How to Set a Promotional Budget for Marketing


Marketing to clients, whether they are consumers or other businesses, can require a certain amount of promotion in addition to advertising and networking. There are challenges to setting a promotional budget for your marketing campaign, but if you have the right data you should be able to meet your objective.

Determine the ROI (return on investment) for your previous marketing campaigns, if applicable. To do so, subtract your investment dollars from your profit, and then divide by the investment. You can do this for individual promotions or over a period of time. Either way, the formula will give you your rate of return on your marketing promotion expenditures.

Decide on an overall ROI threshold for your new budget. For example, a return on investment of 50 percent may not be enough to justify your expenditures according to your budget. However, in most situations marketing promotions are an investment and it may take time to recoup your expenses. Reviewing your product and project timeline may help you calculate your ROI target.

Decide what will and won't be repeated, then determine what areas need additional -- or less -- spending. Using the ROI from previous years will help you assess what promotions have potential and what may need to be abandoned or tweaked.

Outline the goals for your new promotional budget. If you are setting a yearly promotional budget, detail each promotion, its timeline and the anticipated outcome, such as increased third quarter sales or more repeat customers.

List all costs involved in the promotion. Will you purchase promotional items or gifts for your clients? Do you need to hire an advertising agency to run an ad campaign? If you don't have numbers from past years, gather estimates from other departments or vendors.

Enter your figures into a spreadsheet program, such as Microsoft Excel. Vertical columns should include "Promotion," "Projected Expense" and "Actual Expense." Horizontal rows should list each event associated with a particular promotion such as advertising, production, employee costs, merchandise and other expenditures. Review your estimates against the actual costs to see if you have stayed within your budget.

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