How To Spend Your Marketing Budget
Updated: 5 days ago
Whether you’re a freelancer, start-up, or established business, your marketing strategy can dictate whether your business takes flight or flops - it has a direct effect on your ability to create brand awareness and generate revenue.
And with most of the world at home to combat COVID19, demand for communication services has doubled, people are spending 20% more time using apps, and Facebook is experiencing record usage - so now is the time to get your digital strategy right and ensure your marketing budget is spent wisely - here's how you do it...
In this article, you will learn:
How Much To Spend On Marketing
-What should be included in a marketing budget?
-How much are competitors in your industry spending on marketing?
-How to go about creating a marketing budget
Prioritising What To Spend Your Marketing Budget On
How You Can Maximize and Measure Your Marketing ROI
-Packaging services together
How Does Marketing Change, As Per The Life Stage of Your Business?
-Marketing Budget for Freelancers
-Marketing Budget for Start-Ups
-Marketing Budget for Scale-Ups
How To Spend Your Marketing Budget in 2020
Whether you’re a freelancer, start-up, or established business, your marketing strategy can dictate whether your business takes flight or flops, because it has a direct effect on your ability to create brand awareness and generate revenue.
That’s why one of the most common questions asked by marketing professionals and business owners alike is “how do I spend my marketing budget?”
Like many things in business, the answer to this question isn’t always clear. You need to consider a few things...
How much can you actually afford to spend on marketing?
How will you spend your marketing budget?
How do you plan to evaluate the success of your marketing efforts and maximize your ROI?
How will your marketing budget change based on the current life stage of your company and external global circumstances?
If you’re searching for the answers to any of these questions, you’re in the right place - this post will clear up any confusion about your marketing budget and help you determine where your marketing dollars can be put to the best use.
Let’s take a closer look!
How Much Should You Spend On Marketing?
Most experts recommend that established businesses should spend approximately 7 to 8 percent of gross revenue on marketing. Of that 7 to 8 percent, at least half of your budget should be spent on digital marketing strategies, during COVID19 we would recommend 100%.
So, if you own a business that earns a gross revenue of $1,000,000 per year, that means approximately $70,000-$80,000 should be set aside to cover the cost of marketing, and a minimum of $35,000-$40,000 should be dedicated to digital marketing strategies.
However, this number might vary depending on the lifecycle of your business. For example, a start-up in a competitive industry might need to designate a higher percentage of their budget to marketing when compared to an established company.
A common benchmark for how much startups should spend on marketing is 12 to 20 percent of gross revenue.
That’s because they’ll need to work harder to differentiate their brand from the many others that have already established brand authority in their space.
But what exactly does the term “marketing” include?
Turns out, it’s not all flashy social media ads and video content. Your marketing budget should also take into account things like training and salaries for marketing employees, market research, testing, and other activities that are crucial to your marketing success.
What Will You Spend Your Marketing Budget On?
Today, there is a nearly endless list of marketing strategies that can help you establish your business’s brand and attract paying customers.
Let’s take a look at a few that have proven to be most successful:
Did you know that 77% of internet users read blogs?
Creating a blog and posting regular content can be one of the most effective ways to market your business.
That’s because blogs help:
Drive organic traffic to your website
Convert traffic into leads
Achieve Long-Term Results
The key benefit of a blog is that it provides real value to your audience, making them more likely to view your brand in a positive light and keep you in mind if they need your services in the future.
Youtube alone has over one billion users. This accounts for more than one-third of the people on the internet!
But why should your business invest in video content?
Well, let’s take a look!
Video attracts a younger audience - as much as 81% of people age 15-25 use Youtube.
Video has a global reach - Youtube is available in over 80 languages in 91 different countries. This means you can significantly improve the reach of your brand with a video content strategy.
Video is adaptable - Video content can be repurposed for a number of different platforms, including blog posts, social posts, podcasts, and more.
Professional Website Design
Making sure your company has a professional website should be one of the most important marketing considerations for your business.
Not only should it look good, but it also needs to be optimized for search engines and mobile use because smartphones and tablets now account for more than half of all web traffic.
Here are a few statistics that show why you NEED a professional, optimized website for your brand:
Website credibility is judged 75 percent on your site's overall design.
51 percent of American online shoppers say that slow loading time is the main reason they abandon a purchase.
85 percent of adult consumers believe a company’s mobile website should be as good as or better than their desktop site.
47 percent of consumers check the products/services page of a website first.
This is just a shortlist. There are hundreds of more statistics illustrating why an optimized website is a necessity for today's businesses.
Newsletters are a great way to keep your customers engaged with your brand and provide a platform to inform them of any new product or service offerings.
