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. 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, describe objectives, marketing channels, tactics before launching a campaign - all these steps are essential for directing investment into 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 data 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 total revenue that will constantly improve customer base - it's a great starting point for long-term success.