How to Determine the Perfect Marketing Budget for Your Company
So let's pull back the velvet curtain on what pricing really looks like and what you can actually expect for your dollar spend.
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So you have the best idea on the planet but no clue how you're going to get it in front of an audience. That's where marketing comes in.
While the marketing industry is filled with strategies and ideas, it's easy to get flustered by all the things you "should" be doing to help your company grow. Ultimately, it all comes down to planning and budget. So let's pull back the velvet curtain on what pricing really looks like and what you can actually expect for your dollar spend.
Here are a few tips for navigating that elusive marketing budget:
The first question we ask a new client is, "Do you know what your budget is?" Usually that's when we see the client's eyes get as big as saucers as they reply, "I have no idea! That's what I thought you were here for."
Over the past five years, we've developed what we call "marketing math" to help clients define exactly what they should be spending on marketing:
New companies: For companies that have been in business for one to five years, we suggest using 12 to 20 percent of your gross revenue or projected revenue on marketing. (Companies less than a year old, tend to need to ramp up before spending marketing dollars.)
Established companies: For those companies that have been in business more than five years and have some market share/brand equity, we suggest allocating between 6 and 12 percent of your gross revenue or projected revenue.
While this may seem like a lot, remember new and emerging brands are looking to capture new market share and develop brand recognition with an audience that has absolutely no idea who they are. That's why it's so expensive. Once the brand is established and a portion of the market is brand-conscious that number drops significantly.
Chicken and egg marketing
I need to grow my brand to make money, but I have no money to help do that. Sound familiar? We call this chicken and egg marketing. I'm here to tell you, to establish a brand you have to crack many, many eggs. That's why it's so critical that startups and established brands alike are well funded. It's like building a house: It's almost always going to take more time and way more money than expected. If you aren't well funded, make sure your dollars are spent wisely and tied tightly to specific deliverables. There is nothing worse than spending every penny you have to build something the wrong way only to have to start over again. So do it right the first time.
FOMO (Fear of missing out)
This term applies to marketing just as much as it does to your Saturday night plans. There are certain unalienable marketing rights of passage that you must spend time and money on so you don't miss the brand boat:
- Social media
Now obviously the mix and dollar spend on each of these will differ significantly based on your product or service but resign yourself to the fact that each of these will take a sizeable bite out of your budget.
How much should each of these channels? Fees can range depending on the age and size of the company and national, local or global marketing goals. But here are some basics:
Inexpensive: 99designs $400 and does not include additional collateral (business cards, letter heads, email templates, etc.).
Good: Small agency may charge between $4,000 to $5,000 and should include all necessary collateral.
Great: More than $10,000 and this is if you are going to a large agency who is creating your entire brand book, story and collateral, among other assets.
Inexpensive: Wix or WordPress can be a do-it-yourself website and can be free.
Good: For a Wordpress site designed to look like your brand, it will usually cost you around $3,500 and add an additional $2,000 or more if you need a plugin shopping cart.
Great: At least $15,000. The price will depend on functionality, automation and design, among other components.
Inexpensive: Hire an intern or a college student.
Good: Between $1,500 and $2,500 for a small agency.
Great: More than $4,000. The price is based on number of platforms, listening software, amount of real-time interaction and PR integration.
Inexpensive: Tell your friends and word of mouth
Good: Some social media marketing (between $300 and $500 a month) along with targeted ads on relevant websites, which is around $500 a month.
Great: Full social, outdoor, print, digital, pay-per-click will set you back at least $3,000.
Inexpensive: Hire an intern
Good: A freelancer platform like Odesk.com, where you can name your own price
Great: Agency content usually runs $250 and $1,000 per piece depending on word count and graphics
Inexpensive: Show up and network at other people's events
Good: Cross-market with another brand with the same target audience
Great: Full events strategy. For production teams, small event start at around $5,000 and can reach into the millions.
There's no magic bullet to reaching your marketing goals, but there are steps to take to ensure you're building your brand in a measured, directed fashion that spends your money wisely.