By Peter Boyd, a Florida attorney who founded PaperStreet† He has helped more than 1,500 law firms with their websites, content and marketing.
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Strategic allocation of your marketing budget is essential when it comes to paid advertising campaigns. You want your ads to perform when your prospects or customers need your services most.
If you’re working on your campaigns with a professional marketing agency, your marketer should be able to help you develop a proper allocation plan and track the distribution of your money. If you’re taking charge yourself or just want to understand your options, here are five suggestions for distributing your money evenly in paid advertising campaigns.
Understand your marketing goals.
In addition to understanding your overall budget for your ad campaigns, you also need to understand your campaign goals and overarching marketing goals for your business. The popular SMART goal is a good one to keep in mind. Marketing goals should be:
† Specifically
† Measurable
† achievable
† Relevant
† Time-sensitive or time-bound
An example of a goal that aligns with the SMART guidelines is a goal that aims to increase revenue from new customers in a particular service area by 20% by the end of the quarter. Your goals can determine not only which marketing channels make the most sense for the situation, but also how you should allocate funds to support the goals.
Make a rough plan for a whole year.
Before focusing on details, it’s a good idea to at least have an idea of the overall advertising strategy. Think about how your potential customers make the journey from discovering your business to becoming a paying customer. Make sure your strategy reaches potential customers or customers at different stages of the journey.
Your marketing plan may include several tactics (so you’ll need a separate budget for each). At a minimum, consider how you will use the following:
† Pay-per-click ads
† Search engine optimization strategies
† Social media advertising and other paid marketing
† Email advertising
† Web design changes
† Conversion rate optimization
Who will do the work anyway? Do you have marketing staff with the knowledge and bandwidth to complete tasks? Are you looking for freelance talent? Are you hiring a marketing agency? How much time do you have to supervise?
If you like a hands-on approach to marketing, you may want to build your own team of freelancers. On the other hand, if you prefer to focus on other aspects of your business, it may make more sense to outsource the work and oversight to a marketing agency that focuses on maximizing return on investment for these factors.
When considering how much to invest in each strategy, a popular tactic is to spend 70% on strategies that have proven successful for you, 20% on new strategies aimed at growing your business and 10% on experimental or emerging strategies that help you stay ahead of your competition. †
Calculate expected costs and ROI.
For each marketing strategy in your overall annual plan, estimate the cost and return on investment. When factoring costs, remember to factor in all possible expenses, including PPC ads that don’t convert, software, and additional team members, whether they’re staff or freelancers.
Estimating ROI is much more difficult than calculating your estimated spend, but you can start with average conversion rates based on published research. Keep in mind that these amounts vary greatly by industry, so calculate accordingly.
Divide expenses among your strategies.
Using the information gathered previously, the next step is to allocate your budget to different marketing channels and over different time periods. Consider whether spending on a particular strategy should be timed monthly or quarterly. For example, if your campaign is promoting the launch of a product or service that may not be ready until the middle or end of a particular month, you may want to set a quarterly schedule for ads in that campaign.
Be aware of seasonal variations that affect your business. For example, if your business is primarily focused on other businesses, the later parts of November and December will not be a time of optimal growth, as businesses often go into a holding pattern during the holiday season. It may be best to load the ad spend earlier in those months.
Follow and refine.
The most important step, from the point of view of properly distributing your spending, is to monitor your campaigns and make adjustments based on the results. Track key performance indicators for each campaign and measure their success. Then use those findings to adjust the budget for the next campaign.
A campaign that performs well may make more money. But a campaign that performs poorly doesn’t necessarily deserve a cut. Instead, you’d better change your approach for that campaign. If strategy is an important part of your marketing goals, consider trying alternatives before pulling the plug on funding.
As you work throughout the year, your data can not only help you adjust your spending so that it’s distributed where it needs to be, but it can also help you develop your marketing budget for the following year.
It’s an art, not a science.
Your goals and circumstances determine the allocation of funding for paid marketing efforts. There is no “best” way to divide your money. You must determine the allocation that best fits your forecasts and be willing to adjust it as you analyze the results.
While you must prepare, you must also remain flexible and be willing to adapt when the preparations do not deliver the expected result. Consulting an experienced marketing agency for help can help provide perspective and shorten the learning curve.
