How to set a budget for content marketing

This post explains how business to business (B2B) marketers can set an effective budget for content marketing and understand what they get for their money.

How can you set a budget for content marketing that won’t break the bank? And how can you create enough content for that budget to create a measurable increase in sales?

Making a link between what you spend and what you get for content marketing isn’t easy. In this article, we’ll explore a content marketing model and work out how you can create a right-sized budget for what you want to achieve.

You need to think of all the roles and resources you need

This is a content marketing model that will apply to many businesses. What are the main cost headings that come out of this?

  1. Your costs: You can’t just put the process on autopilot with an agency and expect business to roll in. You will need to spend some time to think about the strategy and direct your resources. Budget for the opportunity cost of your time to work out what prospects want and consider the range of content needed.
  2. Costs to create content: You will need someone to carry out research, someone to write and someone to edit. Depending on how you get your people, you could spend $3.30 per hour to $200 per hour.
  3. Costs to distribute content: You can spend a few thousand dollars to tens of thousands on marketing automation. You will also need technical support to operate your software.
  4. Costs to monitor how prospects engage with your content: You need an analyst looking at the marketing data coming out of your systems who helps you interpret and act on that data.
  5. Costs to engage with leads: At this point, your budget may overlap with sales, where you pass leads onto the sales team, or you might have a person who helps engage with questions and opinions on social media platforms such as Twitter and LinkedIn.

As you can see, the majority of your costs have to do with heads – people that are carrying out the activity. There are several good reasons to consider outsourcing these cost – the most significant being that you can invest a little money with an agency and then ramp up your investment as you see results, rather than putting in a few hundred grand up front with no guarantee of seeing a return. If you are interested in things like being P&L positive at the end of the year, a big part of these costs should be outsourced.

Take a step back and think about what your prospects want

A business to business sales process follows a four step model:

  1. The customer recognises that they have a need and asks questions like, “Do we have a problem?”
  2. They evaluate options asking questions like, “Who is cheapest, or has the best service?”
  3. They resolve concerns asking questions like, “Can we trust them?”
  4. Then they negotiate terms and actually become a customer.

How much content do you need?

The short answer is, as much content as is needed to answer all the questions your customers have, given the budget you have.

A customer will understand what you do by asking questions. Your content needs to answer the questions customers have in their minds. It needs to answer questions they have asked, and also bring up and answer questions that they have not yet thought about.

Your content will be used across many channels and platforms

You will use content with prospects and customers at every stage of the selling process.

When negotiating terms

  • Proposals: This is what we will offer and what we will charge

When resolving concerns

  • Testimonials: This is someone we did this for before
  • Case studies: This is who we did it for.

When evaluating their options

  • White papers: This is a problem your industry faces

When recognizing need

  • Blog articles: Come up in search requests
  • Industry articles: Become aware when reading trade magazines
  • Direct mail: Contact via email or direct mail

70% of companies don’t think they use content marketing effectively but over three quarters of all companies still intend to produce more content in 2016 ranging from presentations and webinars to blogs, case studies and more output on social media platforms.

How to select an approach that works for your business

There is no one approach that is guaranteed to produce results. You need to select one that matches the way your company works. Use the list below to think about how your company works now and select an approach that works.

Make decisions as you go along.

If you are fairly new to content marketing, and don’t know what you want, or how much you want to spend, the best thing to do is just get started.

Write a blog post. Create a landing page. See if you can get an article accepted by a trade journal. Do something, anything to get started. If you have a go and create 5 – 7 pieces of content, you will learn more about how you or your staff write than through all the discussions of what you would write if you did do content marketing.

You can keep a tight rein on costs by deferring decisions, and focusing on simple, low cost actions to start with.

Spend what you can.

If you know how much content marketing can do for you, either from previous experience, or because you see others in your field using it to generate leads and business, then the question is how much can you afford to spend?

If you are on a constrained budget and want to make every penny count, it’s important to focus. Don’t spread yourself across every platform. Don’t create long form and short form content plus images plus tweetable material. Instead, spend your budget on content creation, and a minimal distribution system that gets your material in front of prospects.

Don’t spend all your money on creating lots of material, with nothing left over to pay for distribution or following up with analytics and lead management.

Spend what you spent last year.

If you already have a track record of spending, then protect your existing budget and plan how you can use it effectively.

