How Much Should You Spend on Marketing?

How Much Should You Spend on Marketing?

When calculating your marketing budget, all the costs related to marketing and advertising should be included, such as:

  • Digital and print advertising
  • Public relations
  • Events and tradeshows
  • Social media
  • Marketing automation
  • Promotional giveaway
  • Vendor expenses

Note: On-site marketing staff costs may be considered an HR expense, but should also be included when you calculate marketing ROI.

Unfortunately, knowing what to include in your budget doesn’t tell you how much you should be spending. Here are some simple guidelines that can help you get started:

The U.S. Small Business Administration suggests spending seven to eight percent of gross revenue on marketing and advertising if your company has annual sales of $5 million per year or less, and your net profit margin is in the 10 to 12 percent range.

 

How do you measure up?

  • Gross Revenue: $500,000 = $35,000-$40,000 for marketing and advertising
  • Gross Revenue: $1.5 million = $105,000-$120,000 for marketing and advertising
  • Gross Revenue: $3 million = $210,000-$240,000 for marketing and advertising
  • Gross Revenue: $4 million – $280,000-$320,000 for marketing and advertising

Your marketing budget may increase in some years because you are developing your brand or making significant changes to your marketing plan. If you re-brand or reposition your company, develop a new website, start social media marketing, or implement marketing automation with ad retargeting, you will likely exceed your budget numbers, and for good reason. You need to invest more to build the foundation of any marketing funnel in your plan. Otherwise, your marketing tactics may struggle to get the desired results.

 

What is the foundation of good marketing?

  • Brand core: Your company’s purpose, values, differentiating factor, and elevator pitch. If you don’t know who you are or what makes you different, how do you expect to compete in a crowded marketplace?
  • Brand logo and brand guidelines: All the different versions of your logo with guidelines that educate your team and vendors on your colors, fonts, logo usage, etc. Consistency in your company’s appearance elevates the sophistication of your image.
  • Target audience profiles: Details on who your ideal customers are – their values, demographics, buying habits, etc. Who are you selling to and where can you reach them?
  • Marketing strategy: What are the goals and metrics that will drive effective marketing? Setting achievable and measurable goals helps you understand the return on investment you receive for their marketing dollars.
  • Digital presence: Your website, social media accounts, other review sites, etc. A modern, easy-to-use website and active social media accounts build awareness and drive sales. 

When it comes to determining a marketing budget, it’s important to keep in mind that your plans for growth will affect the amount you need to allocate. If you have plans to grow your organization’s revenue, need to improve the foundations of your marketing (listed above), or need to acquire an in-house marketing staff person or work with an outsourced marketing agency, you will want to allocate a higher percentage to the marketing budget.

“If you are marketing from a fairly static annual budget, you’re viewing marketing as an expense. Good marketers realize that it is an investment.” – Seth Godin

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We are months into a worldwide pandemic, and there are still many unknowns. But, two things are certain:

  1. Most businesses need to adjust their marketing strategy to endure, and
  2. Digital marketing is the key to making that transition successful.

It’s common to put more pressure on marketing during a recession. Expectations are that it will achieve more with fewer resources while still providing a high return on investment. While this is possible, under current conditions it requires reallocating marketing dollars to digital marketing tactics. An article from Forbes says it best:

“We are in uncertain times, but with the increase of remote working and a collaborative approach, companies are turning to digital channels and embracing the transformation. We have seen a real spike during the last few weeks from companies wishing to create or update websites, launch new eCommerce channels and create social media campaigns focused on home-workers and a real focus on using influencers and SEO to reach new audiences.”

For businesses that have been slow to transition from traditional to digital marketing, time is running out. Some businesses have transitioned their budgets to include digital channels. But, they can gain valuable market share by accelerating that transition and fully embracing a digital strategy. As we’ve previously discussed, businesses that maintained or increased their advertising budgets during a recession actually received positive results in the marketplace.

 

Real-World Cases of Digital Pivots

CASE STUDY 1: In-Face to Internet

In the pre-coronavirus world, one of our technology clients relied heavily on trade shows and other events to generate leads. When that channel disappeared under social distancing restrictions, we realigned their budget to establish an automated marketing program coupled with a digital and retargeting advertising program. Working with their sales and marketing department, we developed a strategy to digitally educate their target audience on the problems the company solves, drive online demos signups, and retarget website visitors with advertisements to drive them back to the client’s website.

