When you have a good idea, you want to put it to use for your business. However, when you have no idea how you are going to do it, you need marketing. There are a ton of strategies, tactics and other ideas out there when it comes to the marketing industry. For that reason, it can be extremely easy to get overwhelmed with what you should and should not be doing to try to grow your company. However, in the end, it all boils down to a lot of planning and a pre-determined budget.
So, let’s take a look at what a marketing budget should look like and what you can expect from your marketing dollars:
1. A Little Bit of Marketing Math
When we talk to new clients, our first question is always, “Do you know what your budget is?” And as a general rule, they have no clue. In fact, most of them expect us to come up with their budget for them. While we can’t tell you exactly what your budget should be, there is a basic rule of thumb that can help you figure out what you should spend:
- New companies – If your company has been in business for five or less years, then your marketing budget should be somewhere between 12 and 20 percent of your annual gross revenue. Now, if you have only been in business for less than a year, you may want to spend less on marketing and then begin to ramp up.
- Established companies – If your company has been in business for over five years, then your marketing budget should be somewhere between six and 12 percent of your annual gross revenue.
At first, these percentages may appear to be a lot, but you need to remember that new companies are looking to develop brand awareness and recognition with audiences who aren’t familiar with them. Once your brand has been established in the market, the percentage drops considerably.
2. Chicken and Egg Marketing
So, do you have no money to assist you with growing your brand to create sales and make money? This is known as chicken and egg marketing. In order to establish your brand and company as a whole, you will need to crack a large amount of eggs. For that reason, it is important for start-up businesses as well as established brands to be well-funded.
You could compare it to be building a home. More often than not, it will take more money, more time and more effort than you ever anticipated. If you are not well-funded from the get-go, you must make sure that your marketing dollars are wisely spent and tied to specific milestone deliverables. The last thing you want in this type of situation is to spend every last penny of yours building something to find out that you did it the wrong way and that you have to start all over again. Make sure that it is done right the first time.
3. Fear of Missing Out
As with all things in life, you are going to be worried about not spending money and time on certain aspects of marketing and your brand suffering as a result. Some of these include website, branding, social media, content, advertising, and events. The amount of money that needs to be spent on each of these will vary depending on the service or product, but they will each take a considerable amount of your marketing budget. So, how much should you spend on each one? Pricing will ultimately be based on the size and age of your company as well as your various local, global or national marketing goals; however, here are a few basics (with generic pricing):
- Inexpensive – WordPress is a great DIY website and is usually free.
- Good – If you want your WordPress site to have a unique design, it will cost about $3,500. For a plug-in shopping cart, you will need to add $2,000+.
- Great – You can expect to spend $15,000 or more. The final price will depend on design, automation, functionality and other components.
- Inexpensive – You spend around $400 at 99designs, but you won’t get anything extra (collateral) like letter heads, business cards, e-mail templates, etc.
- Good – If you opt to go with a small agency, you can get all the necessary collateral for around $4,000 or $5,000.
- Great – Yu can expect to spend over $10,000 with a larger agency and you will get it all: an entire brand book, collateral, story and various other assets.
- Inexpensive – You can hire a college student or an intern, possibly for free.
- Good – You can hire a small agency for somewhere between $1,500 and $2,500.
- Great – You are looking at over $4,000, a price based on the number of platforms, amount of interaction in real-time, licensing software, and PR integration.
- Inexpensive – You can hire an intern for free or a nominal fee.
- Good – You can name you own price by opting for a freelancer (think Odesk.com).
- Great – You can find a top-notch agency that will charge $250 to $1,000 per piece of content, depending on graphics and word content.
- Inexpensive – Spread word-of-mouth through your friends, colleagues, etc.
- Good – Use social media marketing (around $300 to $500 monthly), in addition to targeted advertisements on relevant sites (about $500 monthly).
- Great – Full digital, print, outdoor, social and pay-per-click advertising for about $3,000 or more.
- Inexpensive – Go to other people’s events and network.
- Good – Find another brand with the same or a similar target audience and cross-market.
- Great – Do a full events strategy. Depending on logistics, this can range from around $5,000 (for small events) into the millions.
In reality, there is no magic number when it comes to your marketing budget. You just want to make sure that you have the marketing dollars to real your marketing goals. So, your best bet is to define those goals and then determine the money that you need to reach those goals. In addition, you need to ensure that you are taking the steps necessary build your brand in a direct, measured fashion that allows you to spend your marketing dollars wisely.
For more advice or to assist you in developing a marketing budget and/or strategy, contact us at WebDetail.