Every year, you set out with a new budget that will shape your marketing strategies and tactics for the coming months. In an effort to make every dollar count and generate maximum return on your investment, the question is how can you maximize the effectiveness of your marketing budget?
Organize Into Buckets
Optimizing your spending to generate the best results possible starts when you set up your budget before the start of the year. Organizing your budget into the proper buckets or categories enables you to track your spending in those areas more effectively.
To optimize the effectiveness of your budget, it’s a good idea to get as specific with your buckets as possible. Organizing by channel is a great way to do so.
The more you break out your categories, the better you can eventually measure the success of your investment. For example, a paid advertising budget isn’t as easy to track as a budget for each of the paid channels you may be on such as Google, Bing, LinkedIn and Facebook.
When it comes to attribution, there isn’t a one-size-fits-all approach. You have to use multiple models to get a full picture of how things are performing. Keep in mind where a strategy or tactic will impact revenue to ensure you use the right model.
For example, a first-touch report will enable you to understand which aspects of your budget are attracting visitors — like a blog — while a multi-touch report will give a clearer picture of the categories that get your visitors to become leads.
Also, remember that not everything you spend money on is going to have a direct impact on revenue. The money you spend on branding isn’t going to be featured in an attribution report, but it raises the level of all of your content, so consider the impact it has on other areas of your budget.
With all of that in mind, maximizing the effectiveness of your budget then becomes a reporting exercise. Being able to track the use of your budget by categories and those categories’ impact on revenue will enable you to easily compare the results and allocate budget effectively.
To accurately compare the results of your budget categories to one another, compare the percentage of return on investment versus the actual dollar amount. When you start to notice that you’re investing a lot of money into particular areas, but your return isn’t nearly as strong, it may be time to start allocating money into categories that are generating a higher ROI at a significantly lower cost.
For example, let’s assume you were specific in your categories for paid advertising. You have the same amount of budget for paid advertising on Facebook and LinkedIn, but LinkedIn is generating significantly more results. At that point, you could potentially adjust your budget for Facebook by moving money to LinkedIn to maximize your budget’s effectiveness.
Much like reporting, the invest, evaluate and maintain framework can easily be applied here. You don’t always have to pull or reallocate budget, but to maximize its effectiveness, you should consistently evaluate the tactics and strategies you’re using.
Maintain the ones that are working well, invest in the ones that could do better and evaluate those that aren’t working at all. Evaluating tactics that aren’t working may ultimately result in changing your budget, but changing your methods may help improve the effectiveness of your spending as well.
Consider Human Capital
It’s important to remember that your budget isn’t just the dollars you spend on assets, events and advertising, but also the people that are doing the work. How you decide to dedicate human capital toward different areas of your marketing will play a large role in maximizing your marketing budget.
If your team is investing a lot of time and effort into categories that aren’t delivering a high return on investment, that’s a drain on your budget. You may not be spending a lot of money on display advertising, but the hours a team member dedicates to designing those ads should be factored into your return on investment.
As a manager, you either have to evaluate the tactics they’re implementing and change course or evaluate which categories are managed by which team member.
Much like your marketing strategy itself, your budget is a living document. If you spend exactly what you expect to spend in every category, it’s unlikely that your budget performed to its full potential. To maximize the effectiveness of your marketing budget, you need to consistently know where your money is going and the returns it’s generating for you.
If evaluating and changing tactics doesn’t improve underperforming areas of your spending, it’s time to consider reallocating money to higher-performing areas or saving it for future use.