As a business owner, one of your priorities is marketing your products or services. Marketing, however, requires a financial investment, and you need to determine how much you should allocate for it. The question is, how much should your marketing budget be? The answer is not simple, and it’s essential to consider several factors before deciding. These crucial elements can help you determine the right marketing budget for your business.
Industry and Competition
The industry you’re in and your competition can impact how much you should spend on marketing. If you’re in a highly competitive industry, you’ll need to invest more in marketing to stand out from your competitors. On the other hand, if there’s little to no competition, you might not need to spend as much. Check how much your competitors are spending on marketing and use it as a guide of how much to allocate to be competitive.
Company Size and Revenue
Another factor to consider is the size of your company and how much revenue you’re generating. A larger company might need to spend more on marketing to maintain its position in the market, while a smaller or startup company might allocate a smaller percentage of its overall revenue for marketing. Determine a percentage of your revenue that's practical and sustainable, this may range from 5% to 20% depending on the size of the company and the industry.
Marketing Goals
Your marketing goals will shape how much you should allocate for your marketing budget. If your main goal is to increase your brand awareness, then you’ll need to invest more in advertising and public relations activities. On the other hand, if you’re aiming to increase your sales, more focus will need to be on direct response marketing activities such as email marketing or social media advertising. Depending on your marketing goals, some activities may require more budget than others.
Duration of the Campaign
A short-term marketing campaign will likely require a smaller budget than a more long-term one. A short-term campaign’s primary objective is typically to create a buzz and provide immediate results. Meanwhile, a longer-term strategy to build brand awareness and lead generation usually requires a higher budget for a sustained period. Whichever you choose, make sure to evaluate the return on investment accurately regularly.
ROI – Return on Investment
Marketing isn’t just a cost center, it should deliver measurable results that eventually translate to sales or increased brand equity. Determine a benchmark for how much return you can expect from your marketing activities, and adjust accordingly. Continuously evaluate the return on investment vs. the budget allocation to maximize the impact of your marketing budget.
Determining your marketing budget can be tricky, but it’s essential to evaluate your business’s goals, industry, and competition, duration of your campaign, size, and revenue of your company. As you aim to increase your brand's equity and generate leads and sales, it's crucial to measure the return on investment of each activity. Whether you're a startup or an established corporation, a well-calibrated marketing budget can bring significant returns and sustainable growth. Allocating a practical and sustainable budget, together with accurate ROI measurements, should ultimately result in a favorable impact for your business.
Are you struggling to determine the right marketing budget for your business? Common Core Marketing can help! Our team of experts will work with you to develop a custom budget that maximizes your ROI and drives growth. Don't let uncertainty hold you back - contact us today to learn more!
