We’ve decided to answer some commonly heard questions with a monthly blog.
Q: We’ve never had a marketing budget, how do I know how much to set aside?
A: Here are some basic guidelines for marketing budgets.
For small companies, once they have the basic tools (such as identity
system, website and basic collateral) in place, an annual marketing
budget can be built around one to two percent of revenue. Start up
companies should use a percentage of total cash reserve, not revenue, as
a gauge, and realize they may have to spend more “up front” as they get
up to speed.
More mature companies may need to devote five to ten percent of
revenue to marketing communications in order to fuel the needs of sales,
recruiting, training and customer relations. Companies marketing
directly to consumers will need to spend more money that B2B companies
will. And those in professional service industries may need to spend
less than those selling products or technology.
Larger, public, and especially marketing-driven companies such as
Nike, will easily spend as much as twenty percent on their marketing
That said, allocating your budget is another issue. You’ll need to
develop a marketing plan and assign a budgets to each tactic on the
plan. Here are some points to keep in mind as you start to develop your
plan and budget.
Make sure your plan and budget…
Looks at the big picture. Create a plan and a budget
for a whole year at least, and stick to it. Take a hard look at your
marketing obligations. Can you do everything this year? If not, let
people know early so they can adjust their plans and budgets. Then, when
you have a plan, try to stick to it.
Matches your business goals. I am a firm believer
that marketing plans need to directly relate to strategic plans. Sit
down with a copy of your goals, strategies and objectives and assign
marketing tactics that support each one. When you tie business success
to marketing activities you’ll feel better about spending the money, and
demand your marketing pull it’s weight, which is always a good thing in
Covers a range of marketing media. From web to PR,
social media to print media, trade shows to television, your money needs
to get around. You don’t have to do everything at once, but don’t put
everything into just one or two media baskets either.
Builds on a consistent marketing message. Marketing
communications can be organized around just three main questions. Who
are we? What do we do? And how do we change (or become a part of) lives?
If your marketing program consistently answers those questions every
year, you’ll have a well-integrated program that helps build your brand
Isn’t a waste of money. You’re making a significant
investment. You want you marketing to be heard, read, seen and
remembered don’t you? So don’t let it be boring! Budget for professional
design and copywriting services. The better the investment you make,
the better chance that your marketing will be noticed and therefore be