What sized marketing budget do I need?
I get asked this question regularly, and it’s often one of the first things clients want to understand. It makes complete sense to want to know how much to invest, especially if cash flow is tight, you haven’t done any marketing before, or you’ve been stung in the past by unscrupulous marketers.
Several variables determine the appropriate marketing budget for your business; these include the goals and objectives you’re aiming for, the timeframes in which you want to achieve them, and the marketing resources you have available.
Your marketing budget
Each business is unique, and therefore the exact marketing budget should be tailored to your needs, however, generally speaking, owner-managed companies are typically looking at an ongoing marketing budget of between £1,200 - £4,400 per month, excluding advertising spend.
Your target market and the best ways to engage with them will determine the exact marketing strategy and marketing tactics that should be adopted. This guide is given as a range to allow for flexibility in investment, but increased investment will allow for greater resource and quicker progress.
Industry benchmarks for your marketing budget
It’s typically recommended that a marketing budget of between 12-20% of your gross revenue is required for new businesses looking to grow in their markets; and between 6-12% for companies with an established presence and customer base, according to Experian.
These percentages often shock business owners; however, it is crucial to invest in marketing based on what is appropriate for your business and circumstances.
What should I spend on advertising?
Advertising spend can vary drastically, and it entirely depends on the type of advertising you’re looking to do. For a PPC (Pay-Per-Click) campaign, you can be looking at anything from £500 to £15k per month, depending on your industry and how much competition there is for the keyword terms you’re looking to bid on.
Scalable marketing budgets
There will always be variation between businesses when it comes to marketing budgets, and of course, some will spend less while others will spend a lot more.
The important thing to remember is to make the most of any investment you’re making, so ensure you’re receiving what someone has promised you, track the performance of your activity and make adaptions as you learn more about how to engage with your target market.
A cautionary tale
I spoke to someone recently who invested £3,000 for some marketing activity to be carried out in October 2019 and some of the work has yet to be delivered. This is far from acceptable and you should quickly highlight any issues like this to your current marketing supplier.
When choosing a marketing partner ensure you work well together, they listen to your feedback and guidance and do what is best for your business. As a bonus, if they’re lovely people too, that’s always a win.
