How much should you spend on marketing?

It’s coming up to that time of the year for many business owners when they spend some time away from their business or desk and actually have time to think about how they are going to grow.

Of course, it’s difficult to think about growth without also thinking about marketing.  Almost 80% of the clients we deal with at Marketing Angels haven’t defined what their marketing budget is when we first meet with them. Part of our job is to help them map their business goals and business stage with a realistic and affordable marketing budget.

It’s important for every company to determine exactly what it is they want to accomplish with marketing. Are you just starting out? Are you established but looking to expand, perhaps launching in a different state or opening new stores? Or, are you just wanting to maintain awareness or visibility? You may be introducing a new product/service to the market or completely refreshing your brand? Do you need to develop new ways for your customers buy e.g. a mobile strategy.

Each of these goals require specific strategies and tactics that vary in costs. Apart from these, there are a host of other considerations as well – such as your industry, the size of your business, competition, profit margins, and so on.

However, we’re sure about one thing and that’s that your marketing budget shouldn’t be based on how others are spending their money or what’s left over once all your other business expenses are covered.

What every business should invest in

Regardless of what stage your business is at, it’s critical that you have a marketing plan and also strong branding. 

Strategy and skills

Whether you create your own marketing plan or hire an expert to help you, you are less likely to waste precious marketing dollars if you’ve researched the various options, the costs involved and likely results.  You’ll also be more successful if you have an experienced marketer to implement your plan.  Whether you hire internally or outsource, you need to ensure that your plan gets executed and executed well.

A great first impression

Creating a strong first impression both online and offline is critical.  Your brand says a lot about your business and is the first chance you have to “engage” your target market.

Get help with making sure you understand what your brand stands for, what your key messages are and then get help developing a good creative brief. Invest in a decent corporate identity and initial branding materials and a website that is optimised for search and mobile.

We all know that first impressions are really important especially if you’re an unknown brand or just starting out in business. A poorly designed logo and website can make it impossible for you to attract new customers.

What you can expect for what you spend

Before you set your mind on how much money you’re willing to invest to grow your business, let me show you how far your budget will get you in the real world:

• Less than $2000 – Are you really serious about being in business?

With this budget, maybe you need to rethink whether you believe in your business? It’s very difficult to get anything for less than $2000. If you are not willing to invest at least this amount you need to question how much faith you have in your business and your commitment to grow.

• $2000 – You better be a marketing ninja yourself and have a lot of time on your hands.

You’ll need some considerable marketing, design and technical skills yourself.

$2000 might get you:

– Some business cards with a cheaply designed logo and a landing page or blog site created using a free open source web platform.

– If you have the right website, you could then build a list and send email campaigns using some of the free email marketing tools available such as MailChimp.

– Some Do It Yourself search engine optimisation. You would need to really know your stuff to be able to optimise your site well enough by yourself to get consistent leads through search engines.

– A social media presence so you can start to build a social media following.  However, you should be aware that it’s difficult to get your content seen on social media now unless you have budget to spend on promoting your social media posts.

You won’t really achieve a great deal of brand awareness or exposure to new potential customers. You really have to be internet savvy to be able to generate some awareness with less than $2000. You would need a lot of marketing smarts and online skills to achieve much from a budget of this size.

• $2000 – $5000 – Enough to get you looking good but not the eyeballs to appreciate it.

A budget of $2000 – $5000 will get you the bare basics.  It’s an OK budget if you are intending to grow pretty slowly and organically.  A budget of this size will get you:

– A cheap corporate identity

– A simple brochure-style website

– Search engine optimisation managed by yourself

– Attendance at a few networking events where you can try and drum up some business.

This will require you to have a decent set of skills, particularly in SEO, and a fair amount of time to manage the marketing yourself.

• $5000 – $10,000 – A small amount of advertising and a good set-up for building and communicating to your database

A budget of this size will get you some smart marketing tools and a little left over to test some advertising:

– Perhaps a more complex website. One with perhaps a good content management system and customer relationship management (CRM) system.

– Search engine optimisation and limited search engine marketing which you would need to manage yourself

– Some consulting help to assist with product development, low cost marketing ideas and PR and marketing coaching

– A social media presence and perhaps a small amount of money to test some social media advertising.

A small budget should be focussed on investing in some good web-based online marketing tools and some expert help on low cost marketing.

• $10,000 – $20,000 – You can start testing some advertising tactics

Some smart marketing tools and a very limited amount of advertising, direct marketing or other marketing activity:

– A high performing website with some customer relationship management tools, a content management system and perhaps an email marketing platform

– Limited search engine marketing

– Limited paid search engine optimisation assistance

– Very limited direct mail activity, limited print advertising or event budget, or online display advertising

– Very limited PR done yourself

–  A small amount of social media advertising

A budget of this size will means you can now start to expand on your marketing tactics. You’ll have a small amount of money to invest in some paid advertising or other tactics that require an investment. You probably won’t have enough to advertise or run other campaigns frequently though.

• $20,000 – $50,000 – You can get start to run some focused consistent marketing campaigns

Some smart marketing tools and some consistent advertising or other marketing activity in one medium:

– A high performing website with some customer relationship management tools, a content management system and perhaps an email marketing platform

– Search engine marketing (managed externally)

– Paid search engine optimisation assistance

Consistent activity in either:

– Direct Mail

– Print advertising, radio, outdoor or online display advertising

– Some events

– Limited PR

– Social media advertising and promotions or competitions

You should now be able to start to consistently advertise or run a marketing campaign in one medium.

• $50,000 – $100,000 – You’re serious about growth and gaining strong brand awareness through your consistent and effective campaigns.

With a budget of this size you should have an arsenal of smart marketing tools and consistent advertising/marketing activity in multiple mediums.  You can invest in

– A high performing website with some customer relationship management tools, a content management system and perhaps an email marketing platform

– Search engine marketing (managed externally)

– Paid search engine optimisation assistance

Consistent activity in one or more of the following mediums:

– Direct Mail

– Print/radio or outdoor or online display advertising

– Some events

– PR

– Some sponsorship

– Social media advertising, competitions and promotions

At this stage you are seriously investing in marketing, you know you’ll get retain, you’re growing and will be consistently advertising and running campaigns in across the key marketing channels. 

A marketing budget needs to be balanced. If you spend too much, you’ll break the bank and just waste your money. On the other hand, if you spend too little because you want to be “safe”, no one will likely know that you exist – and you waste whatever little you had.

Many businesses calculate their initial advertising budget based on a percentage of their projected gross revenues, and add in an extra budget for start-up marketing costs. I suggest if you want to do it right, consult a marketing expert who can help you figure out the marketing strategies and tactics that will get you the best results and value for your investments.

Since starting her outsourced national marketing consultancy Marketing Angels in 2000, Michelle Gamble has helped hundreds of SMEs get smarter marketing. Michelle helps businesses find more effective ways to grow their brands and businesses.