Even though many times there is more creativity in budgets than ads, the easiest way to get a marketer to groan is to tell them to do a marketing budget.
The Marketing Budget Process
The first step in establishing a marketing budget is to remember that marketing goals are simply a means to achieving business goals and should be viewed as such. As with most things in life, almost anything is possible with enough time and money – it is just not a reasonable and sustainable approach.
For most companies, marketing is a method to get sales leads, so then the first question to be answered is:
What is the value of a qualified sales lead to your business?
If you already know – skip to the next paragraph. If not, start by determining the average value of a sale, then subtract the fully-burdened (all of your expenses) cost of the sale, to get your profit per sale. Now you know the estimated maximum to pay for a lead – you need to determine an amount less than this or you lose money. All that said, this is a generalization – in the case of certain business conditions, like a start-up, many companies are on a (hopefully brief) the more you sell, the more you lose plan. They just make it up in volume. 
Next, determine how many leads you can reasonably handle and effectively close and your average close rate. Now, just do the math to determine how many leads you need to fill the pipeline (if you can handle 5 sales per month and have 10% close rate, you need 50 leads per month). Last, take the amount you have determined that is reasonable to pay per lead and multiply it by the number of leads you need to meet your sales goals.
That is your estimated optimum monthly marketing budget – if you pay more, you will be cutting into profits, if you don’t invest that amount in marketing, you will most likely be unhappy with the results.
Or - you can do what most companies do – from the very large to the small - and pull a number out of the air. Many times, this amount, is the amount “you can afford.” This is reasonable – it is hard, especially in this time of restricted credit, to have money to spend that you don’t have. However, at the same time, expectations need to be reset on the expected outcome.
Next up – putting that marketing budget to work with a tactical marketing plan.
Dallas Marketing Services is a marketing blog
published by Seven Aspens Consulting.
Thank you for sharing such an informative article. It’s nice to have great ideas just like what I’ve read in http://www.integritycareertransitions.com/blog/
Keep it up!
The title leaves no place to doubts. Anything is Possible indeed with Enough Time and Money.
Yet let recall the retired and the disabled – the sick… I too belong to that group who have lots of time, but not a penny to share their memoirs. We are the needless in the world of marketing?
I have no credit card … e-business is closed to me – the disabled became the dependents against their own will.
Does it mean that we are the losers? Am I the burden indeed to my children?
I enjoyed at your success while reading the post. My best wishes to you. Yet there were nothing I could put into my day to day life.
My life contradicts to the logical reasoning in essence. I am happy to share my artworks for a free and feel myself afflicted by the headaches at any attempts to see the market in human relationships.
Maybe, all the above are just the needless notes and will be not approved by you. I wanted not to oppose you but to put down my personal story – the strong conviction in the priority of the morality in all we are doing.
Thank you both for your comments.
Tomas – I enjoy visiting your blog and viewing your artwork very much. While our blog may not provide value to everyone in their daily lives, we strive to provide businesses with free marketing information to help them with their efforts. Thank you again for sharing your comments and your insights.
Oh, if only we all only had that time and money. Wouldn’t life be so much easier, to be able to afford the pull at number out of the air method? Good blog.
Thanks Bulldog! Ah yes, my favorite method of estimating.
Yes, anything is possible with time. But, I have found a great way to stretch the money part of growing a business! I partnered up with radio stations and partnered with an online marketer and continue to partner up. This is so simple and lucrative, no one has anything to lose. These people already have a spot to put marketing about my website, so it’s not much extra work to get the word out there. The link is trackable back to the marketer, and once the sale comes in, they see a check for $500! This is how one of my business partners totally grew his business because he had time and no money.
If anyone reads this and is interested in this concept, I will send partnership info back. Also have info about Joint Venturing on my blog http://growabundantlife.blogspot.com Thanks! I believe passion is the true driving force, especially in the face of little money!!