On this episode of Ground Up, Kieran Flanagan talks about the early days of freemium at HubSpot, instilling a growth discipline that expanded well beyond the marketing team, managing cross-functional teams, and more.
Ground Up Podcast | Oct 21
Kiera Abbamonte on July 16, 2019 (last modified on July 15, 2019) • 16 minute read
There’s no such thing as a perfect marketing budget. The right allocation of resources hinges heavily on your business, your customers, and more.
If you’re just getting started with marketing (or even if you’ve been in the game a while), that can make budget allocation a prickly subject to tackle—how do you even approach it? But when your business depends on solid marketing to grow and thrive, solving the riddle of marketing budget allocation falls to you.
So do you find the right distribution of tactics and budget for you?
While there’s no right answer, we asked 52 marketers to share their best tips for allocating marketing budget. Here’s what they had to say.
Before we get into the details for effectively creating your marketing budget, it’s important to quickly review the things you should include in yours in order to create an accurate and realistic budget.
Typically, the following should be included in your marketing budget:
How should you organize and prioritize these channels for your marketing budget? Here’s what we learned in our research.
“Unless you know which campaigns and efforts are generating actual revenue, you’re resourcing your business blindly,” said Martin Shirvington of Plus Your Business.
Many of the responses we heard centered around tracking performance and adjusting your allocation accordingly. But long before you spend a dime, you need to have systems and tools in place to measure that performance.
“Trying to determine where to spend money without knowing how each channel is performing is like playing darts blindfolded,” said Quincy Smith of Ampjar. “Define and set up tracking for your marketing channels, so you know where the best ROI lies—before dumping any money.”
“Ensure that you have the right marketing technologies in place to be able to measure and capture data at every point possible in your marketing plan,” advised Kyle Turk of Keynote Search. “There’s no point in allocating budget to marketing activities if you can’t track their performance.”
Kelley Wrede of Revenue River pointed out that, until you test and measure marketing campaigns, you really have no idea what will work.
“You may not know how things are going to work out the first time you invest in them, but if you collect data and can attribute dollars spent with dollars earned for each channel, the allocation process will become much more intelligent and successful for your organization over time.”
Gazelle Interactive’s Ryan Walker suggested using an analytics tool that employs the same attribution model across all of your marketing channels—so you get the most holistic view of the real value of each.
Shervington and team use HubSpot Pro because it connects marketing channels (like AdWords and Facebook Ads) and allows you to attribute “at the most granular level.”
Editor’s note: Want a more visual way to report and analyze how your marketing channels generate leads and turn them into customers? Download this free HubSpot Sources Report dashboard to view sessions, MQLs, SQLs, customers, and more—all broken down by source.
One of the big questions we wanted answers to was what drives marketing budget allocation? We asked the marketers we spoke with to share the most important factors that help them determine marketing budgets.
Around 40% of respondents told us that alignment with overall company goals was the single most important factor in driving their marketing budgets.
“Certain channels are more effective for brand building exercises, where others are more effective for direct revenue generation,” explained Chris Martin of FlexMR. “I advise marketers to work with executive leadership to understand the main challenges the business is currently facing, and use that information to guide choices on marketing allocation.”
“With objectives and strategy written,” said Daleep Chhabria of Growth Forte, “you might, for example, narrow down to PR, website, SEO/content-writing, social media for amplification, promotions, and a few marketing technologies.”
“Are your goals reach-related or revenue-related?” John Donnachie of ClydeBank Media asked. “Are you trying to increase awareness for a new product or are you trying to increase sales for an existing product?”
Jonathan Aufray of Growth Hackers added, “Does your company want more visibility? Do you want more sales? Do you want more downloads? Once you know your company’s goals, you can put more marketing dollars on the channels that will help you move the needle.”
One unique tip we heard was to avoid taking a zero-sum approach to marketing channels—because they all work together and affect one another.
“Dig into how marketing channels assist one another,” recommended Jesse Perreault of Car Loans Canada. “A marketing channel may not be producing the CPL you’re looking for, but it could very well be a critical influencer for the channels that do produce.”
Adding to Perreault’s comment, CodeCrew’s Alexandra Marin explained, “Successful marketing is a fine combination of multiple factors.”
“If any of them is left behind,” Marin added, “the long-term resolve of your efforts may be disappointing—even if short-term results look good.”
Marketing budget allocation isn’t just about the marketing team. It requires input from throughout the organization, and that includes the sales team. Marketing and sales are always at their best when they work together toward common goals—so G2’s Deirdre O’Donoghue told us you should define those goals together, before you worry about allocating spend.
“It’s easy to make some assumptions and guesses about how certain channels will perform, but you won’t actually know until you experiment,” explained Corey Haines of Hey Marketers.
Vivek Kumar of Qlicket agreed, adding that “any good marketing team must first all of their options first, before executing on any tactics.”
