How Much Should You Spend On Marketing?

Marketing is crucial for all businesses. After all, customers won’t reach you if they can’t find you. And even if they find you, you only have a moment to grab their attention. How much should you spend to get that attention? And where should you spend it? We review some considerations for setting a marketing budget for busy business owners.

Devise A Marketing Plan Before Setting Your Budget.

Getting all your marketing methods out of the silos they’re in and into a comprehensive marketing plan is essential to reaching your business’s goals. Without a plan, it can feel like you’re throwing things at the wall and waiting to see what sticks. Do you have a clear brand? What are your brand pillars and your values statement? Getting these fundamentals figured out is the first step in successfully growing your business. You’ll likely waste money if you start making marketing decisions without laying the groundwork.

Define Your Target Audience & Get To Know Them.

If you think your audience is anyone and everyone, consider breaking it down into niche personas and defining your target audience before you set a budget. How old are they? How educated are they? Where do they live? Are they highly technical or influenced more by emotion? Focused marketing plans are more successful because they create effective branding, web and advertising campaigns that get you in front of the right people at the right time with the right message.

Leverage Digital Ads To Get The Most From Your Marketing Budget.

All business owners want their marketing efforts to have a return on investment. It;s hard to track results from traditional marketing methods like TV spots and radio ads. In contrast, digital ads produce data proving their ROI (or lack thereof), which provides justification when allocating budget dollars. Some of the best types of digital ads to leverage are:

Google Ads

The top three results in a Google search get 61.5% of the website traffic. Staying at the top is a competitive game, and setting a Google Ads budget that aligns with your goals is a great place to start. Ask yourself these 3 questions to establish a Google Ad budget:

1. How many new leads would you like to bring in per month?
2. What is the average cost of each lead?
3. What is the conversion rate of those leads? (how many new customers will you get from those leads each month).

Example) If you want 30 leads/month and it costs $50/lead in your industry on average, your monthly ad budget should be about $1,500. If your business’s conversion rate of leads to customers is 30%, you will get nine new customers, which means you spent $166 for each new customer. It becomes a math equation that you can work through (or we can help with) based on your business’s goals. And don’t worry; if you start to get more business than you can handle, you can lower your budget or pause campaigns at a moment’s notice.

Social Media

Similarly, budgeting for consistent social media campaigns and boosting posts is a great way to get in front of new customers and build brand awareness. Social media algorithms are not built in favor of organic content, so you often have to spend some money to get noticed and build momentum. The good news is that social media campaigns can fit within any budget—$100/month is a good place to start. Social media platforms make it easy to optimize by demographics, location and interests to make sure you’re reaching your target audience, too.

What Percentage Of Your Revenue Should Go To Marketing?

There used to be a rule of thumb that said 5% of your revenue should be spent on marketing. However, it’s not that simple anymore and depends on a few more factors. According to the U.S. Small Business Administration, business-to-consumer (B2C) companies spend more on marketing (between 9.6–11.8% of revenue) when compared to business-to-business (B2B) companies (between 6.3–6.9%), on average. These percentages reflect average annual spending, but if your business needs a new website, is rebranding or releasing a new product, you may exceed these recommendations in a given year. In these instances, you should divide the cost across the years that the website or rebrand will serve your company and view it as an investment, not an expenditure.

businessman's hands calculating marketing budget using calculator with sheets in front of him.

Estland Can Give Your Business A Clear Marketing Path

At Estland, we work with companies who want results-driven marketing, giving business owners more time to focus on running their company. We determine what your business really needs, and once we have a clear plan, we’ll make sure you spend the right amount of your marketing budget on the right methods. If you’re ready to Make The Most Of Your Moment, we’d love to listen, to learn and to create an effective strategy to reach your marketing goals. Contact us today.

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