For many small businesses, determining your marketing budget is likely an afterthought. Actually spending money on advertising or other marketing costs can feel daunting and fruitless, especially when first starting out. But brand exposure and strategic targeting are crucial first steps for growth, meaning it’s better to outline your marketing budget earlier rather than later.
But where do you start? And how do you ensure you’re getting the most out of your marketing dollars? This is where AI processes and tools can help.
AI or Artificial intelligence is a technology that lets machines perform tasks with the same proficiency as humans. Leveraging the power of ML or Machine Learning, AI can help channelize your marketing spending in proper directions leading to a higher return on investment (ROI).
Before we discuss how AI tools can help you layout a marketing budget, let’s cover a few basics.
What goes into your marketing budget?
Your marketing budget covers all the expenses that you intend to spend on activities like:
- Registering a domain
- Buying web hosting
- Creating content
- Running paid ads
- Buying sponsored content
- Sponsoring events
- Publishing ads in the newspaper
- Partnering with influencers
- Hiring marketing executives, an agency, etc.
To put it simply, anything and everything that goes into the promotion of your business should be part of your marketing budget.
Why do you need a marketing budget?
You indeed have to spend money to make money. Investment is directly proportional to high earnings. If you don’t get out of your comfort zone and take the risk, you can’t expect to increase your income.
Marketing is an investment where the money is spent to acquire more customers for your business, leading to higher profits and more revenue.
Here are the top reasons why you need a marketing budget:
Set goals and performance indicators
A marketing budget influences how you set specific goals and key performance indicators (KPIs). Without any KPIs set, you really can’t measure what’s working well for your business.
Bring in new customers
Marketing has the power to bring new clients to your business. If you don’t set a marketing budget and make it a priority, it will feel like a useless expense that needs to be removed.
Take on the competition
Your competition is already advertising to your customers, which makes an appropriate response necessary to compete. Industry benchmarks are a great resource to help you understand how much businesses within your industry are spending.
It will encourage better coordination with your marketing team or contracted agency. Having budgetary guidelines and goals in place makes it easier for other departments in your organization to collaborate on projects and share resources. Better coordination will lead to higher productivity.
Plan for the future
Much like your sales and operational expenses, having a preliminary budget can help you forecast and set goals for the coming month, quarter, and year.
Pitch to investors
If you plan to seek out funding, you’ll need to outline your marketing spend, as well as the channels and campaigns you intend to run. Walking into a pitch meeting without a marketing strategy or budget will make it seem like you aren’t thinking ahead.
5 ways AI can help you determine your marketing budget
You need to take care that your marketing budget is not wasted. When you leverage AI to perform tasks that directly impact your marketing spend, you can fine-tune and optimize these expenses.
Here are some ways where AI can help you to decide your marketing budget:
1. Selecting the right advertising channel
One of the crucial parts of effective advertising is deciding on the right marketing channel(s). If you choose a platform where your target audience is not present, your marketing campaigns will become incredibly expensive and fail to deliver.
Platforms like Mercato are already leveraging AI to offer geo-optimized marketing across several digital channels to drive customers to their online store.
Programmatic ad platforms use AI and ML to determine the right ad choices at the right and correct times. Automatic bids are set depending on various factors like the location of the prospect, the buyer persona, the buyer intent, and the purchase history. Hence, AI tools can automatically select the advertising channel and allocate a budget for it.
Another option, Adohm is a complete marketing suite that you can use to run multiple campaigns using a single platform. You can automate the entire media buying process on channels depending on your target audience’s persona and location. Features like autonomous targeting and cross-channel execution are powered by AI. It automatically targets the preferred marketing channel depending on the set KPIs and the available performance data.
Do it yourself
If spending money on an automated ad platform simply isn’t reasonable for your business, you can always do this manually. It will take a bit more work to set up and test, but you can effectively leverage the automated systems within Google Ads, Facebook, and Bing yourself.
Just keep in mind that you’ll want to keep a closer eye on your ads as you navigate the automation process. It’s not as daunting to get into as you might think. It’ll just take time, a little trial and error, and a willingness to veto things when they’re underperforming.
2. Adjusting your marketing costs intelligently
Nowadays, AI can automatically detect the marketing channels where your ads are performing better and automatically adjust the marketing spend.
For example, suppose Google Ads are generating the highest ROI between Google and Facebook Ads. In that case, smart AI tools can increase the budget for AI ads and cut down the Facebook ad spend.
Similarly, suppose you want to cut down on your marketing spend. In that case, you can continue to run Google Ads with a full budget while cutting down the Facebook ad budget to half.
Tools like Adext lets you link your campaign advertising accounts to the Adext AI dashboard and predict the conversions. It can accurately choose up to ten different budgets every day and optimize your campaigns based on your goals. Again, you can also do this yourself and work between the ad dashboards of each platform and determine where your spending is making the greatest impact.
3. Leverage the power of media mix modeling
Marketing mix modeling is a statistical analysis technique that estimates the impact of several marketing strategies on different channels to forecast sales.
Every business has a lot of customer data in CRMs and other tools that they regularly use to engage with their prospects. This is what is known as ‘Big Data.’ But, you can’t really put this big data to use without AI. AI tools can help to identify the marketing messages that persuade your buyers to buy a particular product. The AI platform can then automatically switch messages and channels to deliver the highest advertising ROI.
Tools like Pattern89 lets you simulate your ad campaigns and dry run them so that you know which campaigns work best even before the campaign is launched. You can easily decide how much you should spend to get your desired outcome.
4. Identification of influencers who will likely support your brand values
Influencer marketing is a tactic that companies leverage to improve their brand value. Both micro and macro-influencers are effective in supporting the appearance of a given brand.
AI is pretty helpful in identifying the influencers who are most likely to support your brand cause. Accordingly, you can set your influencer marketing budget so that you don’t spend too much-approaching influencers.
For example, IBM Watson Personality Insights is a tool that lets you understand how influencers react, what they think, and what their personality attributes are. This can help eliminate a ton of time reaching out to influencers or help avoid misaligned partnerships altogether. The more you know about who you want to bolster your brand, the more likely you are to connect with the right person or team.
5. Analyze data to make the best marketing decisions
If you can’t measure what you are doing, then there is no point in doing that task. With data intelligence, you can extract meaningful snippets from different data sources and make the best marketing decisions.
Tools like Import.io lets you compile the available date into spreadsheets to pinpoint the areas for improvement so that you can adjust your marketing budgets. The tool enables you to aggregate reviews from the web to have an idea of your brand reputation. It also lets you extract keyword-based data from any of your competitor pages so that you can set a budget for SEO.
Like we’ve said before, you can also do this with tools you likely already have, such as Google Analytics. It will take a bit more upfront setup to automate the process, but it can be a cheaper way to optimize your marketing budget and still find invaluable insights.
AI is a natural pillar of modern marketing
Artificial intelligence has grown from being a futuristic industry term to a necessity. Nowadays, businesses are using both AI and Machine Learning to power up their marketing campaigns. Even as a small or growing business, you can tap into AI to optimize your marketing spending and bring in more sales.
This approach to marketing your business should be something you consider early and revisit often. With a little work and a willingness to test everything, you can quickly identify processes, platforms, and digital strategies that best serve your business. Start small and layout a plan to scale as you find success and you’ll soon have a budget and strategy that fits into your broader business plan.