Marketing experts and agencies often recommend that small businesses spend 7 to 8 percent of their gross revenues on marketing. And, according to a study, small businesses tend to follow this rule and spend between 3 and 5 percent. However, small marketing budgets don't necessarily translate into small results. The secret lies in how those marketing dollars are allocated.
If you're running a small business and are struggling to manage your marketing budget, use the following as a guide to making decisions, and don't forget how helpful a marketing partner can be in setting and spending your budget. Your unique company is likely to have unique marketing needs. However, understanding the average marketing spend by small businesses can help you determine if your current budget is adequate. Average numbers are a good rule of thumb when you start setting your marketing budget.
However, there are a number of factors that can affect the exact numbers you decide to assign to marketing campaigns, digital marketing and specific types of marketing campaigns. Newer companies often need to spend more money on marketing because they need to create brand awareness and engagement with their target audience. Nobody knows about them yet, and marketing can help them get noticed in your area. As a result, start-ups and young companies under 5 years old should plan to spend 12 to 20% of their gross revenues on their marketing budgets, instead of 7 to 8%.
This higher percentage will give them the freedom to invest in marketing that draws the attention of their local area and allows them to start achieving their growth goals. Understanding your buyers will help you decide where to spend your money on marketing. Talk to your current and former customers to find out why they bought from you. Find out where they spend their time and where they prefer to receive information.
Once you understand your target audience and how your company can meet their needs, you can start creating marketing campaigns that have messages and use marketing channels that capture their attention. For example, let's say that your target audience prefers to watch videos to gather information before making a purchase. You can choose to invest more of your money in video marketing than in graphic ads to reach them. On the other hand, a demographic that prefers to receive email communications may require you to invest money in email marketing campaigns.
Social media is a very popular digital marketing strategy. Targeting the social media channels that your target audience uses is an important way to reach them with news about your company. As a result, you'll need to determine where on social media your audience spends their time and then send marketing money to those platforms. Focus on Facebook, for example, or allocate funds to Instagram, instead of spreading out your marketing dollars trying to target all social media channels.
When setting your digital marketing budget, you might also want to think about your marketing goals. Do you want to publicize your brand? Make more sales? Are you addressing misconceptions about your business? Promote a particular discount? Get more visits to your website? Expand your contact list? Your goals will determine what marketing strategies you'll spend money on. For example, if you want to improve your online reputation, you'll use different strategies than you would if you wanted to increase visits to your website. Examining the numbers and trends to find the right marketing budget for your company can be difficult.
So getting the most out of your budget can present another challenge. Our local marketing consultants can help you set up your budget and optimize your effectiveness with personalized strategies and a huge service toolbox. No longer ask yourself what you should spend your money on in marketing. Distinct is here to help and success is just around the corner.
Search our website Recommended Software Case Studies SEO Marketing Resources for Small Businesses FAQs Small Business Squad Website Maintenance Checklist WordPress Support Free Website Audit Blog Archives Blog Archives Local Marketing Advisors Local Marketing Consultants Press Kit Web Design and Development Unlimited Web Support Zoho SuiteWhite Label Duda Support Customer Portal Make Your Zoho Partner Distinguish Your Zoho Partner Distinguish Your Zoho Partner. In the simplest terms, your marketing budget should be a percentage of your revenue. A common rule of thumb is that B2B companies should spend between 2 and 5% of their revenues on marketing. Calculate your marketing budget Access the free guide to marketing budgets Before you know how much to spend on marketing, it's essential to understand what a marketing budget includes.
For example, does the marketing budget include in-house staff and website maintenance? The size of the company is one of the most important factors when asking: “How much should a company spend on marketing? Based on the size of your company, you can often estimate what percentage of revenue should go to marketing. Industry is another crucial factor when it comes to how much to spend on marketing. A marketing plan is fundamental to a marketing budget. Describe your objectives, marketing channels, and tactics before launching a campaign to direct your marketing investment to the right projects.
With a marketing plan, you can take a strategic approach to promoting your business. While you can make some changes (or zero) to a traditional marketing campaign, digital marketing is flexible. Take advantage of the flexibility of digital marketing. Adapt your tactics based on your data, such as those from an advertising campaign, for even better results.
