By Rony Chiha
Determining the right marketing budget for your business can be difficult – it’s a fine balance between not spending enough and spending a lot more than you need to to be effective. The first thing you should do is look at your budget and how much you CAN afford to spend, before assigning numbers to different channels.
But how do you determine what you can afford? Here’s a brief guide to help you do just that:
1. WHERE ARE YOU IN THE GROWTH CYCLE?
The age of your business will greatly influence the budget that you are able to spend. Your businesses age will, in most cases, be a guide for your established brand awareness in the market.
A new business, less than five years old, should probably be spending between 12% and 20% of its gross revenue on marketing. Although this may seem like a high number, it is necessary, as a new business will likely not yet have an established name in the industry and will need to spend more to reach a wider audience, as opposed to a company that has been in the industry for many years.
For a company that is older than five years, between 6% and 12% of the gross revenue should be put towards the marketing budget.
2. DO YOUR RESEARCH
In order to research, you need data. To collate data you need a research group. In order to reach a research group, you need exposure. This exposure usually comes through paid marketing. This is where the fine balancing act of spending too little v. spending too much comes in. You need to spend enough money to be able to analyse data from a considerably large sample size. If you are working with a small budget, don’t worry. There are plenty of case studies and market research available to help you reach the right audience with the right message.
3. WHAT WILL BE YOUR MAIN FOCUS?
Prioritising which elements of your business to focus on will help you to prioritise your budget accordingly.
Essential elements that should be a part of your main priorities include your company’s branding, social media, website, content and events. Again, the amount you spend on these will be determined by your prioritisation of these elements.
4. HAVE ROUGH ESTIMATES
Having rough estimates of your budget will allow you to more accurately prioritise your spending. Below are some costs to consider when it comes to branding, our website, social media, content and events.
- Branding: This is not only the way you look and feel on site, but includes branding collateral such as letter heads, email templates and business card designs and printing, the cost can vary. If you are a larger agency you may also opt to contract a branding agency to workshop your brand image. This will of course, incur a higher cost. Branding is no mean feat and so it’s important to get this right from the get go.
- Website: You can opt to create your own website using platforms such as WordPress or Wix. This is a low cost option that is best suited to a small business or start-up. For larger businesses, you should expect to have to put some money aside in your budget for a contractor to design a website with user friendly designs, automation and functions.
- Social media: If you want to cut money from your digital marketing budget for social media, consider hiring an intern to work it out for you, or hire a professional to help you create a social media plan to stick to.
- Content: You can entrust an intern with your content if you have a smaller budget, or pay an agency for a fee which can vary depending on your word count.
- Events: If you have funds in your budget, why not host a networking event, or join up with a similar business to create a co-event? Depending on the scale of your event, costs will vary widely.
There is no right way to allocate your budget within your business, it is dependant on the various factors mentioned above. It is important while going through this process to know what your are trying to achieve with your spend; what results are you expecting?
And don’t forget there are huge benefits of working with a great marketing agency that is professional.
Source: Dynamic Business
