The best marketing budget to help you get results
As a business owner, you know you’ve got to allocate some budget towards your marketing efforts. But how much exactly? While there isn’t one right answer, there are a few things that can help you figure out how much you should spend on marketing your business.
If you’re feeling a little lost on how to set a marketing budget - don’t worry, you’re not the only one! Many businesses out there don’t have a defined marketing budget - and that’s marketing mistake #1! It’s important to understand what your goals are as a business, and choose marketing strategies that will help you achieve those goals.
First off, let’s find out how to calculate your total marketing budget.
How to calculate your marketing budget
Calculate your revenue
Before you set yourself a marketing budget, you’ll need to figure out what your company’s total revenue is. Talk to your accountant or financial advisor to help determine your brand’s gross revenue, or estimated revenue.
What’s your company size?
The next step is to determine your company size. Are you a new company operating in the market for 1-5 years, or an established company that has been operating for 5+ years with brand equity/market share?
The suggested marketing percentage for your business
According to Wordstream, the most effective marketing budget for new companies is 12-20% of their gross revenue. Whereas for established companies, a marketing budget should be 6-12% of their gross revenue. Established companies have a smaller suggested percentage as they don’t need to market as heavily as newer companies. They generally have loyal customers that will continue to purchase from them. While they still need to allocate a budget for marketing, they don’t need to spend as much as a smaller company.
However, we suggest putting in a minimum of 15% of your expected revenue back into your marketing efforts. This will give you the best opportunity to reach and engage with your audience to bring in new leads, and retain current customers.
Now that I know how much to allocate, what should I spend it on?
Before you dive into marketing, you’ll want to take the extra time to plan out which strategies you need to spend on. While each industry is different, there are some basic digital marketing strategies every business should think about. Here are a few strategies you may want to allocate some of your budget towards.
Branding is so important for a business as it sets the look, feel and quality of the brand. It’s important to have consistent and cohesive branding throughout your website and marketing materials to help you gain loyal customers. Whether it’s perfecting your website, or updating your marketing collateral to make it more cohesive - spending some time and money on branding can go a long way.
If you aren’t quite whether your branding needs an update, here’s a few ways to figure out whether your business needs a brand refresh.
Content Marketing helps promote your brand through blog articles, video and various other online materials. Creating engaging content that your audience finds interesting, and useful is a great way to attract new leads, and ultimately turn them into your customers. You’ll want to focus on generating content that drives your audience to react to it - whether it’s in form of a ‘like’, ‘share’ or ‘comment’.
To help boost the efforts of your content marketing strategy, you’ll want to start thinking about content distribution and how to get your content seen.
Another important marketing strategy you’ll need to allocate your budget towards is paid advertising. Depending on your overall budget, and how your target audience is best influenced, splitting your ad budget between social ads and Google ads is generally a good way to go. Think about which social platforms your target audience use most and allocate some budget towards advertising on those platforms - whether it be Facebook, Instagram, Twitter, or LinkedIn.
SEO is a marketing area that many brands spend money on - and you should too. SEO stands for search engine optimisation, and will help ensure your website, including the content on your website is easy to find for people searching terms in search engines. Spending money and time on SEO can pay off in the long run as it helps people find and discover your content.
Social Media Marketing
We’ve said this before, and we’ll say it again - social media is crucial in today’s digital world! After you decide how much you’d like to spend on social ads, you’ll need to consider allocating some of your budget towards an actual social media strategy. This will include organic posts, and other unpaid methods to attract the attention of your audience.
The final strategy you’ll want to think about allocating budget to is email marketing. An email marketing strategy is a key component in moving leads through the customer journey. Many brands have forgotten the power of email, but when done effectively, it can be great way to build a community, and push your leads into becoming customers.
As a guide, Nuphoric has a sample marketing budget that can help determine how much of your budget you should be allocating to different marketing strategies.
While this is a generic guideline, take note that all the marketing strategies stated may not be suitable for your business. It’s important to take the time to figure out which strategies will work well for your brand, and focus on those.
As we’re currently living in the world of digital, one of the most effective forms of marketing is through digital marketing strategies. Not only are digital methods more affordable, but it’s the best way to reach audiences today.
Want some advice on how digital marketing can boost your business? We’re here to help. Give us a buzz, and we can guide you in the right direction!