CASE STUDY 2: Social Presence to Social Powerhouse

For one of our municipality clients, we were consistently creating social media content that produced impressive engagement numbers with their audience. However, their audience size was stagnating. So, we worked with them to create a social media advertising plan and budget that included boosting posts, social media ads, and interacting more with followers. Over the course of just a few months, their social media account likes grew by thousands.

 CASE STUDY 3: Advisors to Advisees

It’s not only our clients that needed to reassess their marketing strategy as a result of the pandemic. We also took the opportunity to change our own strategy. We developed a new website with messaging and information targeted to our ideal client personas. The website is also optimized to work with marketing automation and digital advertising programs that we are currently developing.

It’s decision time for many businesses, especially when it comes to marketing budgets. Businesses that down-size their marketing and advertising budgets in reaction to current social and economic conditions are in danger of losing a significant amount of business. Or, worse yet, losing their business entirely. Those that adjust their strategy, invest in developing a strategic marketing plan, and transfer their marketing and advertising dollars to digital will have a significantly better chance for success in the year ahead.

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5 Easy Tips to Transform Your Business During a Pandemic

5 Easy Tips to Transform Your Business During a Pandemic

How can you sell and market online if you rely on foot traffic sales?

As we traverse through this changing world, one thing is clear: business is not the same as usual. Even as businesses begin to reopen, operations won’t look as they once did. Whether you have to function at reduced capacity, or customers are staying closer to home, this pandemic will impact your revenue projections for 2020.

If you operate a traditional brick-and-mortar business that relies on customers coming to your location for sales, what can you do? How can you sell to customers that aren’t coming through the door? How can you continue to see the same volumes that you saw pre-pandemic? One word: Online.

This virus has changed the way we use the internet, but it is also going to change the way we do business. As work, schools, and families transitioned home, they made many changes to their lifestyle and doing business online became the new normal.

If you’re feeling underprepared or overwhelmed, it’s okay. Here are five easy tips that will impact the transformation of your business into the digital world.

1. Social Media Selling

Do you have a social media presence? Are you selling online through social networks?  Whether you are utilizing a specific inventory shop or simply posting items for sale, this is a great strategy. Customers may not be browsing in your store, but they are browsing online.

We have seen many businesses use social media to develop creative sales methods during this pandemic. Consider having a live auction on Facebook Live for selling overstock, a weekly special that requires an entry to win, or a “deal of the day” that can only be purchased through Instagram. The possibilities are endless!

2. Make Supporting You Convenient

Do you have gift cards available? Can customers easily buy them online? While we are “all in this together” and many want to #BuyLocal and #SupportLocal, your customers may not feel ready to engage as they once did. Make it easy for the community to support your business by purchasing gift cards. Why do you think Amazon gift cards are such a popular gift? They are easy to buy and easy to give.

If you don’t have gift cards yet, you are just a few clicks away from being able to sell them in-store and online.

3. Google My Business

Google is doing its best to help all organizations during this time and has made several changes to help maximize their online presence.

  • You can solicit donations as part of your Google listing
  • You can promote gift cards purchases as part of your Google listing
  • New search options to help support local businesses
  • Merchants who are certified on Google My Business will be able to add attributes like online appointments, online classes, or online estimates.

 4. Create a Community

Staying connected while staying apart has proven to be one of the biggest challenges for organizations during this pandemic. How can you connect with your customers virtually and create the same environment when you aren’t in all one location? It’s time to create your own community.

Start a Facebook Group for VIP Insiders. Host virtual Zoom parties or Google Hangouts. Having a live event at your establishment? Steam it online and offer “event kits” that viewers can order ahead of time to participate at home. The important thing is to stay connected with customers and stay front-of-mind so when it is safe to reopen, you are fully booked.

5. Strategic Selections

As you get back to business, think about what you can do differently. People are bored. People are tired. What can you offer them that will make this situation a little more bearable (and make you a profit at the same time)? Here are a few examples others have done:

  • Free shipping on orders over a certain dollar amount
  • Curbside pick-up
  • “Family packs” with special meals large enough to feed an entire family
  • Subscription boxes
  • Curated packages around a theme

This isn’t a complete list, but it’s a great place to start. It is easy enough to accomplish in one weekend, it doesn’t take a technology expert to implement, and it is something your business will need to survive.

If this feels overwhelming to you, you aren’t alone! Outsourcing some or all of this work is an option and may end up saving you time and money in the long run.

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