There is a shift in budget allocation from advertising to digital marketing. Marketing budgets are forecast to increase, with digital marketing taking up 75% of budgets by 2020. Keep this in mind when planning the total budget and how you strategically allocate it.

Match the spending of a competitor.

In all industries, there is usually one company that seems to invest more in marketing and reaching customers than everyone else.

Research by Neil Rackham showed that companies that succeed focus their efforts. They reduce the number of opportunities they work on, but increase the amount of resource they devote. This means that they might go after a smaller set of customers, and use fewer channels to get to them, but they put more effort and content into the process.

If you go up against such a competitor but are spread more thinly, you might spend half as much as they do, but only win 20% of the time. They, on the other hand, spend twice as much as you, but win 70% of the time.

Researching and understanding how a competitor spends their marketing budget is a good way to benchmark your spending and see if you are doing the right things.

Use a formula like percentage of sales.

Many companies spend 7 – 10% of sales on marketing. The CMO survey updated in February 2016 shows that marketing budgets are now over 10% of a firm’s overall budget for the year and run at around 7 – 10% of sales. This kind of formulaic approach is the easiest way to benchmark how much you are spending relative to other companies.

Marketing costs include:

  • Direct expenses of marketing
  • Social media
  • Marketing analytics
  • Marketing research
  • Marketing employees
  • Marketing training
  • Sales employees
  • Other overheads

Advertising spend is falling, while digital marketing is seeing an increase in spending.

In 2005, Colgate-Palmolive spent 2.5% of their advertising budget on digital. They increased it to 13% in 2014 and it is heading to 25% quickly.

88% of business to business marketers use content marketing to engage with customers. On average, companies spend 32% of their marketing budget (excluding staff) on content marketing.

If you are spending a lot less than this, then you may need to consider whether you are committing enough to strategic marketing to protect your competitive position in the market.

Test and learn with experiments.

A test and learn model accepts that there is formula for success and you need to be willing to experiment. This starts with asking questions and having a view on what could happen.

For example, are your target customers more interested in videos or in reading descriptions. If your selling point is design, then a video might make the prospect more interested, while if you have a complex product you may need to use more written content. If you are not sure, however, then you can try both and see how customers respond.

The key here is to start with a hypothesis – a belief that if you do something, customers will respond in a certain way. Then, you validate this with customers, either asking them through careful questioning, or creating a prototype and testing how they respond to it. Testing and learning needs you to be comfortable working closely with customers to validate your thinking, and if you do this well your customers will end up telling you what they will pay for, and help you create your marketing system and tuning your business.

Create a marketing model and simulate scenarios.

In a larger organisation, you may not be able to create small experiments without some level of buy in. You will be asked about the business case for what you are trying to do, and what the expected returns are.

In this situation, you need a marketing model. This is like a financial model that lists out resources and expected outcomes. If you can make it a dynamic model that lets you see what happens if you increase or decrease resources and model a number of outcomes, then you can create marketing model that people understand. If they understand what you are planning to do, it is more likely that they will support you in your work.

Set an objective and a funded project with a plan and resources.

Organisations that believe in managing by targets will set an objective and expect you to hit it. Financial services companies, in particular, are fond of targets. Having a clear objective or target is an amazing way to focus a team on outcomes.

Objective based management is much less useful if target setting is used as a stick, rather than as a prized outcome. A team that fears that they will be sacked if they don’t meet target will be much less effective than a team that believes it will be rewarded if it hits its targets.

You also need to make sure that money and people are available if you want to make meaningful progress, along with regular review and monitoring.

Conclusion:

Content marketing sounds simple – make great content that attract prospects and converts them to customers. But that doesn’t mean it is easy to do.

Use the content marketing model in this post as a way to think about how you can set a budget that will result in generating effective content that you can use to promote your business and grow sales.

You can do content marketing on almost any size budget. If you don’t have the money, you can put in the time.

But, if you don’t do content marketing at all, expect to lose business to competitors that understand the value of content marketing to get in front of customers before you do.

Get started using one of the approaches described in this post. Whether you just jump in and have a go, or create a funded plan with targets and objectives, the important thing is to make sure that you are building your content marketing capability year on year.

How to use a test and learn strategy to invest your marketing dollars in what works

It’s not easy to know what is working and what is not.

John Wanamaker said “Half the money I spend on advertising is wasted; I just don’t know which half.”

This is true of many companies. In our experience, many companies don’t really understand why they are carrying out marketing and whether what they are doing is effective. They rely on experts to tell them what they should do, and try to interpret trends from analytics and make sense from statistical noise.

