Budgeting helps business owners to plan realistically and focus spending on priorities. Just as you need a comprehensive budget to help you to manage your overall business operations (read Analyze Your Finances and Create a Better Budget), a marketing and communications budget is a central component of your marketing plan, serving as a road map for accomplishing your marketing-related goals. When you take a systematic approach to allocating money for marketing — estimating costs, establishing priorities and setting financial targets — you provide yourself with a concrete plan of attack and set yourself up for ever-improving marketing campaigns.
How much money for marketing?
When it comes to marketing, one of the first questions that business owners ask is how much money they should set aside for this aspect of business. In general, there are two ways to determine fund allocations: either settle on a fixed number or opt for a percentage approach. In the case of the former, you estimate the costs of the marketing and communications-related activities that you think you’ll be doing. A percentage approach — that of allocating a certain percentage of projected gross revenues to marketing and communications — closely ties spending to the performance of your business; as your company grows, so too would your marketing budget. For companies that use a percentage approach, Nancy Schwartz, president of the marketing and communications consulting firm Nancy Schwartz & Company, recommends that they allocate an average of 9 to 12 percent of their annual budget for marketing. For artists who have entities providing marketing for them already, such as galleries representing work, this percentage may be significantly smaller.
If you are not sure which approach to take, the best way to begin is to prepare a comprehensive list of expected marketing and communications expenditures for the year. Divide expenses into categories that reflect your various advertising vehicles (Web sites, e-mail marketing, print media advertising), collateral materials (business cards, brochures), marketing promotions (coupons, promo gifts and other incentives), public relations (for example, you might hire someone to write and distribute a press release), and events (trade shows, art fairs, open houses). Then estimate the monthly expenses for each category.
As with your overall budget, the more detailed you are in classifying expenses, the easier it will be for you to see exactly where you expect marketing dollars to go. It is a good idea to list each event separately and break down expenses for the event into subcomponents such as production costs for flyers or postcards, postage, refreshments and other anticipated costs. Some expenses, such as Internet costs are fixed monthly expenses; others, such as collateral materials (business cards, for example), are one time costs. Use records of expenditures from prior years to complete the worksheet. If you are just beginning your professional career, you will need to investigate the cost of these various activities to develop a baseline budget.
Once the worksheet is complete, look at the total dollar figure for the marketing budget and compare that number to your overall budget. What percentage does marketing comprise of your annual budget? If it’s too high, you will need to do some retooling.
Prioritize and set measurable objectives
While it would be nice to afford a $5,000 Web site redesign, you’ve got studio rent to pay, materials to purchase and other essential business expenses to cover. Pare down the dollar amount by considering what your top marketing priorities are for the year.
“Do you want two new clients? Do you want to up your net (sales) by X dollars? Where are you trying to get to?” offered Schwartz, who suggested that artists focus their efforts on no more than three goals.
Be sure to translate those goals into measurable objectives — dollar figures and also units, such as a target number of Web site hits and clicks or a certain amount of new mailing list subscribers you expect to gain from a specific marketing campaign — so that you will be able to discern whether you’ve met your mark.
Next, suggested Schwartz, outline the marketing strategies that you think will deliver those desired results. For instance, what marketing activities will you need to implement to increase e-commerce sales, and how much will it cost?
Track and analyze results
There’s no way to know the effectiveness of a particular campaign if you don’t keep track of the results. Web analytics (refer to An Introduction to Google Analytics in the February 2009 issue of Art Calendar) and speaking with customers in person are two ways to monitor patterns among your target market. What is your Web traffic conversion rate? Where did people find out about your artwork? What is a particular client’s dollar amount of purchases? How many pieces has the client purchased from you? How often does each buyer purchase from you? Data such as this can prove extremely useful for maximizing the efficiency of your marketing plan. You can extract serviceable anecdotal information from direct conversations with customers; be sure to compile that data on a spreadsheet so that it can be analyzed.
When you study the results of a particular campaign or the use of a specific marketing vehicle, compare these to the costs tied to such projects. Because you will have set measurable objectives, you will be in a better position to recognize the value of the campaign. And if a particular method or technique failed to meet expectations — for example, participating in a trade show didn’t net you key contacts you thought you’d make — you can make a more informed decision about whether to discard one marketing strategy in favor of another.
Time versus money
There are numerous marketing strategies and not all cost money; rather, they do require a time investment. “For example, social media marketing takes a huge amount of time,” said Schwartz, who works primarily with nonprofits and foundations, and noted that those clients share challenges similar to artists with respect to limited time and money.
Thus, the artist who is struggling to come up with a marketing-on-a-dime plan can take heart from Schwartz’s observation garnered from 20 years of experience as a marketing consultant that a successful marketing plan starts by developing your message. “Find out what your current clients think is great about you and find ways to talk about that in all of your marketing — that’s a time cost, less of a dollar output.”
It does take time and thought to develop a budget, but most successful business owners would agree that a budget — and in this case, a marketing budget — is critical to improving their market position and for the overall growth of their company. When you go through the budgeting process for your marketing and communications endeavors, you identify key marketing issues and develop a road map for carrying out your marketing strategies. In addition, the budget gives you a concrete reference against which to measure the effectiveness of your approaches so that you can design even more effective marketing plans in the future.AC
Special thanks to marketing consultant Nancy Schwartz of Nancy Schwartz & Company for her contributions to this article. Check out her blog, www.gettingattention.org, to find ideas, tactics and tips for succeeding through effective marketing.
Contributing writer and communications consultant Ligaya Figueras specializes in business writing, marketing and media relations for visual and performance artists, writers, nonprofit organizations and specialty service providers. Follow Ligaya on Twitter at twitter.com/LigayaFigueras, or friend her on Facebook at facebook.com/ligaya.figueras.