Many companies know they need sound marketing but fear it’s too expensive or don’t know how much to budget for it to be effective. And many smaller companies lack the ability to budget, relegating marketing to ad-hoc dollars when they can. That’s a recipe for disaster. You might as well just light your money on fire. Marketing in fits and starts doesn’t work. You either believe in it and invest in a pragmatic, focused approach, or you don’t. That doesn’t mean it needs to break the bank, but you need to be realistic.
Over the years, I’ve seen many who view marketing as a cost center rather than a source of revenue. That is outdated thinking likely based on notion that 50% of all advertising is wasted, you just don’t know which 50%. Modern marketing provides the data to help you measure if it’s working or not. You can track leads from the time they hit your website, qualify those leads and also know whether they close or not.
That’s often easier for B2B than brick and mortar, however, there are many ways to measure the effectiveness of your marketing. The key is in consistent execution based on a sound strategy. Think of marketing done well as a virtuous cycle that delivers increasing returns year over year. But back to our question of how much should you spend? And the follow up, “If I can’t afford it, what can I do?”
A rule of thumb is 5 – 10% for an established business however it depends on how competitive your niche is. And whether you are b2b or retail. If you’re just starting out and no one knows you, budgeting 10 – 20% of revenue is ideal. Your budget also depends on your strategy. It’s not a one-size fits all. You must spend enough to see results. If all you have is 1 – 2%, it will be hard to see the ROI you seek and you’ll walk away convinced marketing doesn’t work.
On the flip side, you need to be willing to invest over time as especially for those starting out, it takes time to see traction.
Based on your strategy, your budget can be spent either on people or advertising or (preferably) both. If you take an SEO approach to growing your awareness, having the right person on your team executing your content strategy is critical. You can invest most all of your budget on your people whether in house or an agency. If you take an advertising approach, hiring an agency to develop your ads or the right digital marketer on your team who knows how to write, test and optimize copy is also critical. You then need the budget for meaningful ad spend which depends on how competitive the keywords in your industry are.
Once you set a budget, you need a strategy. A mistake I see many companies make it taking a flavor of the month approach reacting to their competitors or changes in the market. While you need to be aware of, and sometimes change course, your strategy needs to be connected to the problems you solve for your customers. In market downturns marketing is often one of the first areas that get cut yet investing prudently during such times can set you up for success in the rebound.
With a solid strategy in place, you’re able to make smarter decisions in these times – which we’re obviously in right now. Whatever your available budget, don’t start spending until you are clear on what you expect your marketing to accomplish. Marketing done right is a powerful tool to accelerate your growthIf you’re interested in exploring how to kickstart your marketing, we offer a free one-hour consultation.