What’s the Perfect Marketing Budget for Your Company?
June 28th, 2018 by
In our years of experience as a digital marketing agency, we’ve found that a typical marketing budget for a business is 5-10 percent of revenue, sometimes more when in growth mode. But don’t stop reading yet! Determining the exact budget for your business, and how to allocate it, depends on a wide range of factors, from goals to company age. Here are five questions that can help your business determine its ideal marketing budget.
1. What Are Your Needs and Goals?
Most effective marketing budgets start with a bottom-up approach. This means that your first step is to define your company’s quantifiable goals and objectives. This could be the number of new customers or accounts you’d like to see in the next year. It could also be how quickly you need to see results on your campaigns. The important thing is that the goal is well-defined. This way, you can come up with specific strategies to reach your target, and you can easily measure which strategies are working (and which ones aren’t!). Quantifying your business goals as much as possible will help you create a much stronger marketing budget and marketing campaigns.
2. What Does Your Historical Data Look Like?
So you need specific objectives…but how do you determine what those should be? One effective tool is historical data. For example, if you’re trying to figure out how many new leads you need per month, look at data from previous months. How many people typically contact you per month? How many of those people are qualified potential customers? How many typically convert into actual customers? And is this conversion rate providing you with enough customers to keep your company growing? Once you determine how your company has been performing, you’re in a much better position to decide if and how you’d like to change that performance. In other words, you’re in the perfect place to set measurable goals!
For more information on how to track leads and determine the quality of those leads, visit our Analytics & Lead Tracking page!
3. How Old Is Your Company?
Historical data is great—if you have historical data. Brand new companies usually don’t, which can make determining a marketing budget especially challenging. Luckily, the experts are here to provide guidance! Both entrepreneur.com and websolutions.com recommend that new companies should allocate between 12 percent and 20 percent of their gross revenue to marketing costs. While this range might seem a bit high, there is logic behind it. New companies must be more aggressive with marketing spend because survival depends on building lasting brand recognition with an audience that’s never heard of them before. Once companies have established their brand and customer base, they can change their focus to maintaining the awareness and market position they’ve gained, while incrementally growing their business. And they can adjust their marketing budget to the 5-10 percent we recommended earlier.
4. What Should Your Marketing Plan Include?
So once you’ve established your goals and consulted your historical data if possible, what sort of marketing tactics should you use to achieve those goals? First, a typical marketing budget covers both public relations and advertising, in addition to the previously discussed branding. It’s a very wide range, but it can most easily be broken down into print and digital communication. Print communication includes traditional marketing efforts, like billboards, newsletters, brochures, and press releases—and don’t forget to budget for design, printing, and mailing costs. Digital communication, on the other hand, includes developing a website that’s both SEO friendly and user-friendly, using online advertising to your advantage, and maintaining active social media accounts. Depending on your industry, you might also want to budget for additional marketing efforts that don’t neatly fit into the print or digital category. This could include broadcast advertising, on radio or television, or special events like conferences and trade shows.
5. Where Is Your Target Demographic?
With all those marketing options to choose from, how do you know which ones are right for your business? One key way to narrow down the list is to define your target demographic—not just who they are, but where they are. This question not only applies to the physical location but also to online behavior. What types of media does your target demographic use? Do they spend more time checking their emails or scrolling through Twitter? Whether you’re marketing in the print or digital arena, knowing the places your target demographic frequents can help you put your content in the best location to make the most efficient use of your marketing dollars. In fact, your target demographic can help you decide whether to use print or digital marketing in the first place. While traditional media can strongly contribute to brand awareness and complement your digital strategy, the right balance of print to digital marketing depends greatly on your industry and your customers. Know your target demographic, and you can feel confident you’re investing in the right media.
At Search Influence, our goal is to help you grow your business and optimize your potential online. If you’d like professional insight into choosing the ideal marketing budget for your company, call 504-336-3422 or request a proposal online today.