Are You Spending Enough On Your Marketing?
It’s something a lot of people don’t talk about, so this means there are a lot of business owners out there who don’t really have any idea how much they should be spending on their marketing.
By now, most business owners understand the need to have a great-looking, conversion-friendly website. Now that that’s settled, how do you get it in front of more people? How much do you spend? Is there a rule somewhere?
Here are some ideas to help you understand just how much money you should allocate to your marketing budget:
Know Your Industry
The first step in determining a marketing budget is to know your industry. Knowing what your competitors are spending on advertising and marketing can help gauge how much money you should allocate toward the same goals if you want to stand a chance at competing. Of course, you may not be able to get an answer from them directly, but there are always ways to get an idea.
First, you can ask industry leaders. However, keep in mind their budget will probably be different from what your average competitor spends. You can also try talking to people at conferences and trade shows to get a feel for how much similar businesses are marketing.
The goal here is to at least try to get a range. If you can get a bead on what the industry giants are spending, that’s just an idea of what you want to work up to someday.
Looking at different marketing tactics can also give you an idea of what your competitors are doing and where they’re spending their marketing budget. For example, if they have billboards, they probably have a decent amount of money earmarked for marketing. That’s not something you should ignore, especially if billboards are one of the things you really want to do for your business down the line.
If you have a brick-and-mortar location, look at other businesses in that area to see what they’re doing. Marketing costs can vary greatly depending on whether you’re online or down the street from other companies, so you need to take that into account.
Define Your Goals
Determine your goals behind your marketing strategy before you go allocating funds. Ask yourself if you are planning to:
- Build brand awareness
- Increase sales
- Get more appointments
- Earn a certain amount of revenue
- Get X new people on an email list
Defining your goals is essential to determining where you should spend your marketing budget. Marketing can be a successful tactic to increase sales, but only if you know what your goals are and how you plan to achieve them. Marketing is most effective when it’s tailored for a specific purpose.
For example, if your goal is to create brand awareness or raise awareness about an upcoming event, then social media might be the ideal strategy. However, if your goal is to generate leads for your sales team, then you might go the email marketing route. If your goal is to get more people on your email list, you might focus on content creation and so forth.
Understand the Costs Involved
Depending on where your business is in relation to where you want to be in the future, there will be different costs involved for your marketing strategy. The cost of having a website developed, for example, could be very costly (it isn’t with us!). However, a website is where your brand lives online, and no business can be successful today without an engaging home base. Additionally, a logo, branding, web hosting, ads, and email builders all cost money.
Again, once the website is all settled, you have to determine the costs of things like SEO, Google Adwords, Facebook advertising, etc. The national average for local SEO here in 2021 is $1000. Different industries have different budgets for Adwords, and it really depends upon what your main competitors are spending with this aspect of marketing. Facebook advertising budgets typically range from $500-$2000/month plus the management fees to the agency creating and managing the ads.
Marketing is an investment in your business. Once you have clearly defined goals for your marketing strategy, knowing and accepting the costs involved is crucial. Set realistic expectations for your business based on how much you are willing and able to spend.
Know Where to Market
There are a lot of options when it comes to places you can spend your marketing dollars. Depending on your goals and audience personas, you may choose to allocate funds for:
- Search engine optimization
- Google ads
- Social media marketing
- Email marketing
While all of these are considered great marketing tactics, each of these avenues achieves a different goal. For example, Google search ads help people who are searching for something very specific find your business. That means if you own an online coaching business, you can spend ad dollars to appear first in Google searches related to your organization’s services.
On the other hand, social media ads will appear on the social feeds of any specific demographic that you choose. Marketing through email is great for getting people on your mailing list to purchase new products or learn about new services.
Marketing your business in person can be helpful, too, especially with events like trade shows and networking groups. If you’re attending an event, take the time to chat with other attendees. If you’re hosting an event, invite past clients and potential customers to get involved.
Many small businesses have sponsored a cause dear to them or a youth sports team to put their name in front of others. Doing these things can get you more brand awareness as well as direct customers depending upon what you do.
These are just some ideas to get you started. Marketing is a complex subject and requires a deep strategy to make the most of your budget. Knowing how to direct each marketing dollar spent will help you achieve the most with your budget. It’s also important to test various strategies to see what works best for your specific audience.
Track Your Costs and Adjust When Necessary
The most important part of implementing any marketing budget is to track your costs. If one of the strategies above isn’t working as well as you’d hoped, consider switching up your tactics. Marketing is a fluid process, and it takes time, research, experimenting, and testing to figure out what works best for your business.
Marketing Budgets Across Different Industries
Marketing budgets are based on multiple factors, including annual revenue, available resources and economic climate. They can range from under $20,000 a year to over $250 million for a single campaign. The following examples of marketing budgets are general guidelines based on a research survey.
From their overall budget, marketing costs this percentage of annual revenue for these industries:
- Consumer-packaged goods: 24%
- Consumer services: 15%
- Tech software: 15%
- Construction: 13%
- Education: 11%
- Healthcare: 10%
- Finance: 8%
- Energy: 4%
It’s not unusual for a business to spend anywhere from 2%-15% of its annual revenue on marketing costs.
Choose a Trusted Marketing Partner
Even if you have a bottomless budget, marketing is always going to cost money. Marketing tactics are meant to attract new customers to your business or keep existing ones coming back for more. Marketing can also help you get ahead of the curve and stay competitive in your industry.
It’s important to keep a healthy perspective on marketing. Most successful businesses see it as a continuous investment that requires budgeting and the willingness to spend in order to reap the rewards of having a thriving business.
While it can be an intimidating concept, especially for small businesses where every dollar counts, marketing can show fruitful return on investment if done right. A simple way to think about it is to consider how much revenue your average customer brings in. You can base that number on which marketing elements make the most sense.
For example, if your average customer brings in $1000, and you pay an SEO company the same amount monthly, then SEO only needs to bring in 1 customer a month to break even and 2 customers a month to turn a profit.
Whether it’s a website, social media ads, email marketing, or search ads, there are many avenues you can consider to increase your presence online. Choosing a trusted partner who can help you achieve your marketing goals within your budget is key to long-term success.
If you have questions about your digital marketing, call the staff at Make It Loud for a free initial consultation. We’re here to help you put more money in your pocket.
One marketing strategy idea may be to run search ads for your company using your competitor’s name as a keyword. That means that if someone searches for your competitor, they will see you among the first results as well.