Make More Money From Your Current Marketing
While you may consider marketing an expense to your business, it is an investment that drives your growth. Measure your marketing expense against your return on investment to support your overall goals.
A small business marketing budget covers costs for advertising, promotion, public relations and employees. Typical amounts vary based on the size and industry of the business, its annual sales and how much their competition is spending.
Marketing budgets can range from as low as 1% of sales to over 30%; an average of 15% is a good place to start.
Newer businesses may spend half of their sales for introductory marketing programs until they gain a foothold. Once they do, most local small businesses tend to just match the spending and tactics of their direct competitors.
What To Include In Your Marketing Budget
- Website Development – Including ongoing hosting, content creation and search engine optimization costs
- Print & Online Advertising – Newspapers, magazines, search engine and social media ads, online display ads
- Broadcast Advertising – Cable television and radio
- Graphic Design Costs – Design of marketing collateral and website/advertising graphics
- Printing Costs – Printing and shipping costs
- Direct Mail – Printing and postage
- Public Relations – Media kit development and deployment, telemarketing
- Employee Hiring & Training – Website managers, sales training, press officers
- Trade Shows – Booth development and space fees
4 Ways To Determine The Best Marketing Budget For Your Business
Your small business depends on marketing to generate revenue and grow profits. If you’re not sure how much of your overall sales you should be spending on your marketing activities, compare and contrast the four strategies below and decide which makes the most sense for your market.
- Flat Dollar Amount – New businesses generally begin with a flat amount of money allocated to marketing, generally based on what they think they can afford. This is generally more effective for one-time expenses, such as a specific direct mail campaign or a trade show, and not for long-term marketing goals
- Competition Match – Once new businesses gain a foothold locally, they generally evolve into matching the spending and habits of their local competition to maintain the status quo. This strategy keeps the business in line with others in the field, but assumes everyone else is doing the right thing.
- Percent Of Sales – The main advantage to using a percentage of sales strategy is that the marketing budget increases or decreases with the sales revenue of the company and remains within that scope. It also allows the business to outspend competitors to generate new leads.
- Marketing Objectives – The most-effective strategy for determining your marketing budget is to define your marketing objectives and calculate how much it will cost to implement the tactics required to achieve those objectives.
Whichever strategy you take, be sure to measure your results and test for improvements when and wherever possible. Developing a formal marketing budget will help further define your annual marketing needs, keep your costs low and facilitate future changes that reflect your growth.