Kumar says their team followed the process set forth in Traction, a book written by Gabriel Weinberg and Justin Mares. The book outlines nineteen “traction channels” for marketers to test, weighing the costs and benefits as they go.
“From there,” Kumar said, “we were able to draft a marketing plan with the security of knowing that we considered all of our options.”
We’ve heard tips about setting up attribution models and drawing allocation from your goals… but you always have to start somewhere. Chane Steiner of Crediful recommends that very first somewhere is wherever your in-house team has some level of expertise.
“Start with one marketing channel at a time, and begin with wherever you have in-house expertise,” Steiner said. “Of course, you can’t stop there. Expand one channel at a time, continuing to A/B test your way into a position that generates ROI. From there, you can experiment with optimizing your ROI.”
“If you have to choose one channel because of a limited budget, choose the channel that your audience is spending the most time on,” said Dai Baker of Dai Baker Creative Group.
“Understanding where your customers hang out is really the most important aspect to consider when allocating your marketing budget,” said Pedro Campos of PedroConverts. “Take the time to find those channels where you can reach your ideal customers—then figure out how much you’re willing to spend on them.”
John Donnachie of ClydeBank Media asked, “Where do your customers spend their time online? What channel makes the most sense to reach them?”
“Understand your customers and their buyer’s journey before allocating budget to marketing activities,” suggested Kyle Turk of Keynote Search. “Don’t waste your budget on marketing initiatives that don’t directly impact your core customer group. If your target audience isn’t on Instagram, for example, don’t allocate money to Instagram ads.”
“After a few months to a year of promoting the business, you should check the ROI of each marketing medium, and allocate your budget based on that number,” said Hassan Alnassir of Premium Joy.
Once your marketing program is rolling and set up to track performance across channels, allocation becomes as simple as doubling-down wherever you see positive results—and cutting your losses where you don’t.
“Your historical information should be the number one asset in determining where you should be allocating your time, energy and budget,” said Brandon Cook of Clean Origin. “You have to look at ROI—not only in terms of how many marketing dollars you spend, but also in the amount of time and energy that goes into any given marketing channel.”
Stacy Caprio of Conversiono recommends starting small, with budget spread relatively evenly across channels. “Once you have data that shows which channels are converting to paid customers in the most profitable way, you can start funneling more money into those channels.”
Hill Gaming Company’s Casey Hill outlined the two-step process they use with clients:
Hill also recommended the wider focus of ROI, similar to Cook’s sentiment around time and energy investments. “Focus on where you can consistently produce quality content because you enjoy it. If you hate writing, don’t do a written blog—try video, or interviews, podcasts, etc.”
Editor’s note: Want an easier way to see how marketing channels contribute to revenue? Download this free Google Analytics Product Revenue dashboard to view revenue across products, sources, and more.
Drawing from that data-backed approach to allocation, several marketers advised that you can’t be afraid to cut your losses. Don’t fall victim to the sunken cost fallacy—just because you’ve invested in a channel doesn’t mean you must (or should) keep pouring money into it.
“Don’t be afraid to move on from bad content,” warned Cristina Maria of Commusoft. “Many marketers seem to think that if they pour dollars into a channel that isn’t working well, it will magically transform it. Whether it’s Facebook Ads or paid Instagram Stories, you need to track ROI and cut your losses if it’s not working.”
Vedrana Damjanovic of Rockay shared similar advice, saying, ”Don’t try to force a message or campaign on all platforms when it may be better received on one, as opposed to the other.”
“Don’t fall in love with a particular channel,” advised Robert Donnell of P5 Marketing. “We see too many clients that are enamored with SEO or Facebook—to the exclusion of other channels. We have to be objective about the allocation.”
In other words, kill your darlings and cut your losses.
Wes Marsh of BCA Technologies told us they have a hard-and-fast guideline for marketing allocation:
“Put 70% of your budget into proven channels that give you the best blend of quality leads at a low cost per lead, and then squeeze as much as you can out of it. Put 20% into other channels that still offer quality exposure and lead generation, even if there is less direct attribution (i.e. display, video, etc.). Finally, keep the remaining 10% of your budget available to explore new channels and for testing.”
Hey Marketers’ Corey Haines also recommended leaving a portion of your budget available to experiment with new campaigns. “For every channel that you invest marketing dollars into, give yourself the ability to experiment with a portion of the budget. Even a small experimental budget,” Haines explained, “can go a long way in exploring new ways to use the channel, figuring out what works and what doesn’t, and exercising your creative muscles.”
At some level, the right marketing channels for your business come down to your industry and business model. That means you can glean some value out of researching how your competitors allocate their marketing spend.