They try and copy others who look like they are doing well. But marketing does not follow natural laws like physics. It is very hard to show to show that following what someone has done before will produce the results when done by someone else.

As a result, it’s difficult to see how one formula or approach can be guaranteed to deliver increased sales. This doesn’t mean, however, that there is no point in planning and having a strategy. It just means starting with an understanding of the limitations of strategy and being open to creating an evolving strategy that changes as you understand more about your situation.

Should you invest a lot of money in software and people?

You should not buy any tools before you have a first go at trying to deliver what you trying to do with the resources you already have.

What does that mean? Well, you could start today so that auto marketing plan, and put aside 50,000 dollars as your budget.

You could invest in a marketing automation platform like Hubspot or Marketo. This costs between $2,000 to $14,000 for a starter package for one year.

But you also need a person with experience to drive it for you. Say you can hire someone for $40,000.

Now, your first year costs are nearly $55k, and you have nothing to show for it during this financial year other than the potential pipeline you could create if you used the system the way it should be used.

If you are new to using marketing automation and you are in an industry where it hasn’t been used much in the past, then be prepared for some negative reactions.

If it’s hard to make your numbers right now, and you need to bring in 10 customers to pay for the $50k you are just spending, then you are going to get a lot of questions about why you doing this and whether it makes any sense to put all your money into this kind of activity.

You will have to succeed and quickly before you can convince people who think this is a bad idea that they should either suffer in silence, or agree with you. Nothing succeeds like success.

Use a test and learn strategy to start a conversation with customers

One approach is to try out a test and learn strategy, which is a process of planned experimentation. You try and set out to prove or disprove something and in doing so you get a better understanding of what you are trying to achieve, and you use this learning to try again and refine your approach.

The main objective of marketing is to start a conversation with potential customers. The first thing you need to do is figure out how you are going to get customers to talk to you. Are you going to do this by going to them, or having them come to you?

If you want them to come to you, you have to be able to show them something that is useful and interesting. This usually means that you are helping them understand an issue, solve a problem or make a decision.

Most businesses already know why their customers need their product. You will already have sales material, presentations, proposals and other documents that explain this. If you are in a fairly well-developed industry, there will be trade publications and journals that talk about the issues faced by your customers.

Research what existing publishers are talking about to find out what is considered important and interesting

Understanding what is out there is your starting point, and then you align yourself with the ideas in your industry. There are a number of publishers looking for content, so why not try and build a relationship with them and their audiences? Start by creating content that a publisher will accept as useful and interesting, and you are on your way to getting in front of potential customers.

All you to get started is a computer, access the Internet and Microsoft Word, Google Docs or OpenOffice. But you need to get started because the important thing is starting to understand your audience and start creating content.

Create a system to produce your content that creates relevant and useful material

You need a system to help you create focused and good quality content. No one gets up first thing and pushes out 2,000 words of perfect copy without thinking.

Start the day with some free writing, just a stream of consciousness set of words to clear out your brain and get it prepared for the day. Then you can get into flow and create something good.

What you do that you need to do is focus on writing content that is being created because you want it published. If you think of everything you write as due for publication and commissioned by someone else, your thought process will have a customer at the centre of your work from the start.

This publisher is a person who wants your material for a reason and is willing to promote it for you. This means that you are going to operate like a professional writer and have a commissioned list of topics. Each topic should have a proposed title, a purpose statement that explains why you are working on it and a synopsis of what the article is going to be about.

From the synopsis you can then create an outline of your argument with topic sentences, and fill in the details with copy, proof points and images.

Keep in mind that you want to use your content across a number of channels. You might be able to use all material you create on a web page or blog post but it could also make its way to into a document, presentation, brochure or sales letter.

Simply working like this is going to help you create more focused and targeted content that works for your customer.

If you haven’t got enough content already, then you should try and set a target number of content pieces to create using existing systems at no additional cost before starting to spend any money. For example, a reasonable target might be 50 blog posts on your site of at least 1,000 words each to get started.

Only then invest in productivity systems and software to expand your reach through better distribution

Once you have a system creating useful and relevant content then you can try and reach as many people as possible.

This is when you can start thinking of systems that help you automate your work, or streamline your workflow.

At this point, you know that by spending some money, you will save time and there is a clear business case for the investment you are about to make, which will help you grow sales and your business.