14 Nov Marketing Budgets
How much should my marketing budget be?
The average marketing budget is a minimum 10% of a companies turnover.
Marketing budget, the age-old question of how much. Yesterday I was having a conversation with a member of my family who is setting up his own business and it turned to budgets.
I will not bore you with the details but the main thrust of the conversation was that he did not intend to market at all.
Because the budget to do this simply did not exist.
I was curious as to how he was going to get customers so I asked him, the answer was ‘I’ll wait for it to happen organically.’
‘How will that happen?’ I asked
‘Word of mouth’ he replied
‘So…’ I ventured ‘How are you going to get your first customer when your business is predominantly online?’
At this stage, he became annoyed with me. Of course, I wasn’t trying to provoke in any way but I still maintain that your business will not grow if it does not have a marketing budget or strategy. You cannot expect to publish a website and expect the magic to just happen.
But I’ve tried marketing before and it didn’t work.
Join the club. Almost everyone I know has been sucked into using a ‘marketing consultant’ or ‘marketing team’ that were unscrupulous. That doesn’t mean it doesn’t work, it means that person(s) didn’t know what they were doing.
I fully appreciate that new or smaller businesses do not always have the budget to employ a marketing team. However I can assure you that if you employ the skills of the right marketing or PR team you will realise skilled marketing is not actually expenditure but an investment.
Once the initial strategy is created and implementation has started you should be getting a minimum of 100% return on investment.
It should of course be higher than this, we have clients who’s ROI is over 3000% which of course shows that marketing does work and is worth investing in.
There are of course other benefits to PR and marketing other than money in the bank. Brand recognition can be gained through social media, press appearances, guest blogs and other avenues.
Value in terms of money simply cannot be placed on these outlets. For example last month we had a client who gave advice in the business section of a national newspaper. This generated a huge number of enquiresthat have since converted to sales. In addition to this they received a significant boost to the people that visited the website and liked and followed them on social media channels. This is something that is very difficult to quantify as they have the potential to convert into leads in the future but in the interim they have the benefit of boosting the brand.
So what should you be doing?
Your first step is to ensure your financial plan is in place and it includes a designated budget for marketing.
How much should I put aside for marketing?
Large companies can spend up to 20% of total revenue on marketing but as a general rule of thumb our Essex marketing and PR team would suggest 5% to 10% of your total revenue.
This is entirely dependent on your business though and will chance according to your business and industry.
There are two types of people, those who see marketing as a spend and those who see it as an investment. From my years and years of experience I can promise you that it is those who perceive marketing and PR as a ‘spend’ who will not be as successful and who will cut the budget when times seem a bit rough.
This isn’t just me saying this either. Statistically firms who have a marketing budget are more profitable than those who do not.
So once you have a budget in place how do you split it?A good marketing and PR company will be able to guide you here but generally speaking 30 -35% on online marketing is about right, this is exclusive of social media which should represent around 5-10% of your budget. PR should take a further 30% and the rest of your budget is dependent on your business.
Now I know what I am spending how do I choose the best marketing and PR Company I can afford?
- First and foremost, as with anything DO NOT RUSH.
- If possible meet with the company face to face. If this is not possible please at least converse with them over Skype. You are going to be working with these people for a long time so you need to know you like them and get on with them.
- Avoid anyone that makes you sign up for a minimum period. They are doing this so they are guaranteed to keep your business regardless of how they perform. Our Essex team only have a notice period of four weeks so you can stop whenever you want to. Why four weeks/ because we will have loose ends to tie up and will create a document that explains the best way for you to proceed.
- Do not reply straight away. If you think that this team is the one for you, see if they chase you. This will be a good indication of how well they communicate when you work with them and how much they want to work with you.
If you are looking for assistance with your marketing and PR contact our Essex team today for more information.