“I’d start by looking at several competitors to identify a trend in the pattern of their traffic sources,” Dresean Ryan of Dresean Consulting suggested. “Analyze some of the competitors in your industry with tools like SimilarWeb to see where they’re investing most of their advertising dollar—by looking at their traffic source, you’ll be able to tell where most of their budget is going.”
“Test, reallocate budget, test some more, reallocate some more, and so on. Amplify your successes and don’t be put off if something doesn’t work at first,” recommended Oliver Roddy of Catalyst Marketing.
Corey Haines of Hey Marketers explained, “It’s easy to make some assumptions and guesses about how certain channels will perform, but you won’t actually know until you experiment.”
The marketers we heard from recommended starting with small budgets and testing to see what works. “Figure out what’s working and then turn up the dial accordingly,” said Zaahn Johnson of The Kingdom.
“Experiment with a small budget and optimize toward a very specific goal. That way, you’ll be able to see results even without a huge budget,” explained Slisha Kankariya of With Clarity.
The key here is to test things for yourself because, at the end of the day, your prime budget allocation is unique to you. “Spend less time reading up on what’s worked for others and more time looking into what works for you and your site,” suggested Mark Aselstine of Uncorked Ventures.
“Only through testing each channel will you be able to determine where to allocate larger percentages of your marketing budget,” said Alistair Dodds of Ever Increasing Circles. “When you find a channel that absolutely flies and is delivering high ROI, be prepared to scale up quickly.”
“Make sure that you invest in a channel where you can accurately measure the metrics of your return,” noted Software Path’s Megan Meade. “That way you can identify the most profitable areas for future investment and scaling up with the data.
While it’s important to direct your budget toward the most profitable marketing channels and activities, you should also be mindful of investing too much in just one channel. For example, if you spend 90% of your marketing budget on SEO and Google changes their algorithm… you’re out of luck and out of budget,
David Hoos of The Good suggests, “If you find wild success with one channel, that doesn’t mean you should abandon the others. You don’t want to have the success of your business riding on a single channel.”
It seems like the marketers we spoke to our following this best practice, too. We asked, on a scale of 1-10, which channels do you typically invest more dollars into?
While content marketing emerged as a clear leader, the answers were pretty evenly spread—with SEO and email marketing being just behind content, and Facebook and Google Ads in the top half, as well.
“My one piece of advice,” said Sara Bennett of PACE Staffing Network, “is to start further down the marketing/sales conversion funnel and work you way up as you can based on resources (money, time, etc.).”
“It’s imperative to understand what stage your customer is at in the sales funnel,” explained Lewis Kemp of Lightbulb Media.
“I have always seen my marketing efforts for where they are on the conversion funnel,” added Bennett. “That often correlates to how quickly you’ll receive a return on your investment.”
“I encourage marketers to invest in channels that are further down the conversion funnel (like lead generation, SEO, and Google Adwords) because there’s much less financial risk—and you’ll see ROI faster. Once these marketing channels are operating to a satisfactory level,” Bennett explained, “you can begin investing in channels higher in the funnel, until you work your way up to awareness and exploratory research.”
Kemp went on to echo Bennett’s advice about starting your investment deeper in the funnel, adding that marketers should “utilize cost effective channels (like paid social and email) higher up the funnel. Once the brand becomes more established, make the move to higher yielding and intent-based marketing channels (like Google and LinkedIn Ads).
I know we just talked about investing in the bottom of the funnel. And if you can only invest a little, that’s a good place to do it. But for marketers who have a little more wiggle room, it’s important not to overlook the top of the funnel.
As Brooks Manley of Engenius advised, “Don’t neglect investing in the top of your funnel. You won’t see the returns as quickly, but your sales funnel a year or two down the road will thank you.”
“Marketing changes daily. What worked today might not work tomorrow, so you need to have the flexibility to move dollars around,” said Kyle Turk of Keynote Search.
“Shifting budget to high performing marketing channels and activities from low performing ones, requires you to be flexible and adaptable—and enables you to maximize ROI,” Turk explained.
“Evaluate what’s been done already. Reevaluate where your customer is spending their time Shift dollars there,” advised Maria Kiagias of Social Gold Group. “It sounds easy, but it’s hard for many businesses to let go of older marketing initiatives.”
Jacob Landis-Eigsti of Jacob LE Video Production told us adaptability is also a key component to being able to double-down on investment when you find something that really works.
“When you’re testing a strategy, you can keep spending low. But when you find a plan that works, keep putting money towards. I spent $400 a month while testing and ramped that up to $3,000 a month when I found a strategy that works.”
We heard a lot of tips from the marketers we spoke to, and they all boil down to a few key takeaways:
By following those basic rules and adapting to the results you see, you’ll find the right allocation for your marketing budget—and maximize your ROI along the way.
Ground Up Podcast | Oct 21
Marketing | Oct 21
Content Marketing | Oct 15