How much money should I spend on marketing?
When it comes to deciding on budgets, a common query is “how much money should I spend on marketing?” It can be tricky to know what’s ideal.
It will most likely come down to your own circumstances, your own goals, and what represents the best return on investment.
Deciphering how much to spend on marketing starts with an overarching goal. Money talk can then come into it and budgets can be set.
Factors that can often affect this are who your target audience is, how you reach them, and how you are choosing to measure your marketing efforts.
So, when it comes to asking “how much money should I spend on marketing,” there are a few factors you can consider to come to a decision.
What do you want to achieve?
Before you invest time or money into marketing, you must define your goal.
When you put a postcode in a Sat Nav what happens? You’re given a precise location. You are generally given a few options for how to get to your destination. Finally, you decide which route works best for you. Right?
Marketing is exactly the same. Think of the postcode as the goal.
If you do not define the goal, how on earth do you think you will ever get there?
Once you have the goal set, it’s a matter of looking at the different ways in which you can get to that end result. Choosing a route in the car where you avoid the motorway might take a little longer but you can see the route mapped out. In the same way, you may not want to pay for Google Ads or other such marketing but can still see the route mapped out to your destination.
It’s time to set your goal. It may seem a bit basic to say, “I want to make more money”, but that is generally the truth. Marketing is the purest example of “speculate to accumulate” in business, and there’s nothing wrong with acknowledging that.
However, while that may be the overall goal, there are other smaller objectives that are useful to consider.
It may be that you’re looking to promote the business as a whole, raising awareness of your brand and garnering interest in what you do. You can do this through social media posts or blogging, offering opinion as a thought leader, and helping to build trust amongst your potential client base.
You may want to promote a specific product or service that you offer. This might involve a brochure that you send out to potential and/or existing customers.
Put that destination into your metaphorical Sat Nav and assess which route you’d like to pursue.
How much money do you have?
The simplest place to start is perhaps the most obvious – how much money do you have? There’s no point trying to spend what you can’t afford, so what percentage of your cash/capital are you able to invest?
A general rule of thumb is that a business should invest 2-5% of revenue on marketing. The size of your business will determine how much this equates to.
The average marketing executive as an employee costs around £32,000 as a starting salary. This can inform whether you’re better off hiring someone or outsourcing your marketing. If that is too rich for your current budget, begin by designing a route to market that’s either free or low cost, such as blogging, digital newsletters and social media.
It’s also wise to assess whether organic or paid marketing is right for you. One clearly has a bigger cost! Online platforms such as Google and Facebook will tell you that you should spend… because they want your money! You might not need this extra cost, at least not to begin with.
It’s worth remembering that no marketing campaign comes with a guarantee of success. You must be prepared for the fact that your investment is at risk. Multiple factors could prevent a campaign from being as successful as you’d hoped. This could be due to a competitor’s marketing being more effective, print being distributed to the wrong areas, poor SEO, or weak design elements not catching the eye, to name but a few.
Therefore, you should only spend what you can afford to lose, but if your marketing is well-designed, well-placed and well-timed, you should see a rise in interest, brand awareness, and – hopefully – sales.
Everything you invest – whether that be time or budget – needs to be measured. You can then see how much you got back from what you put in. You don’t want to find that you’re wasting time or money with nothing to show for it, and no idea of why something did or didn’t work. More on this later.
What are you spending it on?
It’s important to ensure that any money you do invest in marketing is being spent in the right places. The first question is to decide whether you want to do it in-house or hire an agency to help you out. Each option has its pros and cons.
Consider which medium your ideal customer most likely to see. If your company is B2B (business to business), you’re less likely to benefit from a B2C (business to consumer) platform such as Instagram.
Social media is just one way of reaching people, with each platform home to a slightly different audience and demographic. But this may not be the best place to reach your client base.
Social media manager
If you’re looking to expand your professional network, a social media manager could handle your LinkedIn, ensuring that you’re posting regularly, interacting with potential leads, and developing your community standing.
Similarly, if you’re seeking to reach customers directly, your social media manager can also promote your brand on other platforms. These could include Facebook, Instagram, Twitter and even TikTok. However, if you’re doing this, be sure to consider whether the platform is appropriate to your brand identity. Otherwise, you could be wasting your investment. Professional service companies are unlikely to need a TikTok account…
If you want to position yourself as a thought leader in your industry, producing blog content on topics relevant to your business will help to build trust in your expertise. If you’re not confident in your writing skills, hiring an experienced copywriter might be the best way to invest your budget.
Appearing in print
The best way to reach your customers might still be in print. In which case, you’d be wise to invest your marketing budget in a graphic designer. A designer can produce engaging content, such as brochures, flyers, posters or even billboards.
Who are you trying to reach?
Whatever medium you go for, it’s important to ensure that your content is being seen by the right eyes.
Think about who your target audience is. Consider their demographic, where they live, and what their average salary would be. Are they industry professionals or the person on the street? Do they use social media or read brochures? Do they buy in person or online?
By considering these habits, it will give you an insight into how best to spend your budget in order to get in front of these people and see the greatest return on investment (ROI).
How are you measuring success?
The biggest element to consider when setting a budget is that you have measures in place to monitor the ROI.
Are you interested in the quantity of social media engagement, which could help grow your general brand awareness?
Perhaps you’re more interested in leads generated? This could be a case of thinking too short-term, as your marketing might have more of a slow burn effect, with the people who see it not making an enquiry until months later.
Maybe you’re looking to generate reviews of your product/service? These will help to build trust in your company and help to attract more consumers in the future.
There are many potential ways to measure ROI but testing and trialling will be key to finding what works. If you spent £10 on a Google advert but made £1000 back, would it be worth then placing £1000 on Google adverts to potentially see a £10,000 return? Perhaps not – move in increments and see what benefit you gain.
The initial outlay doesn’t have to be huge. For the average small business, we would suggest trialling eight different Google adverts, each with a £10 budget. You will soon see which are working and deserve more investment.
However, if you want to be frugal, test the ads out as social media posts first. The ones that perform the best then get turned into adverts. Ultimately, these test runs will help you understand where and how much to spend.
Every business is different, so the perfect amount to spend will be tailored to your personal circumstances. Remember to consider who you’re selling to, where you’re selling it, and how you’re measuring return on investment, then adapt as you learn what works.