How to Determine Your Marketing Budget
Put your money where it counts.
You may wonder if a marketing budget and plan is worth it, after all putting out money when there is no immediate tangible return can seem counterintuitive, but nowadays a marketing budget and plan are integral to success and continued growth—even if your marketing funds are limited.
How much you’ll need to budget for marketing will depend on a variety of factors, but the first thing to consider is whether you’re just starting out, or if you’re already up and running. A start-up will require more investment up front, while an established business can determine a more constant money flow.
Before you determine any budget, you need to take stock of your sales funnel. How are customers finding you in the first place? What do they need to know in order to keep their interest and make them stay? What factors are contributing to a sales conversion? Analyze any data you have to create a realistic picture of how you’re gaining customers and converting sales.
Once you have this, you can help determine how your marketing funds are best used, and what marketing channels you might want to target (so you can determine how much these might cost). At this point, looking at your competition to see what methods they use and certain commonalities in the industry is helpful to determining what marketing methods to focus on.
Before you can determine any marketing budget, you need to know what your existing operating costs are. It’s important not to base your marketing budget on what’s left over, but you also need to think realistically. Maybe you’ll need to cut expenses in another area to give more to marketing.
The average small business spends around 7 to 8% of their revenues on marketing, but how much you decide to spend will depend on your budget, whether you’re in a growth or planning mode (quick win vs. long-term), and your goals.
Speaking of goals, it’s important to set yours when you’re determining a budget. Where do you want to be in six months, a year, five years? Focus on a marketing plan that will get you there. You don’t need to implement every marketing strategy out there, find the ones that work for you, and prioritize them. Understand trends and implement new marketing tools and strategies that can help you, but make sure you have a healthy mix of traditional marketing methods sprinkled in.
Finally, think of marketing as an investment, not a money pit. How much you put in, and how thoughtful you are about using it, will often determine your return. If this process seems overwhelming, don’t worry. We’re in the business of marketing—both traditional and digital—so we can help you determine a plan and budget that’s right for you. Reach out to Rocket Fish Digital today and let us know how we can help.