Having the online marketing budget blues? Financing a marketing operation is tricky business, for sure, but keep an eye on the following factors and you’ll do just fine:
Business Objectives and Marketing Alignment
Obviously, the most important factor to consider is the business objectives that need to be achieved. It gets a little blurry, however, when it’s time to drill down and figure out specifics. It’s best to keep it simple; start with a question: what is the goal that marketing needs to realize?
For many businesses, it’s easy: revenue. For others, it’s more pointed: growth or user acquisition (not necessarily paying users, e.g. freemium models). Be a bit more specific than that. Use a goal like increasing year-on-year revenue by 30% or growing the base by 1,000 users every quarter. An online marketing budget is based on the activities spent reaching targeted demographics. How specific goals are will impact how directed efforts will be.
Then, move on to specific marketing activities. Again, let’s keep it simple with a question: what marketing channels can be utilized for the most cost-efficient results?
After all, there’s paid and organic search, display and rich media, social media and newsletters, ad networks, and everything in between – it’s imperative to assess which channels will be the most cost-effective, yielding desired results for fewer resources than other channels.
Who to Ask about Alignment
- Ask the BDs – the business development team drives the partnerships, strategic objectives, and overall progress of the various projects that keep the company running. Their input regarding marketing goals is required.
- Ask the analytics team – as the goals that help determine the online marketing budget are usually comparative (to previous or current levels of performance, e.g. year-on-year ratios), the analytics team that runs performance data can indicate how much more is possible, pinpoint strong and weak areas of marketing, and provide input on future campaigns to further refine budget allocation.
- Ask the marketers – with feedback from BDs and analytics, the marketers can then help figure out which channels are most useful for set goals. Besides, it’s common sense to ask the guys who’ll do the marketing when setting an online marketing budget.
Cost Per Lead and Customer Lifetime Value versus Acquisition Path
These are no-brainers: CPL and CLV are always factors to consider in the online marketing budget. They’ll also be considered in marketing alignment. Now, CPL and CLV are common, but most would overlook acquisition path.
While CPL and CLV are pretty straightforward, assessing user acquisition paths is more nuanced. An example would be how SEO giant MOZ found out that their users with the shortest CLV (those who leave their SaaS after a short period of time compared to their “lifers,” who stay on for one to two years at a time) are also the leads that didn’t take long to convert. They found that these users engaged with their marketing at one to three touch points, then converted to the free trial immediately. Their lifers engaged with different points of their marketing and sales funnel more than seven times.
See how different acquisition paths affect CPL and CLV while also being a consideration in marketing alignment? For MOZ, at least, the lower the CPL (because the lead converted early), the shorter the CLV, and the less revenue they made. It also follows that non-lifers probably didn’t become influencers for the brand.
Who to Ask about CPL, CLV, and Acquisition
- Ask the analytics team – again, follow the data and find golden tidbits of insight to better develop the online marketing budget. This is especially true for companies that use Google Analytics; they can access the user acquisition and website traffic paths to fine-tune conversion optimization.
- Ask the sales team – they deal with closing seals and converting leads, so their insight on which sort of leads are most valuable can help dispel any uncertainties.
- Ask the customer service and retention teams – they deal with customer support and they personally see to the end of CLVs (or try to prolong them), so they know a thing or two that can help marketing and sales target and convert leads who are bound to stay longer.
These are the factors to keep an eye on, but take note: different companies have different specifics; there’s no one size-fits-all formula. Call us at 508-755-6797 to discuss the specifics of your business.