There’s no right or wrong answer to the question, “What is a reasonable budget for your first inbound marketing strategy?”
Simply put, a reasonable budget is one that's going to cover the unique marketing needs of your organization.
The right budget for you is going to be what’s feasible within the size of your company and what marketing needs have to be met in the pursuit of achieving your growth goals. But how do you go about determining your marketing budget in the first place?
If you’re going to work with a marketing agency to develop your inbound strategy, then don’t worry – agencies don’t expect you to have some predetermined set number in your head. Many agencies will work with you to determine what is the best fit for your needs.
That being said, you don’t need an inbound marketing agency, though we strongly recommend it.
If you’re thinking of going it alone and developing an internal inbound strategy team, you should still work out a set budget to closely track your ROI.
On average, it’s estimated that new companies (between one to five years old) spend approximately 12 to 20 percent of their gross revenue on marketing, while older, more established companies (greater than five years old) spend between six and 12 percent.
Keep in mind that these are relative figures, so it’s reasonable to expect that your marketing budget could fall out of these percentages. Now, let's get down to business and go through the steps of establishing your very first inbound marketing budget.
Start With Goals
First and foremost, you have to figure out what you hope to gain from investing in your company’s marketing strategy. What are your goals?
You need to know exactly what you want to accomplish, because it will help you identify which strategies and channels you want to invest in. This is the first step in establishing your budget and building your strategy.
Do you want to generate more leads? Do you want to improve customer service? Do you want to boost social media engagement? Increase brand awareness?
Answering these questions and identifying the results you want to see will help you set goals and determine where you need to invest your budget.
If you need a little help establishing specific goals for your company’s marketing objectives, consider starting with SMART goals.
SMART stands for specific, measurable, attainable, relevant, and timely. The methodology is focused around setting small, trackable stepping stones to form a pathway to accomplishing a much greater achievement.
Audit Your Current Resources and Collateral
It’s possible that you’re already taking part in inbound marketing practices, whether you know it or not. Auditing your current inbound resources and collateral will help you determine what strategies you already have in place to work with.
For example, do you already post content to a company blog? Are you present on social media platforms? Have you created target personas? Do you have a well designed website?
Before you move forward with developing a stronger inbound strategy, take stock of what you already have in place. This will establish a starting point from which you can launch and improve.
Close the Gap to Achieve Your Desired State
Once you’ve established your SMART goals and audited your existing inbound resources and materials, you can identify the holes in your strategy and invest in channels to close the gap.
For example, does your website need to be redesigned to be more user friendly and visually appealing? Do you need to hire a content creator to generate consistent content for your blog and other outlet sources?
If you’re going it alone, could you benefit from using marketing automation software to manage and track your efforts? Or perhaps you need to hire an inbound marketing agency to help you build a robust strategy?
To build your marketing budget, keep track of all those aspects that you’ll need to invest in to form a wholesome strategy.
A Sample Marketing Budget
If you're still struggling to wrap your head around this, don't worry. To give you a clearer picture of how you might break down a marketing budget, we've got a Bluleadz sample budget prepared to help you understand.
Here at Bluleadz, we operate on a "value point" system. Every service that we provide to our clients comes with an associated "value point." These are calculated by understanding the impact of the initiative on the company.
The bigger the impact, the higher the point value. For example, let's say you need to create buyer personas. This will shape and fuel our content strategy to ensure we are targeting the right audience in every one of our initiatives.
This has a higher value to company XYZ than an individual blog post because it delivers a lot more value than one post. The process of conducting market research, writing out pain points and goals, and fully developing buyer personas results in a high value resource that will drive multiple initiatives (blogging, digital advertising, etc.) in this hypothetical marketing strategy, hence the higher amount of required points.
For any plan over 100 points/month, Bluleadz charges $100/point. With that being said, multiply the monthly points by this price, and you'll have a good idea of what your budget is looking at.
For this sample, the monthly points value was determined to be 120 points – that brings the monthly marketing budget to $12,000, and the quarterly budget to $36,000, and the annual inbound marketing budget to $144,000.
While that might seem like a hefty number, remember that budgets are also dependent upon the size and age of the company – smaller companies are likely to have a much smaller budget.
Company XYZ's marketing needs may change as certain projects (like the website redesign) are completed. With that in mind, the marketing budget will likely change over time as well.
Crunch Your Numbers and Get Started
Now that you've got an idea of how to outline and establish a budget for your first inbound marketing strategy, take the first step by considering where you can improve, and what you're already doing well in your marketing efforts.
Determining a set budget – and staying within that budget – is an essential part of tracking and maintaining your company's finances.