Small businesses include everything from family-owned stores to local industry powerhouses. But by definition, a small business doesn't make as much money as other businesses, so how much should a small business spend on marketing? If you analyze the percentage model of the marketing budget, between 7 and 8% is a sure part of your total revenue that will constantly improve your company's customer base. It's a great starting point for your company's long and prosperous future; you just need to manage your budget effectively. It might not seem like much, but simply using those two marketing strategies can help your business grow safely and steadily.
Midsize companies have a couple of hundred employees and are generally looking for long-term sustainable growth that will make them a major player in the industry. If you're promoting a medium-sized business, you should be willing to increase your marketing budget, even as a percentage, to ensure that you can keep up with your industry. So how much should a midsize business spend on marketing? Of course, the exact percentage will depend on your industry and your stage of growth. However, 10% is usually a safe bet when it comes to how much to spend on marketing as a medium-sized company.
Midsize businesses should also use SEO and PPC and can generally afford to use some traditional marketing strategies as well. The cost of advertising is definitely higher, but if you're looking to generate brand awareness in a competitive industry, it's a great way to achieve your goals. If your company has a specific strategy for explosive growth in the short term, it can be considered an aggressively growing company. While this type of growth isn't always sustainable, it can definitely be profitable.
That is the attraction for entrepreneurs who want to lay the foundations of a company and then sell it for a good profit. Intentionally aggressive companies can easily push their limits when they start their marketing strategies. With a “whatever it takes” mentality, you can quickly find yourself running low on cash and racking up debt. That's why even aggressive companies should stick to the 15% range as a percentage of their marketing budget.
It is important to establish the foundations of a company before launching into the stars. And even if your marketing campaign is great, it won't do much good if you divert money from your other departments. After a while, your lack of support will be noticed throughout the company, especially for customers. This is especially true for product development.
Taking money from the heart of the company to fund marketing is a sure way to disappoint customers and weaken the company as a whole. However, aggressive growth isn't always a bad thing. If you want to meet your short-term goals quickly, a marketing boost can help you do that. SEO and PPC are excellent marketing strategies for these companies, but they are often accompanied by less orthodox “growth hacking” strategies.
Because you want to grow quickly, you basically have to use all the marketing channels at your disposal to get the results you want. Special industries are certain business sectors that require more investment in marketing than others. There are more specialty industries than just these, but these are the main industries that require significant marketing investments to be successful. The reason is that many companies in these industries have already invested heavily in marketing.
So, if you're starting a pharmaceutical or retail company, you're going to have to fight hard to gain brand recognition. Pharmaceutical products are primarily marketed in the United States. The industry is highly competitive, as drugs like Lipitor alone generate billions in revenues. Every pharmaceutical company is looking to create the next big pill, and every time they try, they have to spend millions on marketing campaigns.
Finally, consumer goods are arguably the most competitive industry in the world because of how large it is. Everything from food to appliances is considered a consumer good, and some of the world's biggest brands earned their fortune from consumer goods. If you want to venture into packaged products, the manufacture of household appliances or most other physical products, your competitors are spending everything they can to make you fail. It's up to you to fight back.
The way to fight back is to use every type of marketing you can. That includes SEO, PPC, television, newspapers, reputation management, social media marketing, and more. You have to constantly shoot at full speed, to stay at the cutting edge of your industry. WebFX's patented Digital Marketing Masters On Staff digital marketing platform makes it easier than ever to track digital marketing performance, conduct industry research, calculate ROI and make strategic decisions.
WebFX's patented digital marketing platform makes it easier than ever to track digital marketing performance, conduct industry research, calculate ROI and make strategic decisions. The other important digital channels include video production, search marketing, content creation, data analysis, and website maintenance. It's a very wide price range, which means that there are plenty of budget options that fit the budget of your particular company. A Forrester Research report, on the other hand, estimates that search engine marketing will capture most of online spending.
Digital marketing spending, by comparison, has steadily grown in double-digit increases year after year. To give you an idea of how much digital marketing will cost your company, you can use the comparison tool above to get personalized pricing information. .