How Much Should You Allocate for Your Marketing Budget?
Author: Jeremy Harrison
It seems like every day, organizations are solicited for new ways to spend marketing dollars. From local sports team sponsorships to online advertising and everything in between, there are myriad ways to throw around all that marketing cash.
It’s easy to just keep spending money on marketing, but how do you know what’s working and what isn’t? How much should you allocate toward your marketing as you’re planning out next year’s budget?
There are a few things to get straight before you calculate your budget.
Marketing Budget vs. Community Support
Organizations often blur the lines between their marketing budget and their community support.
We need to expect different things from community sponsorship than we do from our marketing budget.
Community sponsorship aligns your brand with the things that matter to you, and you want to be able to say “yes” to those without worrying about how that logo on the football stadium scoreboard is affecting your bottom line.
When you budget for marketing expenses, we recommend separating out your community sponsorship efforts into a different budget line.
Spending Too Much on Mass Marketing
Mass marketing has a purpose and a place. Its intention is to reach everyone all at once. Billboard advertising, television ads, and other forms of mass market media are exciting because they reach a lot of people, but the truth is, most of those people just aren’t your customers. Instead, spend a smaller amount of money on a targeted group of ideal customers where you can make the biggest impact.
Because of all of the different channels on which your customers are viewing content, advertising is far more segmented than it has ever been. This requires you to be more focused and consistent on where you share your message.
Related Blog Post: 6 Ways to Saturate and Dominate Your Market on a Budget
So first, define your target audience. From there, you can be laser focused in your marketing efforts.
Six Goals You Need to Accomplish with Your Marketing
Once you’ve defined who your ideal customer is, you’ll want to take time to ask yourself these six questions:
- How am I going to attract their attention?
- Once they visit my website, how am I going to engage with them?
- If they find my information useful, how can I capture their information?
- Once they’ve given me their information, what can I do to nurture them toward a purchase?
- When they are ready, how do I convert them into a customer? That is, have I made it easy for them to buy from me?
- How can I deepen customer relationships, whether through asking for referrals or reviews, or inviting them back to continue working with me?
This is Spire’s Success Blueprint:
If you invest in one area but overlook another area, it can break your entire customer journey. When you assess your marketing strategy, and answer these questions, it can help you identify where you are already investing and where there might be gaps in your marketing.
Here’s how you can start determining where to spend your marketing dollars:
- Start by defining what your objectives are, who you want to reach, and what you want your customers to do.
- Then, take an inventory of how you are currently spending your resources—both in time and in money—and what the purpose is behind those activities.
- Next, analyze all you’ve just written down: are there things you can just eliminate?
- After that, identify where the biggest gaps exist in your current approach.
- Finally, make a plan for what happens next—and how are you going to get it done.
No, but Really, How Much Money Should Go toward Your Marketing Budget?
Strategy is super important for achieving your marketing goals for growth in your business, but often these investments feel like spur-of-the-moment decisions. With a clear marketing strategy, you can feel more focused and confident about how you are investing your time and money.
How much time and money should you invest? The Small Business Administration recommends that “businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing.” On average, organizations allocated 11.3% of their overall budget to marketing in 2020, according to a February 2020 CMO Survey. These figures can give you an idea of how much budget overall to dedicate to your organization’s marketing efforts.
When you bring a strong marketing strategy together with a defined marketing budget, you will find clarity and the ability to set clear expectations for your organization’s marketing efforts.
Spire specializes in both developing and implementing marketing strategies (digital and traditional) for local businesses that want to grow.
If you’re interested in partnering with Spire to gain clarity and direction for your business’ marketing goals, sign up for an assessment or connect with a member of our sales team. We look forward to seeing how we can work together!