I think one of the most frequently asked questions I hear from clients or potential clients is, “How much should I spend on Marketing?” There’s no real simple answer to this but here’s some tips on how to work it out.
The first real issue is to understand what Marketing actually is! A lot of people consider Marketing to be Advertising. Others see it as promotion or perhaps even Branding. The reality is, that Marketing is all of these things. To get a better understanding of this, see our Marketing Wheel here.
Secondly, you need to identify where you are in the mind of the consumer. We actually use a scale of sorts that allows us to analyse where you are at in a series of phases and thus which sort of direction your Marketing should take. This will also dictate your budget in some senses. A start-up business will need more budget compared to an established one. A business that currently lacks brand awareness will require a different campaign to a known brand and thus their budget will also differ.
In general terms (very general) most businesses should be budgeting 3% – 5% of there PROJECTED turnover into Marketing. Any major shifts in the business need to be budgeted outside of these costs e.g. re-branding, change of stock or services (these require separate budgets based on the application and scope of the market). The key here is PROJECTED turnover – not your current turnover. A budget based on your current turnover will only produce a result similar (or usually less) than that shown previously.
If you want to see a 40% increase in your turnover next year and your current turnover was $1million, then your Marketing budget would need to be around $40,000 – $70,000.
The final and most vital tip, is that you have a strategy and a plan. It’s not difficult to waste your budget on things that don’t work. Be strategic in your spend and plan out your me dia and promotion costs along with your branding and creation while leaving a contingency budget, allowing for flexibility if a great opportunity happens to arise.
Marketing is not an exacting science. It’s about gut feel, strategic thinking, the fusion of left and right brain people and a healthy wealth of experience. I guessing you already know where to find all that…