Budget season is here! It’s time to look at how your marketing did in 2017 and decide what to set for 2018’s marketing budget.
Typical Marketing Spends
When it comes to setting your company’s marketing budget, the Small Business Administration recommends the following:
- Start-ups should allocate between 3-5 percent of actual or projected gross revenue to marketing.
- Established companies may want to set aside 2-3 percent.
- Retail businesses may be spending the most—up to 20 percent of sales.
- However, if your business has revenue of less than $5 million, the SBA recommends allocating 7-8 percent of your revenue to marketing (assuming you have margins of 10-12 percent). You also should divide this up between brand development costs (sales collateral, blogs, a website) and promotion costs (advertising, events).
Interesting note: the CMOSurvey.org’s 2015-2016 Marketing Survey reported that companies did spend in the ranges mentioned above, with businesses spending an average of 8.4 percent of company revenues this year [through February].
Also note that the percentages mentioned above are to cover your complete marketing investment—including staff, agency partnerships, ad costs, media spend, outside suppliers, etc.
What’s Your Marketing Grade?
As you look at your own numbers and percentages, you’ll need to rate your efforts. That is, take a look at your results and work to quantify the payoff of your investments. If you can’t quantify in sales or revenue, look to the numbers of new customers, new leads, social media followers, and so on. What grade would you give your marketing efforts for 2016?
Going Forward: What and Where to Spend
There are certain must-spend areas in any company’s marketing budget today. They include:
- Branding: If you haven’t done so yet, you should spend between $4,000-$10,000 with a good digital marketing agency that can create a theme around the brand you want to project to your prospects.
- Website: If you have a basic WordPress website, that’s a good start—but an agency can create a functional site, optimized for today’s search engines and full of great content that your prospects can use to make an informed buying decision. Your cost could run from $15,000 to $30,000 for a site revamp/overhaul or creation from scratch.
- Social Media: Count on $2,500-$20,000 a year. This is based on the caliber of the agency you hire as well as the number of social media channels you’re using to interact with prospects. This number will also depend on whether you want to interact in real time with your followers. Expect to pay between $300-$1500 per month on social media marketing.
Inbound Marketing Content
The ROI on inbound marketing is stupendous, but it’s not cheap. Digital marketing spend is at about 3 percent of a company’s revenue. A $5 million company should expect to spend around $125,000 a year on digital marketing.
Inbound marketing can cost between $5,000 and $15,000 a month, or more. It includes:
- Creating an inbound marketing strategy (from which all subsequent efforts spring)
- Writing content continuously
- Analytics, marketing software, website management and updating, and lead management
As CMOs see the ROI of inbound marketing, they grow their digital marketing budgets: CMOSurvey.org found that digital marketing spend was up 13.2 percent in 2015-2016, while spend on traditional advertising went down 3.2 percent.
Inbound’s top benefit is its ability to provide highly qualified sales leads much more efficiently than outbound methods. What’s more, inbound is 100 percent accountable and measurable.
If you don’t like the grade you’re giving your 2016 marketing efforts, we recommend taking a serious look into allocating more of your budget to inbound marketing.