This blog is part of our spitfire series where we get straight to the point. No intros. No fluffy text. Just straight facts. Let's do this.
And if anyone says otherwise, they're trying to sell you something. Budgets are important because your Board and investors will look at your marketing spend through a magnifying glass. And the impact of your marketing dollars on your revenue is the first thing they'll ask - it's their job.
**Psst** if you want the calculator right away, scroll directly to Step 3 below.
At HireCMO, we think like VCs (literally) and we know that ensuring a solid return on investment (ROI) is critical. But creating a budget, starts with first understanding what your business offers, who its ideal audience is, what marketing channels your competitors are using, etc.
If you're the founder, please don't be offended by this. You'd be surprised by how many times the founder will have one "vision" and understanding of the product. But then right down the aisle, the SDRs, BDRs and marketing folks will have completely misaligned understandings of their product offering. They'll answer the "Describe our product in 1-line" question in 20 different ways sometimes. And it won't be a 1:1 match to how'd describe it. This happens especially to founders in the Series A stage.
A few points to explore here are obviously:
Some questions here you have to ask yourself is:
You may think that these questions are more product focussed, but the truth is if you don't fully appreciate and understand how users are interacting with your product and where you're getting the highest traction (e.g., American moms under 25 who click on your TikTok ads and love feature X), it'll be very difficult to create a sound marketing strategy. and, you'll just spend a lot of money on things that will yield little to no results.
So please do your homework.
I hate the word strategy personally. Because it can mean a lot of vague things or just nothing in particular. But if done right, it's exactly what you need to come up with a budgeting plan that doesn't lose money on the wrong marketing initiatives.
Your strategy will help find the marketing channels you want to use (such as social media, content marketing, email marketing, etc.), and the KPIs (Key Performance Indicators) you should set for each.
Be extremely wary of marketing agencies. Because if you tell someone that you need a strategy, it's usually music to her ears and they're ready to quote you $10,000 for a 10 page document you'll never really use.
And the problem with strategy documentation is that they usually don't reflect the reality of what's possible given your other constraints across your business. That's where my team does things differently - we actually care a LOT haha. We take extreme ownership and think through your marketing/growth needs as though we have equity in your startup. Wanna spend $10K on us? Not so fast. We're going to put you through deep-level discovery calls to truly uncover your problems, figure out what kind of marketing help you need to drive revenue and only if we think we can truly bring big impact, do we actually say yes to you. It's fun baby. And we're the best at it.
But I digress.
Now that you have a clear idea of your marketing strategy, it's time to set up your marketing budget calculator. You can use Excel or Google Sheets for this. I made one for you here.
Create Your Spreadsheet: Start by setting up a simple spreadsheet with columns for your marketing channels, projected costs, actual costs, and results. You should have four columns to start with. And each row can be a marketing channel e.g., social media, content marketing, email marketing, etc.
Marketing channel | Projected cost | Actual cost | Results
When calculating your marketing budget, you can set aside a percentage of your annual revenue and then identify marketing activities that fit within that plan. For instance, if you want to spend 15% of your gross income on marketing, multiply your income by 0.15 and use the resulting figure as your total marketing budget for the year. You can divide that figure by 12 to determine your monthly budget.
But here's the big caveat. The projected cost for each of your marketing channels will depend a lot on your audience targeting, number of people you're trying to reach, the cost per acquisition of the channel your leveraging (e.g., $5 CAC), the competition for the kind of keywords you're using (Google Ads), etc.
If you want help with figuring this out, my team can certainly step in. Otherwise if you want to DIY yourself for search ads let's say, I would recommend using Google's free keyword tool or free trial tools like SEMrush to help you gauge what your competitors are paying for certain search ads.
In the beginning your cost peracquisition or cost perclick might be ridiculously high if you're new to the realm of marketing. So please do this with caution, and make sure you put the right budgeting limits on the ad platforms that you're using e.g., Meta Ads "spend $ per day". Don't let these platforms drain your bank account!
Now that you have your marketing budget calculator set up, you can use it to refine your marketing budget. This includes analyzing your results, optimizing your marketing channels, and making data-driven decisions about your marketing budget.
Some extra things to keep in mind:
Really hope this helped. My team at HireCMO is always ready to jump in and help. If you want a free 45-min session with one of our chief marketing officers, just book it directly with us here. Thank you for spending time reading this article! Take care now! :)