Ray L. Perry Consulting

Can Financial Services Firms Make Marketing Budgets Pay Off?

The majority of marketing leaders have very little experience when it comes to finance. A well balanced budget is not something that would get you excited and out of bed in the morning. Instead, you are here for growth and branding that is great.

As a marketing manager or CMO, you are responsible for a lot of company money and it is important to spend wisely.

Marketing Expenses: A Definition

We will discuss marketing and advertising expenses for your taxes in more depth below. These have specific legal implications, so we want to be careful with how we discuss them.

In general, marketing expenses are the costs of promoting your business. Traditionally, this has meant printing and producing physical collateral, placing ads in print and on-screen, travel, and employee salaries.

The cost of advertising has increased over time and includes digital marketing costs. Companies often spend a lot of money on Facebook and Google ads.

There are also marketing campaigns that use influencers and online subscription payments – both relatively modern innovations.

A List of Typical Marketing Costs

The term “marketing mix” is used to describe the various elements that make up a marketing campaign. These elements can include advertising, public relations, digital marketing, and growth hacking. The cost of each of these elements can vary depending on the approach used.

These include (but are certainly not limited to):

Not all of these costs will be tax-deductible. We’ll go into more detail on this subject later.

The biggest challenge for marketing managers is to keep track of all the different payments. It’s easy to miss things like an ongoing subscription or going over budget on a big campaign.

Even if something is natural, that doesn’t mean it is okay. A business that is run well cannot afford to operate in that manner.

How can you efficiently monitor and manage all of these costs? First, we have to talk about tax.

Marketing and Tax

This section provides an overview of marketing costs and tax principles but should not be relied on for financial or tax law advice.

Readers in the U.K. can find more information about running a business at gov.uk, and readers in the U.S. can visit irs.gov.

Advertising expenses can be deducted from a business’s taxable income, which reduces the amount of tax the business pays.

Are Marketing Expenses Tax Deductible?

If the cost is related to promoting your brand and selling goods, it is generally considered an advertising expense and is deductible. Some specific exceptions to this will be examined below.

You need to distinguish between advertising and operating costs. Operating expenses are those that would be incurred even if they were not part of a marketing campaign, so for accounting purposes, these should be kept separate. Examples of operating expenses include stationery, insurance, and other basic office supplies.

All tax deductions have to be ordinary and necessary according to the IRS. “An ordinary expense is something that is common and accepted in the type of business you have. A necessary expense is something that is helpful and appropriate for the type of business you have.”

This allows for many marketing expenses to be deducted.

The most common deductible marketing costs include:

If a cost can be shown to be primarily for the promotion of a business, it is most likely a marketing expense.

Now, let’s take a quick look at the differences between rules in the United Kingdom and the United States.

Setting Clear Marketing Goals

If you don’t plan ahead, you are setting yourself up for failure. A good plan starts with figuring out what your goals and objectives are.

This is self-evident, and we won’t go over the entire process here.

But if you’ve never set goals before, the SMART method is always a good starting point. This means they need to be:

It is advisable to look at industry benchmarks when trying to evaluate your company’s performance. This is especially useful for seeing how you measure up against your competitors. When setting goals, it is important to make sure they are relevant to your business’ current stage. For example, if you want to increase sales and leads, you should focus on bottom-of-the-funnel metrics.

Why do you need goals?

You can’t just put a number to something, create a limit, or expect to hit a goal without understanding what goes into achieving it. It is essential to set objectives, and your marketing plan will suffer without them. However, it is also necessary to help you build a budget. You cannot just assign a number to something, create a limit, or expect to reach a goal without understanding what goes into achieving it.

Each campaign or action that will help you achieve your goals deserves financial support.

If not, you can probably let it go.

Choose Your Marketing Strategy

This connection between planning and goal setting should be top of mind for everyone in your organization.” As Nathan Ellering points out, a successful marketing strategy requires a clear roadmap detailing how to execute well-planned projects that align with defined goals. This connection between planning and goal setting should be a key consideration for everyone in your organization.

This process not only targeting the right audience with the right content and the right level of effort but helping you understand the impact marketing projects have upon the growth of your organization.

Do you want to invest your resources in a website and blog that is doing well? Are you willing to spend a lot of money on LinkedIn and Facebook ads with the goal of increasing conversions? Or would you rather focus on building a large email list so that you can send targeted email messages?

With all the cheap email marketing software available today, you should budget for it accordingly. Some of the more well known software include MailChimp, Constant Contact, Moosend, and Sendx.io. Once you determine which software best fits your needs, budget appropriately.

In order to create a budget for the upcoming year, you need to know how much you will need to spend on each activity.

We will continue with the financial plan and assume that you have already considered your marketing strategy. If you need help with the latter, here is an excellent guide to building a content marketing strategy.

This tool can be used for a variety of marketing tasks and strategies.