40 percent of B2B marketers say email newsletters are the most critical element to their marketing success.
Email newsletters have an open rate of 22 percent.
Consumers who purchase through email spend 138 percent more than those that don’t receive email offers.
An email newsletter provides a direct link to your customer. When they’re consuming this content, they don’t have the same distractions that are present with other advertising methods like social media.
Whether you’re creating content or using paid ads on sites like Facebook or Youtube, social media can help you reach a broader audience.
Social helps promote video and blog content on your website.
Nearly 4 billion people use social media worldwide.
Consumers average nearly 2.5 hours on social media every day.
Also, not having at least some social media marketing strategy can potentially harm your business as many consumers will associate this with a lack of credibility and authority in your industry.
Paid ads are a great way to target the specific audience that is most likely to invest in your services/products. For example, with Facebook ads, you can filter who will be shown your ad based on age, location, gender, interests, and a number of other helpful characteristics.
But how effective are they?
Businesses average $2 in income for every $1 spent on paid ads.
Three-fourths of consumers say paid ads make it easier to find the information they’re already searching for on a search engine or website.
41 percent of clicks go to the top three paid ads on the search engine results page (SERP).
Paid ads are an especially effective way to get traffic to your business’s website if you don’t have a large volume of content to drive organic search results.
Podcasting helps customers and prospects get a true sense of your brand and its values.
The open conversational format of this type of media helps foster a connection between your brand and your audience, making them more likely to stay engaged and follow up with any future offers.
In the last 10 years, the number of people who have listened to at least one podcast has nearly tripled.
These are just a few of the strategies you can decide to spend your marketing budget on. The key is finding a few that work for you and putting measures in place to implement them in your strategy.
How Will You Maximize Your Marketing ROI?
It’s not good enough to just start with a few different marketing strategies and hope one of them works.
No, today’s business world is far too competitive for that. You need to be constantly testing and tinkering with your process to make sure it’s always improving.
Here are a few ways to squeeze more value out of every marketing dollar.
Test Your Results
Things like A/B testing landing pages and ads and using analytics software can be a great way to make sure you're getting the highest ROI on your marketing budget.
Not only does this help you see what’s working and what isn’t, but closely monitoring your marketing efforts also provides valuable insight into who your products and services are resonating with the most.
This is especially helpful considering the diverse population we have today. People in different locations have different needs and wants. People who come from a different set of demographics might be interested in different products or services.
Testing is one of the main reasons billion dollar companies like Amazon, Google, and Facebook have been able to develop what are considered to be some of the most user-friendly platforms on the internet.
In fact, all three of these internet giants conduct more than 10,000 controlled experiments per year!
Once you start testing your marketing efforts, you’ll begin to notice that even small changes can make a major difference in how consumers respond to each strategy.
For example, things as simple as the colour or placement of a “Buy Now” button on an ad can significantly affect how likely people are to follow through to your purchase pages.
Outsource Your Marketing
It’s time to ask yourself an honest question. Is marketing truly the one area of your business you excel in the most?
If it is, great! Keep doing it.
But more often than not, business owners spend too much time on marketing tasks they should be delegating to a third party instead.
Outsourcing your marketing tasks can be effective for a number of reasons.
For one, it frees up your time so you can double down on what you’re really good at.
Gary Vaynerchuk, the founder of VaynerMedia and owner of multiple successful businesses is known for saying that one of the most important things anyone can do is find out what they’re good at and double, triple, or even quadruple down on it.
Instead of being average at multiple things, it’s better to be amazing at just one. Are you an expert in sales? Product design? Logistics? Stick to these areas and enlist the help of other experts to handle the rest.
When deciding on an agency to handle your marketing, you will want to make sure they employ experts across multiple channels.
For example, at JOLT_, we employ a team of expert web designers, social media marketers, content creators, and more. Each person is responsible for one specific area of expertise but we all work together so that we can provide our clients with the best marketing services possible, all in one place!
How Does Marketing Change Based on The Life Stage of Your Business?
Depending on the lifecycle stage of your business or the type of business you’re involved with, you might need to adjust how you spend your marketing budget.
Creating a Marketing Budget for Your Freelance Business
Freelance/Solopreneur Marketing Goal: At this point, you’re a small fish in a vast ocean. Your goal should be to generate as much awareness about your business as possible. This will help you attract clients and customers.
Assuming you provide these customers with a high level of value, they’ll begin to tell friends, family, and colleagues about the great business you’re running. This creates a snowball effect and will likely result in even more business for you.
Freelance businesses would benefit by spending their marketing budgets on things like content creation and social media ads.
These methods will help get their brand in front of the eyes of more prospective clients, increasing the likelihood of them generating new business.
