With Q1 here, it’s officially budgeting season. Throughout the final months of 2021 and heading into 2022, business owners should be setting and establishing departmental budgets and goals to guide their business in the New Year. The past few years have been difficult to set relative budgets due to the uncertainty brought upon by the pandemic, amongst other issues. 2022 will be no different. However, with some careful planning and foresight now, your marketing campaigns and budget will be effectively set for the new year.
How Much to Set Aside for Marketing in 2022
Study Industry Trends
As mentioned, marketing budgets have fluctuated greatly over the past few years. The unexpected arrival of the pandemic disrupted almost every business sector during this time.
At the onset of the pandemic, budgets around the country were slashed. For many business owners, marketing budgets were the first to be cut. At the end of 2021, marketing budgets were the lowest they have been in over ten years. Before 2020, 10% of a company’s yearly budget was allocated towards marketing efforts, but now, the number is barely hovering around 5%.
While marketing budgets nationwide are plummeting, this doesn’t necessarily mean yours will follow suit. At the end of the day, everything with your business will be situational and your organization may actually be primed to increase spending.
Taking a deeper look at specific industry trends will help uncover exactly where your post-pandemic marketing budget should lay. If your business operated in one of the following industries, then budget cuts likely aren’t needed for you:
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- Home Services (plumbers, roofers, designers)
- Niche Foodservice (ghost kitchens, food trucks, quick service restaurants)
- Workplace Tech (remote tool providers, safety equipment, software providers)
- Online Retailers (eCommerce stores)
- Specific Fitness Centers (cost-effective gyms, classes, alternative fitness centers)
While most sectors were hit hard and are continuing to feel the pandemic’s everlasting effects, these industries are mostly on the rebound. For some of the industries (workplace tech, and eCommerce) the remote nature of the world helped propel their businesses into the forefront of adjusting to the new world. Other industries are benefiting from the general publics’ yearning for a return to normalcy.
Whatever your specific situation may be, looking into both national and industry-specific trends will help you decide how to shape your marketing budget for the next few years.
While marketing budgets nationwide are plummeting, this doesn’t necessarily mean yours will follow suit. Here's how to determine your marketing budget for the year. Click To TweetReflect on 2021
After studying industry trends, it would be a good idea to take a deeper look into how your business performed in 2021 against expectations. Specifically, it would be wise to take a look at how your marketing efforts performed and if you hit all your key performance indicators (KPIs).
When reflecting on your past performance be sure to keep in mind that certain goals might have been working towards a bigger picture. If you didn’t check every box off this year, it doesn’t necessarily mean you need to scale back your future efforts. Your team could be on-track with projections, but you might not know if you don’t take the time to dig deeper past simple numbers. So when looking back to how your performance stacked up in 2021, split your results into two buckets.
First, it’s important to look over metric-specific goals to see how impactful your marketing actions were from a data standpoint. These goals typically are something along the lines of “gain X amount of followers on Facebook before 2022” or “increase online conversion rates by X% by Q3”. Whatever your goals may have been, it’s important to see how close you were to reaching them, or if you surpassed them, by how much and why. Looking into these numbers will help you identify if you need to amplify your efforts in a certain area, or scale something back.
Besides metric-specific observations, it’s important to see how your marketing efforts performed in a qualitative way. An ad or campaign that may have performed well from a metric standpoint may not actually align with your brand message or future plans. Taking the time to reflect on your results through both a qualitative and quantitative lens will help you establish your plans and budget more effectively moving forward.
Set Goals
Now that you’ve reflected both on the state of the industry you serve as well as your own efforts from 2021, it’s time to set your goals for 2022. When establishing your goals for this year, keep your 2021 plans in mind. If you have goals in progress that are bigger picture marketing goals, then it would be wise to keep them going for 2022.
When setting goals, be sure to use some sort of goal-setting method to ensure those you set are realistic and attainable for your team. For a base, let’s use the SMART goal-setting process. With this process, your goals are broken down into five categories;
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- Specific (goals need to be to the point)
- Measurable (a goal needs to be able to be measured against something in some way)
- Achievable (realistic goals need to be set in order to be achieved)
- Relevant (a goal need to be in-line with the rest of your business’s greater goals)
- Time-Bound (goals should have a strict beginning and end date)
The SMART method is great for establishing baseline goals, but far too often, we let these goals constrain us. Sometimes, setting a goal establishes a ceiling that we feel we can’t go beyond. This year, use this method to shape your goals, but go one step further by going beyond SMART to exceed your goals. Keeping yourself to overly specific goals could be putting a cap on your true potential.