Four Approaches to Marketing Planning

While most firms are faced with the task of planning for growth, they do not approach it in the same way. We have observed four general methods:

Ad Hoc

Firms that don’t do any planning are more likely to have trouble achieving their goals. Marketing tactics should be based on more than just immediate needs or random opportunities. Having a plan can help you be more successful.

Legacy Budget Planning

At other firms, it can be difficult to implement change: “We’ve always done things this way, so let’s just make a few small changes and do the same thing next year.” Or, “We always exhibit at this conference, so we’ll do it again.” Usually, they don’t do much analysis of past results or changes in the competitive landscape.

Consensus Budget Planning

Many partnerships come up with marketing ideas by brainstorming as a group and then create a budget and plan based on those suggestions. However, this method often leads to an ambitious and unfocused plan that is ineffective. This is because everyone gets some of what they want, rather than what would be most effective.

Strategic Marketing Planning

We recommend and describe an approach in this post where a firm develops a systematic plan based on its strategic business goals and an informed understanding of its relevant target client groups. The firm allocates its budget in a way that maximizes the probability of success and harnesses efficiencies. Over the year, the firm tracks results and uses them to adjust the plan going forward.

How Much Should You Spend on Your Marketing Budget?

There are two ways to determine how much money you should spend on marketing. The first way, called bottom-up budgeting, starts with figuring out how much money you need to spend to achieve your marketing objectives. The second way, called top-down budgeting, starts with figuring out how much money your company can afford to spend on marketing.

First, you identify which strategies and tactics will help you achieve your marketing goals. Then, you find out how much those strategies and tactics will cost. The total cost of all the strategies and tactics becomes your marketing budget.

This type of approach starts with high-level decisions and works its way down to the details. For example, you might decide to spend a certain percentage of your budget on marketing, then figure out how to best allocate that money based on what other successful companies are doing.

Most firms use some combination of top-down and bottom-up approaches to budgeting. The top-down approach is typically used to set broad spending levels, while the bottom-up approach is usually used to allocate funds to specific initiatives.

Before developing your marketing budget plan, there are some things to keep in mind. Make sure to benchmark your budget against comparable firms.

Benchmarking Your Marketing Budget

Your first challenge is to decide which peer group firms to benchmark yourself against. To make the right choice, you need to consider several factors:

There are big differences in how much money different industries within the professional services universe spend on marketing. Some of these differences are due to the way their services are used. For example, industries that provide compliance-based services, such as accounting, usually have lower expense levels. Industries whose buyers have fewer recurring needs, such as some consulting or technology services, need to spend more money to get new clients and grow.

How to Prepare Your Marketing Budget and Plan

Start With Business Goals

Do you want to enter new markets or product segments? Do you want to increase market share? Do you have any other strategic goals? Strategic marketing begins with your company’s desired outcomes. What are your goals? Are you looking to grow the company? How much? Within what time frame? Are you wanting to branch out into new markets or product segments? Are you wanting to increase your market share? Do you have any other strategic goals?

The firm’s marketing strategy should focus on promoting services to client segments that are most likely to generate additional work and grow revenue. Business goals should not only be based on the overall numbers, but also on which segments of the practice are the best targets for growth. Most firms have different types of clients that buy various services, so the firm’s marketing strategy should focus on those client segments that are most likely to generate additional work and grow revenue.

Which areas offer the best value? What segments will see the easiest growth? Where is growth already happening? After narrowing your choices, it’s time to get to know your target audience better.

Research Your Target Audiences

A target audience is a defined group of people who you want to reach with your marketing. After you identify your target audience, you need to research them. This will help you understand their needs and how to best reach them. Luckily, there are lots of ways to research your target audience. You can start by talking to people in your target market, looking at demographic data, or conducting surveys. The next step in preparing a strategic marketing plan and budget is identifying and researching your target audiences. A target audience is a defined group of people who you want to reach with your marketing. After you identify your target audience, you need to research them to understand their needs and how to best reach them. You can start by talking to people in your target market, looking at demographic data, or conducting surveys.

Who Are Your Target Audiences?

The people you need to reach in order to carry out your marketing strategy are your target audiences. Potential clients would be one example, but this group can also be divided by things like industry and role if that makes a difference. And remember, it’s not just the person who makes the final decision that matters–there are also people who influence them, sometimes a whole committee.

Referral sources can be very helpful in getting your foot in the door with potential clients. Sometimes, these referral sources are so influential that they can even help make decisions for potential clients. There are also outside factors that can affect how potential clients see your business, such as journalists, analysts, and thought leaders.

If a company is having trouble attracting and retaining talent, it can severely impact its ability to deliver on its promises. This makes potential employees or subcontractors important target audiences for employer branding efforts.

To select the most responsive markets, firms research multiple potential audiences or market segments.

THE PROBLEM: YOUR BUSINESS ISN’T GROWING AS FAST AS IT SHOULD!

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