2020’s global pandemic served as a gigantic litmus test for every organization.
For some businesses, marketing became necessary for the first time. Other organizations may have temporarily pushed marketing to the wayside to cut spending.
Regardless of how 2020 affected your business, the new year presents opportunity to refocus – and possibly ramp up – your marketing efforts. But getting started is not always easy.
How much money is enough for my marketing budget? Am I wasting money on certain marketing channels? Should I pay for website leads? We empathize with these questions! As a business owner, sorting through marketing questions is challenging, and we hope to offer some answers, beginning with budget.
While there isn’t a one-size-fits-all approach for every business, marketing experts agree on a few general principles. These principles are a great starting point.
As a general guideline, organizations should spend about 5% of their sales revenue on marketing.
Of course, there is room for fluctuation – this percentage will vary by company and industry. For example, if your business generates less than $5 million a year in sales and your net profit margin is in the 10% to 12% range, the U.S. Small Business Administration recommends spending 7-8% of your gross revenue for marketing and advertising.
Highly competitive industries will require a higher percentage of marketing spend. For example, companies in retail, consumer products, and pharmaceuticals will often spend 20-50% of revenue on marketing certain offerings. Analyze what your competition may be spending.
Your budget could be applied to a variety of marketing avenues, such as:
Although general rules of thumb apply when beginning to implement your digital marketing strategy, you must consider numerous attenuating factors as well. How much you should spend on marketing varies by the tenure of your industry’s marketplace.
Marketing spend also depends on how much you want to grow in what timeframe. In the marketing world, the adage is largely true: you must spend money to make money.
Once your budget is outlined, it can be helpful to breakdown what your digital marketing strategy could include.
The first step toward marketing budget allocation is determining your marketing goals for the year. Draft simple, measurable, and tangible goals with predefined success indicators tied to each. In other words, you should be able to evaluate if your targets are being met!
A few common marketing goals may include:
With marketing goals in tow, take some time to examine your marketing foundation. Do you have proper digital assets in place to reach your goals? Is your foundation prepared for growth?
For example, we’ve been approached by business owners intent on pursuing search engine optimization (SEO), only to uncover significant website issues. We took a step back, often diving into website development, before starting SEO.
Consider these questions:
If you’re unsure how to identify issues with your internet marketing fundamentals, we will happily run a free website audit for you and provide you with a list of problematic areas.
With a strong marketing foundation and a list of actionable goals, you’re ready to select marketing activities.
While every organization is unique, it can be helpful to evaluate where other organizations are allocating funds! Reports from Forrester Research and eMarketer show an estimated allocation of marketing funds offline vs online across digital channels.
Ultimately, the way in which you allocate your marketing funds will depend on the nature of your business, the competitive marketplace, and how target customers behave throughout the buying funnel.
If you are unsure which marketing channels are best for your organization, we’d love to walk you through a few recommendations tailored to your business.
At RivalMind, our expert SEO services are unequivocally genuine. We leverage decades of experience working alongside brands of all sizes and industries, dedicated to advancing organizations with profitable results.
Interested in learning more about how our transparent, comprehensive process could deliver measurable growth? Give us a call today at 331.228.9636 or complete our online form.
Hi, I'm Matt Scroggs, a digital marketing strategist. For two decades I served as the senior digital marketer for several global, iconic brands. Today, I'm the chief marketing officer at RivalMind, an agency 100% dedicated to helping companies thrive by driving transformational growth through innovative digital marketing. I'm also a lifelong Cubs fan, a faithful family man, and a web analytics junkie—relentlessly tracking conversions, loyalty, and advocacy, which are often as elusive as the pennant!
Specialties: Helping Businesses Grow, Marketing Strategy, Idea Guy
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