The SMART method is great for establishing baseline goals, but far too often, we let these goals constrain us. This year, use this method to shape your goals, but go one step further by going beyond SMART to EXCEED your goals. Click To TweetIdentify What’s Needed to Hit Goals
After you’ve set your goals for the new year, you’ll have to identify what steps you need to take on your end to set your team up for success. New goals will likely require new gear, positions, or redistribution of work in the department. Obviously, what you need will be stringent upon your goals, but here are some of the common things to consider adding to the marketing department to ensure success.
You have identified your goals for the year. Now it's time to define the steps you need to take and the investments you need to make to achieve these goals. Click To Tweet1. People
Adding a new employee to the department is a costly venture to go down, but the benefits gained from an extra set of hands could be immeasurable. If you have lofty marketing goals this year, adding in another professional will help keep the work balanced across the department and prevent burnout. Adding new talent is also a great option for teams who may be interested in exploring an area of marketing in which they aren’t familiar with yet. New forms of marketing, including influencer marketing and experiential marketing, are continuing to make waves in the industry, and adding someone who specializes in these fields could provide great benefits to your team.
2. Tech & Tools
Besides adding new talent to the team, some other things to consider are, increasing your budget overall to purchase more ads and dedicating more money to targeted marketing. Right now, more people are online than ever before. This means getting people’s attention online is getting harder and harder. Increasing your spending on targeted social media and online ads could bring more eyeballs to your brand, thus increasing sales and conversion numbers.
Lastly, investing in new gear to help create and maintain your marketing content will help you exceed your goals this year. If you haven’t already, make sure to identify specific gear, or software that would be helpful to you and the team. While this gear could be pricey, the benefits should outweigh the costs if your team budgets accordingly, and will pay dividends in the long run.
Set Your Budget and Look for Funding
At this point, you should have a complete overview of how your marketing team performed last year, and what is needed to hit your goals this year. Now you’re ready to meet with your accounting department to establish a set budget to achieve your goals.
Again, for reference, the average marketing budget is hovering around 5% of a company’s whole budget. If you’re in a situation where you can increase this number, you should. Since other companies are slashing marketing budgets, there’s an opportunity to capitalize on their lack of spending and win over consumers who haven’t seen your brand before in such a crowded market.
There is more than one way to fund your goals this year. Which method will you use? Click To TweetWhatever you decide to do, be sure to keep your budget in line with your business goals. Only set a lofty budget if you think your business can handle it. An over-inflated budget can cause just as many issues as one that is too small.
After setting your budget for the department you may need to tap into some outside funding to get the resources needed to carry out your marketing plans for the year. If that is the case, here are some of the top options to explore for extra capital:
1. Crowdfunding
While typically reserved for product launches and new business ideas, crowdfunding can be a viable option to explore for extra funds. Crowdfunding is exactly what it sounds like. You pitch an idea to an open market (usually on Kickstarter or Indiegogo) with the intention of raising money.
Crowdfunding is a finicky path to go down, so only use this option if you don’t absolutely need the extra money. If you decide to try Crowdfunding, be sure to check out this handy guide to maximize your efforts.
2. Loan Options
If you have a set amount of money that you actually need to tap into, then something more secure like a loan is the route you’ll want to take. With a more established business, a traditional business loan through your bank of choice is the best option for you.
If you don’t have an established history, or if you only need a small amount of money to make up the difference, then tapping into something like a personal loan for your marketing department could be the route to take. Both options have pros and cons, so make sure you discuss any loan you’re thinking of applying for with your accounting team or financial advisor before doing so.
3. Bootstrapping
Last, but certainly not least, is the tried and true method of bootstrapping. Bootstrapping is when “you pull yourself up by your bootstraps.” In other words, it’s when you, as the business owner, make the effort to finance your business on your own. Bootstrapping is a viable option for businesses that don’t have a large marketing budget and have money elsewhere that can be moved around.
When bootstrapping, look both to your personal and professional life to see where funds can be made up. Check out some of the pros and cons of bootstrapping and how to go about it here.
Final Thoughts
Be sure to keep your budget in check, even when applying for additional funds. Taking out too much or too little for your marketing team could result in added risks in the future.
Now that we’re done, you should have everything you need to set a healthy budget that works towards all your department and organizational goals this year. If you need any help along the way, be sure to reach out! I’m here to help you with any marketing tasks big or small. Just know you are never in this alone.
Ciao,
Miss Kemya
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