In order any business to thrive, you need customers. But customers don’t magically flock to your business just because your open sign is lit up. You need to reach the people that are interested in what you offer… And marketing is how you accomplish that.
Every business must decide how much they are going to spend on marketing. How do you determine what’s right for you? Marketing budgets vary based on a number of factors. A budget that works for one business may not work for your business.
You want a marketing budget that is efficient and effective. This decision impacts more than just one line in your bookkeeping: the purpose of marketing is to get that revenue number at the top thicker every day! Marketing exists to grow your sales and increase the number of opportunities you have as a business. But how do you find your magic number?
The Best Budget
In a perfect world, an easy one-size-fits-all number could be given to any business creating their marketing budget. But, there’s a little more to it than that. The size of your company, type of industry, and business goals are just a few factors that can change the best budget for you.
Still, there are general standards you can adopt, assess, and alter to fit the needs of your business. Your marketing budget is communicated as a percentage of your revenue. For B2B businesses, 2-5% of your revenue is the recommended amount for your marketing budget. And if you’re a B2C business, 5-10% is a good rule of thumb.
This range is a good place to begin, but you can make yours more if it fits with your goals. Some experts recommend having a budget as high as 15-20% of your revenue. This may be for you if you are in a highly competitive industry or are at a point where you’re still a new business establishing your name.
An Investment, Not a Loss
It’s important to remember that marketing exists to make you more money. Instead of seeing your marketing budget as a loss for your business, view it as an investment. Successful marketing increases your revenue beyond the price you paid for it. That’s why results are measured as a Return on Investment, or ROI. Cutting your marketing budget to save money will often cost you more money in the end.
Where to Budget Your Budget
Just as important as choosing what to budget is choosing where to budget it. Where will you be marketing your business? What channels and strategies will be the most effective for you? How much money do you put into each marketing campaign?
Answering these questions will require you to think about the following.
Different Costs: Marketing efforts do not all operate the same. Therefore, their costs will not always correlate dollar per dollar. For example, getting a design package for your company when you’re just starting out – your logo, colors, fonts – is mostly a one-time cost. On the other hand, paying for a website includes not only a high upfront cost but also a regular cost for maintenance and hosting. It’s important to consider more than just the dollar amount spent for each marketing effort, as you’ll see next.
Your Company’s Goals: You should only pursue a marketing strategy that helps you reach your specific goals. Some campaigns build your brand’s name recognition. Others educate people about your products in more depth. And others exist to stand out against specific competitors. You may find a campaign that can help you reach all of these goals. Know your goals as a company first, so you can choose the best marketing solution for you.
Study Your Competitors: Understanding where your competitors are advertising can give you a good indication of where you should be too. Maybe they are finding success on a platform because that’s where your mutual audience is hanging out. You may find success on other platforms more than them, but don’t dismiss where they are doing well.
Who Will Be Doing the Work: Do you have the skillset and bandwidth internally to handle things yourself? Or are you going to need to hire out? Great marketing requires both talent and time. If you’re short on one or the other (per perhaps even both), you may want to look into local financial marketing companies, or marketing companies specializing in your business area. Often times, outside professional help can be really beneficial.
With these factors in mind, let’s look at some of the best marketing options out there to spend your marketing budget.
Company Image & Collateral: Whether you’re new or ready to rebrand, every business will need to establish an identity through a logo and other design elements including marketing collateral.The marketing collateral best for your business may vary, from infographics to case studies, eBooks to promotional videos. This marketing effort is an upfront cost with typically little regular upkeep involved, aside from creating additional collateral or rebranding in the future.
Website: When publishing a website you’ll need to keep in mind there will be an upfront design cost and some ongoing maintenance and hosting costs associated. Always connect and stay up to date with your website’s analytics to measure your progress and see where you may need to improve your site.
Local SEO: Your local SEO contributes greatly to your visibility online. It helps people find you. This marketing effort is an investment that will take time to establish and see results. But overall it is the best long term solution for local traffic.
Marketing on Social Media: Many businesses today are thriving by running organic posts on social media platforms. While you may not be paying the platform to publish these posts, building a following will take time. You may need to hire a social media specialist to manage your account. Consider the cost of running your social media in house compared to outsourcing to a social media expert.
Paid Online Ads: Advertise online for instant targeted traffic. Facebook, Instagram, and pretty much every other social media platform today offer sponsored posts on their platforms. Do you already have a strong presence on a specific platform? A sponsored post will boost your reach even further and funnel consumers to your organic posts. You can also opt for search engine advertising options like Google.
Track, Adjust, Repeat
Choosing a marketing budget is a cycle, not a one and done situation. It can be tempting to make a marketing budget, decide how much you will spend on each channel, and walk away. But don’t forget to measure your marketing’s success and adjust regularly. This is what will make your marketing the most efficient and effective.
Did your marketing efforts work on one channel but provide no ROI on another channel? Adjust your marketing budget to spend less money on the less successful strategies and more on those that performed well. An effective marketing budget translates to a successful and steady increase in revenue for years to come.