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    10 Basic (but Important) Aspects that Affect Your Marketing Investment

    by Alba Romero

    Every business knows the importance of their bottom line; that is, predicting, controlling, and achieving a profit. Like you overall budget, you Marketing investment must be well planned out, not just a randomly chosed number. To achieve this, you must understand the costs and risks that you will face and the investment areas and actions that will provide the greatest opportunities. 

    So, the main question is: how can you control and plan your company's budget? You already know that it can often be difficult to identify expenses and measure them correctly. In this post, we share 10 basic but important aspects in getting a better grasp on your Marketing investment so you successfully keep it on track and on budget. 

    How to Control Your Marketing Investment

    While every company has different circumstances, strategies, costs, and investment potential, there are still some guidelines that every business can follow to plan and maintain their Marketing investment. 


    1. Create a general and specific budget

    According to a CMO Survey, marketing budgets usually make up between 7-12% of total revenue. That's a lot!

    In order to obtain a complete vision of where you want to invest your Marketing dollars, you need to figure out the place of Marketing in your general budget and strategy. The general budget will detail all the company's investments, including business development, sales, IT, etc. and the specific budgets for each area.

    By analyzing the overall budget, you may see that some areas overlap or investment in Marketing can be maximized by combining efforts with another department. Within your specific budgets, you can break down the actions necessary, track their success, and optimize or eliminate the underperformers. 


    2. Detail specific investment values for each campaign

    Before even starting, you should assign the exact investment figure that you're going to make in each of your Marketing campaigns. This should not be an approximate figure; rather, you should research the budget you'll need to carry out each campaign based on your previous experience and costs. Keeping this figure in mind, you'll prioritize only the actions that fit into your budget and avoid unecessary or unknown expenses. 

    For example, in your paid media campaigns on Google or Facebook Ads, you can take your budget from last month or last year and decide whether they had an effective ROI (Return on Investment) that you'd like to continue. For social media or content marketing campaigns, you can do the same, though determining exact ROI may be tougher for soft metrics like views and shares.


    3. Follow the 70/30 Rule

    storing your marketing investment in the bank

    Experts agree that we should adopt budgetary rules that give us some room for flexibility and innovation. A good way to do this is via the 70/30 rule: 70% of the budget will be allocated to the fixed costs of Marketing, while 30% will be allocated to variable expenses.

    The 30% can be used to experiment, do A/B testing, explore new markets and avenues, or increase innovation. In the event that you do not use that 30% completely, you can save it for later or add it back into the other 70%. 


    4. Calculate your ROI

    As you should already know, ROI (Return On Investment) is a metric that determines the profit obtained from an investment. ROI is a fundamental tool when it comes to controlling your marketing investment, as it allows us to measure, analyze and make decisions.

    Also, according to HubSpot, 35% of marketers said that understanding the ROI of their campaigns is "very" or "extremely important."

    To calculate ROI, it's necessary to know sales numbers and company costs. The formula is as follows:

    ROI = Net Income / Cost of Investment x 100

    To obtain a positive ROI, and to make sure it's as high as possible, follow these best practices: 

    • Test out different prices: Let's say you're selling a lot of products or services, but your profits are very low, your ROI will also be quite low. On the opposite side of things, if your prices are too high, your sales and profits may start to wane. You should test out different pricing strategies for increasing your ROI.
    • Better define your audience: If your lead conversion rate is low, you might not be targeting the right audience. To optimize your targeting, create Buyer Personas, a semi-fictiotious representation of your ideal customer based on market information and real customer data. Use our template to create a Buyer Persona for your business. 
    • Bet on your greatest assets: You're not interesting in investing more in the content, pages, and products that give you a low ROI, rather the opposite! Focus on those assets that are generating the highest profit margin and divert funds to those areas. 


    5. Increase your average ticket value

    We know this is quite basic, but this metric directly affects sales, which in turn affect profits, which heavily influence your budget decisions. The average ticket is the average value or purchase that each customer has made in your business.  To calculate your average ticket, you can use one of the following formulas:

    1. Obtaining the gross invoicing of your company in a certain period of time and dividing it by the sales volume of that period.

