Businesses Content Manager An advertising budget is the amount allocated for marketing activities within a set time period. The main objective of an advertising budget is to rationally distribute resources between several promotion channels.
A proper budget helps to avoid overspending and achieve business goals
It becomes especially important in a highly competitive environment, when you need to find effective ways to communicate with customers and attract their attention to your offers.
Why is a proper budget important?
Setting a clear advertising budget allows you to manage your finances and choose appropriate promotion strategies . It helps you evaluate Businesses Content Manager the effectiveness of all channels and determine which ones bring the greatest return. This helps you plan future investments in marketing and quickly adapt to changes in the market.
Some companies, especially startups, may act differently
They allocate only the remaining money from the main budget for advertising. As a result, advertising campaigns become ineffective, and it is argentina mobile database difficult to understand where the profit comes from and which channels work best. This highlights the importance of a proactive approach to planning an advertising budget.
Unit-economy
Calculating the budget for an advertising campaign begins with an analysis of the unit economy. We need to calculate how much we earn on one client from the moment they are attracted. To do this, we use the main parameters: customer acquisition cost (CAC) and customer lifetime value (LTV).
CAC is the sum of all marketing costs divided by
The number of new clients you attracted. This can be expressed as follows:
CAC = total marketing costs/number of attracted clients
Example: Let’s imagine that we this is no coincidence this is local seo in action launched an advertising campaign on social networks and spent 100,000 rubles. As a result, we attracted 500 new clients. Thus, the CAC will be:
This means that we spend 200 rubles to attract one client. But if this figure is high in your niche, you might want to choose a different promotion Businesses Content Manager channel or advertising campaign format.
LTV is the total amount that a client brings to a
Business over the entire period of cooperation. Calculating LTV allows you to understand how much you can invest in attracting a new client without risking losses. The formula for LTV:
LTV = Average monthly income × Duration of cooperation (in months).
Example: Let’s say the average canada email lead income from one client is 1,500 rubles per month, and the duration of cooperation is 24 months. Then LTV can be calculated as follows:
see that each attracted client brings in more than we spend on him. This means that the chosen marketing strategy is working.
If (LTV < CAC): the costs of attracting clients are greater than they bring us. For example, if the CAC has increased to 40,000 rubles, and the LTV has remained at 36,000 rubles, then you need to reconsider your approach to promotion.
Developing an advertising budget strategy
Once you have studied the economics of the product, you need to move on to creating a strategy for the advertising budget. Here are a few steps to help you with this:
1. Competitor analysis: Look at what your competitors are doing. Find out which channels work best for them and think about whether it is worth investing in them or whether it is better to look for less competitive niches.
2. Study the target audience:
Find out where potential customers spend their time. What social networks they use and how they make purchasing decisions. Focus on the channels that are most effective for interacting with the audience. For example, VKontakte, Telegram, Rutube.
3. Defining goals: Determine what goal needs to be achieved through advertising. For example, increase brand awareness, attract new customers or increase sales in a certain period. The budget must correspond to these goals and objectives so that advertising works for you.
Example of budget allocation:
Let’s say you plan to invest rubles on advertising. You can distribute the amount like this:
Social networks Advertising on VKontakte and Telegram.
Contextual advertising Google Ads and Yandex Direct to attract users looking for your products.
Email marketing -Newsletters to maintain contact with existing clients.
Analytics and testing Constant analysis of channel performance and strategy adjustment.
Once your budget is set, continue to monitor the results and make changes to your strategy as needed. It is important to be able to adapt to changes in the market and audience demands.
