Setting up a marketing budget can feel like a daunting task for most business owners. This rings especially true if your company is fairly new. Just like you’ve heard time and time again,
You need to spend money to make money.
Of course, there must also be a line in place between what you invest in your marketing strategies and the overall financial health of your business. There are plenty of variables to consider when setting a marketing budget, including the standards in your industry and the objective of your company.
Keeping up with the ever-evolving marketplace is just as crucial. General marketing budgets are on the rise and experts expect the digital marketing industry to reach investments of $120 billion by 2021.
To help you decipher the best marketing budget for your needs, let’s dive into a few helpful percentages and talk about the importance of customization.
A Few Helpful Tips
If you’ve been Googling “How To Set a Marketing Budget?” to death, you’ve probably come across numerous figures. One of the best and most successful figures out there comes from the U.S. Small Business Administration, who recommends that businesses who profit under $5 million each year with a 10-12% net profit, utilize 7-8% of that profit for marketing.
While that number is incredibly helpful, it certainly leaves a few variables in the dark.
What Are Your Marketing Expenses?
Before you go any further, you need to know what you are referring to when you say “marketing budget.” Business owners who are new to the marketing game often neglect or miscategorize expenses altogether, which makes it difficult to measure ROI accurately.
Here are a few things you might want to include in your marketing budget:
- Social Media Initiatives
- Public Relations
- PPC Ads
- Print Ads
- Email Marketing
- Video Content
- Web Design
Make sure factor in additional expenses incurred through consultants, subscriptions, digital marketing tools, etc.
What Is The Industry Standard?
It is important to note that the percentages listed above aren’t equal throughout all industries. For example, a B2C company must utilize a higher revenue percentage for marketing than a B2B company. Competitive industries, such as retail or pharmaceuticals, typically require high percentage budgets ranging anywhere from 20-50%.
Make sure to do some research pertaining to your industry before making any commitments.
Is Your Business Established?
Are you currently seeing steady growth with your business or do you constantly need to think about maintaining brand awareness?
For example, if your revenue sits around six figures and you have an established brand and a build-up of loyal customers, you might be fine spending around 5-10% of your total revenue on marketing. On the other hand, if you’re still trying to build brand awareness and find customers, you might consider spending around 12-10% on marketing.
In the case that you aren’t making six figures yet, those percentages might not work. In that case, you’ll want to look at your competitors to see what they are spending.
To find success in your marketing ventures, you must track and measure everything. The more you do this, the better your business will do in the long, as you’ll be able to see what initiatives did and did not work.
For any other questions regarding your marketing budget, make sure to get in touch with us here at Gold Level Marketing.