MARKETING EXPENSES: 5 steps to manage for businesses

Most marketing managers need financial experience. Meanwhile, the benefits of a sound budget balance are undeniable for the success of businesses. Growth and building a solid brand is the goal that all managers aim for. So how can marketing expenses be effectively managed? Let’s find out with CleverAds in the following article!

1. What are marketing expenses?

Marketing costs typically include costs for advertising, promotions, and public relations. Although based on the size of the business, the marketing costs of each subject are different, this depends a lot on the company’s annual sales and the level of competition in the market.

Depending on the industry, marketing budgets can range from 1% of sales to more than 30%. New entrants to the market can spend up to 50% of their revenue on referral marketing programs within the first year. Smaller businesses try to balance their budgets to match the spending of their direct competitors.

Today, businesses can spend a lot of money on advertising costs plus the increasing costs of digital advertising. As a result, companies often feel free to spend large sums of money on Facebook and Google marketing.

2. Basic elements of marketing expenses

The marketing mix constantly evolves as digital marketing and growth hacking tools are becoming the norm today. Therefore, marketing costs include many factors, including typical expenses such as:

Brand building: create a visual identity, design logo and tone for the brand
Website setup and maintenance costs
PR campaign & crisis management
Marketing automation tools
Travel expenses
Webinar and video conferences
Design and development costs
Digital advertising (social media and search advertising)
Video production
Corporate gifts and samples
Business card
Marketing through print products
Manage email signatures
Budget for agency and consulting services
Attend trade shows and events
Advertising and organizing company events
Search engine optimization (SEO) services

The biggest challenge for marketing managers is keeping all these different costs current. It’s ultimately inevitable to miss out on certain budgets. Administrators may need to remember that a subscription or funding for a large corporate campaign is being renewed.

However, this error is not acceptable. A well-run business won’t be able to make such basic mistakes.

3. How to effectively manage marketing expenses

Managers need to know precisely how much the business’s marketing expenses are and how much will be used. But, more importantly, these costs need to be allocated and used most efficiently. Here are some ways managers can apply to manage marketing costs effectively.

Set clear marketing goals.

Planning is always the most important starting point of any strategy. And to plan well, managers need to define goals and corresponding measurement indicators clearly.

One of the most popular and commonly applied methods is the SMART model method. This model provides us with 5 factors to be able to set a practical measurement goal, including:

Specific: specific
Measurable: able to measure
Actionable: feasibility
Relevant: relevancy
Time Bound: time limit to achieve the goal

Setting goals is essential for any business; marketing plans suffer without clear goals.

Once businesses have determined exactly what they want to achieve, marketing managers will better understand how well they can allocate marketing costs to reasonable sources. For example, if a particular activity or tool can help a business achieve its stated goal, it should be appropriately cost-allocated. On the contrary, businesses should not spend too much money on tools that do not bring high efficiency.

Choose the right marketing strategy.

Marketing strategies provide a roadmap for businesses to implement specific planned projects. These strategies will be measured against a clearly defined objective.

This process helps businesses choose the right target audience for the content they intend to provide. Still, it also helps them better understand the impact of marketing projects on the growth of the business.

To be able to plan for the upcoming year, you need to determine precisely how reliable each tool is.

Check out the effective sample marketing expenses sheets

To be able to always control the costs being implemented, businesses need to reduce them to one term and control them in a specific program. One of the simplest ways is to use a marketing budget template, which businesses can update and refer to regularly to ensure their expenses are on the right track.

This will allow you to plan your proposed spending at the beginning of the quarter or the beginning of the year and align each possible expenditure with the goals set. And the important thing is that administrators can update the situation in real time whenever a certain change occurs.

For most companies, important costs will include the following:

Marketing software (including CRM and automation tools)
Design and develop physical and digital assets
Join events
Digital advertising for search engines and social media
One-off campaigns to generate leads or build brand awareness

Set your budget

Once there are specific plans and goals, this is the most appropriate time for marketing managers to recommend appropriate budget spending.

As the chief marketing officer, the manager may not be ultimately responsible for the company’s budget. Instead, they are given a sum of money for each specific strategy, and the most important task is allocating them effectively.

The most significant benefit of having a clear marketing budget from the start is showing management you’re on top of everything. But, more importantly, after the CEO or the CFO confirms the expenses, that amount will belong to the marketing expenses and will be decided by the management at its sole discretion.

However, some founders and executives manage to spend more closely than others. They expect specific and clear benefits for every given cost and always demand the smallest possible outlay. In this case, marketing managers must explain why they should spend this amount.

Stay up to date with marketing expenses

The purpose of planning is so the administrator can occasionally track and reference items. Every week (or month), they must go back to that budget template and write down what they spent.

One important thing to remember for businesses is this: the more detailed the expenditures are, the more effective they will be. If the administrator constantly reminds members to report expenses and check emails for related invoices, these expenses will accumulate over time.

4. Important principles to keep in mind when managing marketing expenses

Always keep tight control of your spending

Controlling marketing costs will be very difficult if the expenditures are not shown clearly and specifically. That means marketing managers must ensure that expenses are always updated in real time for easy reconciliation and control.

Don’t put all your eggs in one basket

A perfect cost-effective marketing strategy provides businesses with different ways to find new customers and helps them reduce risk. Administrators then need to allocate budgets to various campaign platforms and scrutinize the expected profits of each.

In addition to the specific costs of some tools – like estimated PPC costs – businesses will also want to look for “hidden” fees that will affect the ROI of the platforms and the amount of money needed to optimize. However, these costs need to be properly allocated with an appropriate, balanced budget.

Ready to change

Businesses may be reluctant to change when they find a strategy that suits their products and services. The same goes for agencies or freelancers.

Those businesses aim to have transparent processes so administrators can be flexible when needed. This ensures that you can work with new partners and modern platforms without redesigning your plans and costs every time you adopt a new strategy.

CONCLUSION

Hopefully, the above article has helped readers understand the importance of actively managing marketing costs. The article states that using an expense management platform is the best way to manage your marketing expenses. This gives every department – not just marketing – full control over their spending and the ability to make smarter decisions.