Setting any type of budget can be tricky, especially in marketing, because marketing is not an exact science. However, that’s not an excuse for not having a budget. In fact, it’s hard to imagine an executive or a business owner approving a plan without understanding the associated costs.
At Evolving Digital we typically start with an idea or opportunity. All ideas are brainstormed, where the budget is first mentioned. At this point having a rough number is ok, and depending on the ‘rough estimate’ we may choose to park the idea or to proceed. If we proceed, the idea goes through a process – defining Goals, Objectives, Timeframe, Strategy, and Playbook – a step-by-step guide on how to execute the goal. At the end of the process, your budget should have evolved from a ‘rough estimate’ to a real budget.
Here is a simple campaign example:
Idea/Goal: Partner with XYZ organization to increase sales leads (subscribers).
Objective: Increase leads/subscribers by 20%. To make the campaign cost-effective, cost per lead (CPL) has to be under $8.50.
Timeframe: 30 Days
Strategy:
- XYZ organization has 24,000 members, and 60% of those members are in our target demographic (14,400).
- XYZ organization will allow us to email their 14,400 members if we offer a $10 voucher.
- To reach our objective we need to convert (subscribe) at least 4,320 members (30% of 14,400)
Playbook (simplified)
- Account Manager to finalize contract terms with XYZ.
- Marketing team to analyze similar campaigns. What have we learned? How do we improve?
- Marketing team to write a copy, and create a landing page.
- Marketing team to create and set up A/B tests.
- Email Group 1 (first 1,000) members and verify results. Is our 30% conversion goal on track?
- Adjust email and landing page if necessary.
- Email Group 2 (next 5,000) members and verify results.
- Adjust if necessary.
- Email Group 3 (remaining members).
At this point, we should have more than enough information to formalize a budget. NOTE: Whenever estimating or calculating budgets, we strongly recommend you use three-point estimation (best-case, likely-case, and worse-case). For simplicity reasons, we’ve only used a “likely estimate” in this example.
Budget / Cost Breakdown
- Account Manager = $200 (4 hours*)
- Copywriter = $800 (16 hours)
- Designer = $300 (6 hours)
- Marketing Manager = $1,600 (32 hours)
- Technical resource = $200 (4 hours)
- Estimated Voucher cost** = $30,240
- Total = $33,340 (cost per lead = $7.71)
* to keep the example simple we will assume all internal effort is calculated at $50 p/h
** assuming 70% of 4,320 members end up using the voucher after signing up
In summary, a campaign plan without a budget is not a real plan, and even an inaccurate budget estimate is better than no estimate at all. So the next time you propose a marketing campaign, include a budget; going through the budget estimating process for all your campaign ideas will ultimately result in better decision making. Finally, learn from historical data, and keep fine-tuning your process.
