Budget Allocation Decisions in Marketing Communications
A marketing communication budget provides a formal process for planning, tracking and measuring the impact of your expenditures on marketing communications activities such as advertising, direct marketing, online or events. The budget sets out the funding required to meet your communications objectives and provides a method of managing the expenditure over a budget year.
Objectives of Marketing Communication Budget
The marketing communication budget is part of the wider marketing planning process. Your marketing strategy establishes how you will achieve your marketing objectives. Marketing communications strategy describes the techniques you will use to deliver key messages to the target audience. The objective of the marketing communication budget is to achieve the communication goals as cost effectively as possible and demonstrate a successful return on investment. Some organizations separate above-the-line expenditures on advertising from below-the-line activities such as product information, social media or direct marketing.
Scope of Marketing Communication Budget
The budget covers the direct and indirect costs of communications programs. A budget for product information, for example, would include costs of copy writing, design, printing and distribution. A budget for an event such as an exhibition would cover rent of exhibition space, booth design and production, client entertainment costs, event publicity and miscellaneous staff costs. Careful planning ensures that there are no surprises when the final bill arrives.
How to Prepare a Marketing Communication Budget?
Crafting a marketing communication budget serves as your advertising road map for the course of a year. Having a formal budget laid out lets you carefully evaluate where you are spending your advertising dollars and gives you complete control over your marketing initiatives. By having documentation that clearly outlines what you are spending, you can more easily calculate your return on investment later and identify which marketing campaigns were profitable and which were not.
- Calculate how much your overall marketing budget will total so you can best decide how to divide it among various marketing communication actions. This number can be calculated based on a percentage of the previous year’s sales or can be a set increase over the marketing budget of the previous year, depending on the financial parameters of your company.
- Decide what types of advertising you will do throughout the year so you can begin to calculate how you can divide the budget. Typical segments of a marketing communication budget include print, web, TV, radio and outdoor advertising, though this could vary depending on your advertising needs.
- Review the previous year’s advertising budget and return on investment reports, if applicable, to gauge the costs for advertising campaigns, as well as the most lucrative and effective advertising investments you made.
- Assign a budget to each section of your advertising campaign and break it down by month or week. For example, TV advertising campaigns often work in quarterly or yearly contracts. Divide this sum by the months affected to get a monthly breakdown. A print campaign might change from week to week. Calculate what your weekly plans amount to over a month.
- Set aside some of the marketing budget for new advertising ventures. A last-minute deal might be offered by an advertising sales representative, or you might come across an advertising opportunity you weren’t aware of when calculating your yearly budget. Having a fund for new advertising opportunities can give you the freedom to take advantage of these marketing campaigns without going over budget.
- Include a segment of the advertising budget for marketing materials, such as letterhead, flier printing, T-shirts or giveaway items. Promotional items are an effective branding tool so you need to account for this area of advertising within your budget.