Keep in mind, freelancers and solopreneurs should be targeting their marketing efforts to the exact customer persona who is most likely to do business with them. This could mean a particular demographic or a certain class of professionals.
For example, most B2C businesses will have the most success directing their marketing efforts towards a specific group of consumers - perhaps millennials, baby boomers, or Gen Z.
On the other hand, B2B companies can benefit by targeting a specific class of professionals - possibly Marketing Managers or PR Executives.
Creating a Marketing Budget for a Start-Up
Did you know that only 25 percent of startups are able to stand the test of time and stick around for more than 15 years?
So what separates these businesses from the many more who fail?
Well, often the reason businesses don’t succeed can be attributed to poor allocation of their marketing budget.
Instead of spending their marketing budget on the things that would work for them as an individual company, they end up spending their marketing dollars on the latest new trend or fad.
Startup Marketing Goal: You find yourself in the classic David vs. Goliath scenario. You want to break into an industry, but your competitors are so big that sometimes you catch yourself thinking it will be impossible.
At this stage in your company’s life, your goal is to attract partners and investors who can help even the playing field and turn your vision into a reality.
Here, once again, you’re trying to position yourself as a force to be reckoned with in your industry.
However, because you’re running against established companies who have a stronghold on your industry, it might be difficult to compete with them through methods like video, blog posts, or other content.
This is when it might be a good idea to spend a portion of your marketing budget on paid ads. With paid ads, you’re guaranteed to have your content reach the eyes of your intended audience. Assuming your business is designed to solve a specific problem they have, they will be more than willing to click through to your website or sales pages.
Keep in mind, using paid ads to get traffic to your startup’s website is one thing. But you also need to make sure that everything on your website is set up to help them realize that your business can provide them with real value.
For example, you should invest in a good copywriter for your landing pages to convince visitors that they’ve come to the right place to solve their problems.
You should also make sure your website has a clean design and all other branding (logo, slogans, etc…) align with your company and its goals.
Creating a Marketing Budget for a Scale-Up
Scaleup Marketing Goal: Congratulations - you’ve built an established business! Now it’s time to take it to the next level. If you find yourself in this situation, the main focus of your marketing efforts should be to continue to attract new customers while also enticing other businesses that you would like to partner with.
At this point, your marketing budget should be spent across a number of different channels.
For example, you should continue to pump out a large volume of valuable content like blog posts and video. This will help you expand your customer base by building trust and loyalty with consumers. It will also solidify your position as a figure of authority within your industry.
Scaleups should also be making an effort to keep those who have already purchased products and services from your business engaged.
Research shows that repeat customers are up to ten times more valuable than their initial purchase.
It can also cost up to five times more to acquire new customers than it does to maintain your current customers.
So, when scaling your business, always remember that it's great to attract new customers and expand, but it’s also important to take care of your current customers.
A fantastic marketing strategy for doing this is an email newsletter. Newsletters provide a direct connection to your loyal base of customers so you can notify them when you release new content and products.
You can also use this channel to provide them with special deals and discounts that turn them into even bigger fans of your brand!
How Do Changing Global Circumstances Impact Your Marketing Budget?
How you spend your marketing budget can also be influenced by what is going on in the world at any given time.
Things like politics, economic conditions, or global crises can have a major impact on how effective each marketing dollar will be.
For example, in this past year, we’ve witnessed Brexit, COVID-19, and talk of an impending economic downturn in several countries across the globe.
Not only will these things affect what will and won’t work in terms of marketing strategies, but they may also impact the productivity of your company. (For tips on working from home during the COVID-19 Lockdowns, see this article.)
So how do you prepare for these unpredictable events in your marketing budget?
One way is to leave room for flexibility. It’s impossible to predict what will work five years, one year, or even a couple months from now. That’s why you should maintain a macro perspective and a micro perspective.
For example, setting solidified long term goals can be a great way to keep you moving in the right direction. However, the methods you use to achieve those goals in the short term will always be in a constant state of fluidity.
A good practice would be to reassess your marketing budget at the beginning of each month. What’s working? What isn’t? Take a long hard look at your plan and decide where improvements can be made.
How to Create a Marketing Budget That Gets Results
At JOLT_, Marketing is what we do. That’s why we’ve created customizable marketing packages to help businesses through every life cycle stage.
Freelancer? Startup? Scaleup? Whatever your unique situation may be, our team has the tools and experience to help take your business’s marketing to the next level!
We also realize that the marketing landscape is constantly evolving and make a point of staying up to date with all of the latest developments and new strategies in the industry.
Feel free to get in touch with us today to learn how we can help you grow your business with our customized digital marketing strategy services...
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10. Christine Roy