    Average Ticket = Gross Turnover / Sales Volume

    1. Adding the total value of sales and dividing it by the number of customers who made purchases in that period of time.

    Average ticket = Total sales / Number of customers


    How can I increase the average ticket?
    charting your marketing investment metrics

    • Offer a wide variety of products/services or campaigns: No matter what your business does, you have the greatest chance of success when offering more products or services. If your core business is narrow, you could expand this logic to a larger number of campaigns to attract more traffic avenues. 
    • Be strategic about sales cycles: Analyze your sales trends and understand the cycles. Use price comparison, product differentiation, cross-selling, or upselling to strategically raise your average ticket during downtimes.   
    • Prevent sales abandonment: Many times, customers intend on making a purchase but get distracted or wait for a better offer. Or maybe they're just researching additional purchases. In these situations, it's important to generate trust and conduct remarketing. As you know, keeping a current lead is easier and generates more revenue than attracting new prospects. 


    6. Keep an updated budget

    Creating a budget with outdated information certainly won't help you maximize your investment in Marketing. Therefore, when calculating expected costs, make sure you use the latest figures or estimates, as well as the most recent data from your own company. It is highly recommended to make a budget forecast, keeping track of the state of your expenses at all times. This will help you avoid excessive spending, know when your under- or over-budget, and see how/where to redirect resources. 


    7. Reconciliation between Finance and Marketing

    Reconciliation is the process of classifying the expenses that have been made in the different budget items. In order for your financial department to close the month, quarter, or year, it needs to receive certain information from the Marketing department. This information should include a list of all classified expenses that the department has incurred throughout each period.

    According to Plannuh, 26% of companies have never carried out the reconciliation process. That's shocking. Of those companies that have done it, this process can cause a big headache, so it is very important to have an automatic reconciliation tool; you don't want the chaos and disorganization that can come from different files, spreadsheets, and reports. Our advice: do reconciliation frequently, every two weeks for smaller businesses and up to daily for larger companies. 


    8. Analyze metrics from a stakeholder point of view

    Stakeholders are critical to the success of your Marketing efforts. Each stakeholder will want to analyze specific metrics within the budget. What's more, according to HubSpot, 75% of stakeholders use their reports to show how campaigns have a direct impact on revenue.

    The best way to structure your budget proposals for different stakeholders are as follows: 

    • tracking your marketing investmentCMO: They want a macro-vision of all Marketing expenses, so the budget must cover all product lines, sub-budgets, equipment, etc. Their main concern is knowing how the investment covers the set objectives. 
    • Marketing Operations Manager: They're responsible for gathering and providing metrics for other stakeholders and are interesting in success metrics like traffic, clicks, converions, sales, and ROI. 
    • Team Leads: Both regional and functional team leads will want to check the same metrics as the others, but with special emphasis on their team's expenses. They will want to see if they are on-objective and in-budget, and will be interested in seeing the expenses per person, product, type of activity, etc.


    There are endless tracking tools like Jira, Confluence or Google Drive. Investigate these tools well and make sure that your entire team actively uses it throughout the year.


    9. Invest in the latest Marketing technologies

    By investing in the latest technologies you will not only increase your productivity, but reduce costs (such as time or personnel) and increase your income, making the growth projection much higher to be able to compete nationally or internationally. Regardless of size, companies must avoid outdated practices of multiple tools, platforms, and the dreaded Excel sheets. 

    There are tools like NetSuite or Sage Business Cloud, which help us keep track of the profits that we are generating with each activity, and adapt our budget. Marketing automation platforms like HubSpot allow you to not only house all of your content and contacts, but report on metrics like ROI and attribution. With so many Marketing platforms to choose from, how do you decide? Check out our comparison of HubSpot vs. Marketo and HubSpot vs. Pardot


    10. Count on support from a specialized Marketing agency

    By partnering with a specialized Inbound Marketing Agency you can reduce the costs of your company; you'll pay only for the services you need, when you need them. You'll finally be able to take advantage of opportunities that you didn't have the proper expertise for before. 

    Additionally, by outsourcing your Marketing, you'll save on resources since your company will need less personnel, freelancers, office space, computer equipment, etc. Employee reduction, in particular, can result in big savings, and with an agency like mbudo you'll be guaranteed dedicated support, a wide array of Marketing servuces, and high-quality results. Discover more advantages of hiring a Marketing agency.

    partner with an agency to control your marketing investment

    As you can see, there are many easy ways to control your Marketing investment, so there's no excuse in not making budget adjustments today! How will you benefit? You'll achieve greater security in your strategy, reduce risk and waste in expenses, and prove the value of Marketing to your business. Moreover, you can make better decisions for the future. For help in all things Marketing, contact mbudo.

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    Inbound Marketing Strategy

    Alba Romero

    Alba Romero

    Alba has been a lover of Marketing in all of its forms since she began studying, so she decided to make her passion her profession. She also loves animals, music, travel, and new cultures.