Commercial Ink - Marketing Budgets 101

Marketing Budgets 101

How much should a company spend on marketing? This question seems to be a very controversial topic among businesses. Many people want an exact answer, when in reality, there simply is not a magic number. There are so many factors that go into the equation to figure out what a marketing budget should be and it is different for each industry and business. Many professionals will recommend between 15% and 20% of revenue be reinvested into marketing and advertising. This is a great benchmark starting point, but before making this decision, a company should review all facets of business that contribute to determining a marketing budget.

First, what type of business are you in, and who is your primary target market? On the broad scale, are you "business-to-business" or "business-to-consumer"? Consumer retail companies will generally spend significantly more on marketing and advertising than a manufacturing company. TV commercials, magazine and newspaper ads, and radio advertisements that may lead to increased sales for b2c companies are probably not the best solutions for a b2b company on a limited budget. Marketing and advertising for manufacturers typically needs to be more targeted than for consumer advertisements and can include mediums such as catalogs, targeted direct mail, industry specific journal advertisements, and trade shows. Internet marketing and social media are growing at a fast pace and is a great way for both types of businesses to increase ROI.

Another aspect to consider is location. Is your business located on a busy street where everyone has access to it, or is it situated on a street with minimal through traffic? The latter company will probably need to spend a little bit more to increase traffic into their store or office.

Competitor research is a vital part of determining a marketing budget for you. If your top competitor is number one on Google searches, has billboards around town, and seems to be looming around every corner, it is safe to say that you need a strategic marketing plan in place, maximizing what you have to be sure you're not losing clientele. On the other hand, if you have a niche product or service with little direct competition, you may be able to get away with lowering your budget and still retaining clients. Of course, gaining new business is always directly proportional to the amount you are willing to spend on sales and marketing.

Finally, remember that marketing is an investment. It takes patience, and a delicate balance of spending and holding back. More than likely, it will take several months to see results, so don't be too hasty to pull the plug on a campaign that doesn't seem to be working. Be patient, and stay on top of evaluating return for each component of your marketing. With the proper attention and guidance, your marketing will soon be working for you.

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