising? How much on social media campaigns or contests?
These smaller budgets make it easier to track your marketing spend. They also give you an easy way to remove a project that isn't working for your agency.
For example, separate out online advertising from social media. Then, you'll have a clearer idea of your advertising spending. You'll be able to tell if it is getting out of control because it won't be hidden within the larger marketing budget.
- Monitor Your Campaigns
Just because you said you were going to spend $500 in online advertising a month, doesn't mean you did. Costs add up quick. It is easy, especially with online advertising, for you to spend more time and money than you planned.
But, if you monitor your campaigns, you have a better chance of stopping before you overspend. Make a point to check in on your projects regularly to track every cost that pops up. I like to include a section of my budget for actual costs that I update at least once a month.
- Are You Spending What You Allotted?
If you're spending more than you planned, why? Is it a result of project creep?
For example, too many design tweaks and versions to your insurance agency website. Or, was a campaign more successful than you anticipated so you decided to spend more money to extend the campaign?
In the latter scenario, I would be okay with spending more money as long as my results scaled with the cost. In the former scenario, I would look at what happened. Then I would decide if I need to cut something from my budget to make up for the overspending.
- Remove Campaigns That Aren't Effective
Sometimes a marketing campaign works, and sometimes it doesn't. When you track your marketing campaigns, you can adjust your plan and budget accordingly.
If you don't monitor your marketing activities, you could be overspending. Or worse, you could be wasting money. But, track your marketing, and you'll notice when you don't get the results you want. Then, you can stop that campaign and allocate that budget elsewhere.
For example, say you decided to spend $1,000 on pay-per-click advertising each month. After three months, you decide it's not generating enough leads to justify the cost. Surprise! You now have $9,000 to spend elsewhere in your marketing budget.
- Include a Cushion
I like to include a cushion in my marketing budget. This cushion gives me some room in case I go over budget in any area. It also gives me freedom to try out new ideas or campaigns as they occur to me throughout the year.
The cushion doesn't need to be large. Just big enough to give you something to play with should you want to try out some new ideas mid-year.
No agency marketing budget is perfect. You can't control every factor. Sometimes you will spend more on a project or campaign than you anticipated. You can't always control it. These tips can help you stay on course so you don't spend more than you're comfortable with.