Your Marketing Budget – The ‘Dos and Don’ts’ of Spending Your MoneyKenneth Nel
We’re going to out on a limb and state categorically that your marketing budget is the lifeblood of your business. (Especially if you’re a start-up.) In a world that lives and dies by your most recent position on the Google results page, it’s safe to say that your online activities are your business.
So, the nutshell version which answers the question of spending your marketing budget wisely is this:
- Don’t spend any money without first gathering accurate data.
- Make sure that your online activities drive sales and aren’t just vanity pieces and buzz.
- Constantly monitor your processes and platforms to ensure they’re working for you.
- When you find something that works, work it!
- Let the data dictate your budget.
Did you notice a thin, golden thread running through these five essential points?
Bear with us, we’d like to tell you a little story which will illustrate this point perfectly.
Bullets Before Cannonballs – The Smart Way to Spend Your Marketing Budget
Have you heard of Jim Collins? This incredibly smart man, in his book Great by Choice, talked about a key method that highly successful companies used to ensure the success of any new venture or concept. He coined it “firing bullets before cannonballs.”
For those of us with a limited attention span, here’s the basic premise as told by Jim:
The wisdom behind the idea of bullets before cannonballs is sound. Why would you commit all your resources (aka, your whole marketing budget, a cannonball) to a single unknown and untested campaign?
Surely it would make more sense to put together a data-driven campaign – a small, focused one – and test the waters.
Fire a bullet.
What worked? What didn’t? Make the necessary changes and fire another bullet.
Do you see where we’re going here?
You may have a phenomenal product or a life-altering idea which the world simply must know about. Or, you may have a wonderful business which you just know will benefit so many people.
But unless you have empirical evidence that this single campaign is based on solid and proven data and carries a 100% guarantee of success, should you commit your whole marketing budget?
We can say with, yeh, pretty much absolute certainty, that such a campaign doesn’t exist in the real world of digital marketing. (We wish!!)
So now that we know that we need to use accurate data to predict, test and measure, the next question you’re going to ask is…
How Much Should My Marketing Budget Be?
In short, the global recommendation for a marketing budget is 7 – 10% of your gross revenue.
However, this is not a science, and there are various factors which would affect how much you can (or should) allocate to marketing.
Factors Which Affect Your Marketing Budget
- Service-based businesses tend to spend more than product-based businesses. We’re still working on the data, but from what we’ve seen in action, the sales cycle in a service-based business is longer, and your customers need a little more coaxing than if they are simply buying a product. (Based on digital marketing analysis.)
- A start-up business should be spending more than a business in its twilight years that the owners are considering selling or closing.
- Careful analysis will tell you what your competition is spending on PPC ads. This will likely play a role in your decision-making process but remember that you can’t compete with the deep pockets of big business without jeopardising your own.
- You may find that B2B marketing is tougher and more costly than B2C marketing. Your marketing budget should take this into account during the planning phase.
As a digital agency, our focus is on digital marketing. Your brand may benefit from in-store promotions, billboards or radio ads – you know where your audience is.
Of course, the next logical question is:
How Do I Allocate My Digital Budget?
This question can also be phrased, “How long is a piece of string.”
But, before you throw your hands up, we’d like to offer a few insights along the lines of budget allocation for your digital marketing which will point you in the right direction.
- While it would be good to be present on every channel, it’s not always financially feasible. If 80% of your audience is on Facebook, then use Facebook. It’s better to do one channel really well than spread yourself thinly and badly over several channels.
- Decide what you want. Does this campaign need to generate brand awareness or sales? How will you measure your success? The answer to these questions will dictate where you should be focusing your efforts.
- Find out where your competition is. If another highly successful company is using LinkedIn, is there a valid reason for it? How can you do it better?
- Do you have a seasonal product? If so, then you will be planning content and ads around specific times of the year and be more visible on the platforms which support your goals.
- Cover all your bases. No, we’re not contradicting point 1, rather we are highlighting the importance of marketing for now and for the future. For example, PPC ads will generate immediate traffic to your website, but when you close off the campaigns the traffic will stop. Excellent blog or video content, on the other hand, has long fingers and will generate a slower, yet longer lasting and more consistent flow of traffic.
- Allocate more on what works. That’s pretty straightforward.
A Word From The Coach
We have had the absolute pleasure to work with a cross-section of businesses; from Nationwide UK giants to small start-ups with a limited budget.
Something that they all have in common is that they don’t want to spend more than they must, and they want the hard-earned funds used in their marketing budget to deliver tangible results.
That’s fair, isn’t it?
This is one of the reasons that we have put together a package for business owners who are getting into digital marketing for the first time, or who have not yet seen the results that they wanted.
This packet of “bullets” is an excellent starting point for increasing brand awareness, getting into social media, creating long-term growth with great content, and boosting sales with PPC ads.
It’s also a huge help for businesses who want to carefully manage their marketing budget while figuring out what works. Click on this link for a free digital audit, some sound advice, and perhaps a cappuccino with the coach.