Using the cost of marketing budget setting method (in marketing speak this is called the “Objective and Task Method“) means that you set your budget in accordance with the marketing tasks that are needed to be implemented to achieve your marketing goals.
This method is used by most large businesses to set their budgets. They are set annually as soon as the year’s business and marketing objectives have been set, and the marketing strategy and plan for the year has been written.
Once you know what your marketing strategy and plan is going to be, you can set about putting costs against each item on it. The addition of all the items becomes your marketing budget.
The positive is that you know precisely how much you need to set for your marketing budget.
The downside to this method is that firstly it is a relatively advanced technique. Unless you know how much each marketing element is going to cost (some methods you can get for free, some will be worth paying for), then it can be difficult to set. Not impossible though if you are prepared to do some research.
The other downside for a small business (and many large businesses I can assure you!) is that when you’ve added up everything you would like to do…the cost can be astronomical! At that point you can decide which parts of your marketing plan you are going to cut, or find less costly or free ways of doing them.
This type of budget setting will be better suited to the larger small businesses – those who are already have a turnover of about Â£4-5,000 per month+ (or your currency’s equivalent).
When your business is at that stage of turnover, then I would recommend utilising the services of an experienced marketing consultant, if you don’t have that skill in-house) to help you with those costings. That marketing consultant will also be able to advise you on the kind of returns you will see for your marketing spend (ROI).
(And, no, that wasn’t an advert for my services, it was a genuine recommendation!).
Next week I’ll be looking at the last method for setting budgets – and tell you why I don’t think it’s relevant for a lot of small businesses!
Have a great week,
PS Last week’s blog post on the most affordable way for small businesses to set budgets can be found here.