Guide to Setting Realistic Spending Targets
Developing an online marketing strategy and sensible marketing budget is important regardless of business size. Word of mouth can only do so much. The greatest product in the world will fail if nobody knows that it exists. But how do you set a realistic marketing budget so you’re able to amplify your message across multiple channels? With plans, however, come questions. How much is too much to spend on a marketing budget? Here are 7 tips to help in that endeavor.
1. Spend Appropriately by Channel
While you don’t want to bankrupt the company, skimping on marketing can cause irreparable harm. Common wisdom states that a marketing budget should equal between 1 to 10 percent of sales, but it’s important to consider the variables. According to a recent Gartner study, the average digital marketing budget averages 2.5% of company revenue. As you calculate your spend across marketing channels, ask yourself:
- How established is the business? To get its name out there, an unknown start-up might want to dedicate as much as 15 percent of sales to marketing.
- Is your marketing budget in line with industry norms? Some insight into the competition’s spending habits can give you a good idea.
- What marketing channels best suit your business goals? For example, social media offer many “free” channels; the investment is in the time to manage it. You need resources (either internal or external) to craft appropriate messages, build an audience, roll out campaigns, monitor and manage brand, and measure results.
Consider your options when it comes to marketing channels. Online marketing most likely is at the top of your list, but also look at traditional offline channels (e.g., cable TV, select magazines) when appropriate for your target audience.
2. Splitting the Difference between Brand & Promotion
Once you’ve made a determination of what channels you’ll use, split the allocation between brand development and promotion of the business itself. In addition to advertising campaigns, such efforts as event sponsorship can be an excellent way to blend brand recognition with lead generation.
3. Remember Your Niche
Consider the likely habits of your potential customers. There is probably little to gain from pitching microwave cookware at an auto show. Familiarity with your expected customer base will assist in pointing your advertising dollars in the right direction. Having customer personas will make your marketing budget decisions easier and more fruitful.
4. Marketing Budget Flexibility
Carving your marketing budget in stone might make your CFO more comfortable, however it’s not realistic in this ever-changing business climate. Unexpected opportunities will undoubtedly arise, many with limited time offers where you need to make a decision quickly. To avoid getting caught up in a pressure sale, establish a decision matrix or evaluation criteria in advance.
Remember, too, to analyze the success of past campaigns. If last season’s publicity drive failed to pay off, don’t hesitate to abandon it entirely in favor of something more promising.
5. Frank Assessment of Internal Resources
When putting together your budget, consider the skills and expertise of your internal resources. Is your marketing assistant capable of copywriting marketing messages across social media channels? Or, would it be a better use of time and money by outsourcing that function. You’d be surprised at how you can leverage your marketing dollars by strategically delegating to either internal or external resources (or a combination of both).
6. Plan for Future Profits
Given the importance of marketing, a small business with a margin of less than 10 percent might find it advisable to free up more money for the purpose. A sacrifice in one area today can increase your overall gains tomorrow.
7. Be Patient
Growing a brand and extending your reach takes time. A little experimentation will help you discover how to utilize your marketing budget in the way that best suits your business. I suggest reviewing your marketing efforts at least quarterly to measure, evaluate, and fine-tune.
Ok, those are my 7 tips. What would you add?
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