One of the best ways to drive your marketing dollar further is to set a marketing budget each year. I know some businesses that take a mostly ad hoc approach to their marketing spend, putting money into advertising or branding when cashflow is good and then cutting back in the leaner months. While this approach could be viewed as adapting to economic conditions, it’s not necessarily the best use of your marketing dollars.
Why do I say this? If you review your marketing strategy when you are defining your budget, you can think strategically about how you are going to spend the money. This allows you to plan how you can make the most of your marketing investments in a holistic way. This promotes continual marketing, which is the key to supercharging your marketing!
Your marketing ROI
Good marketing pays for itself. However, some tactics take longer to deliver a return on investment than others. For example, branding has a longer ROI than promotions such as email campaigns. Branding is a long term investment — as brand awareness grows your campaign results increase. As I always say, it’s much easier to market a well known brand than it is a start up!
When you have defined your budget upfront it will be easier to choose the tactics that will deliver the best results. To ensure your marketing provides a healthy return on your investment, it’s still vital to monitor the effectiveness of your marketing. This lets you know which tactics are working and which ones aren’t. Monitoring the success of each tactic will ensure you get the best value for your marketing budget, all year, every year.
How much should my business spend on marketing?
I often get asked this question. There’s no magic formula but marketing usually sits at around 10% within most business budgets, but sizes and results vary. Small businesses, as a rule of thumb, should commit at least 7-8% of gross sales to marketing.
It’s important to have a set amount and know what you can afford. Another essential thing to remember when setting a budget is you may have the right figure but be spending it the wrong way. More often than not a marketing campaign can deliver a higher ROI by strategically allocating rather than enlarging a budget.
Sometimes businesses will put aside a marketing budget only to get to the end of the year and find they haven’t spent it all. This surplus marketing budget can often lead to a bit of last minute print advertising (that often doesn’t work) or the purchase of PR items that are not really needed. Planning out how you are going to spend the budget strategically in your marketing planning process will ensure you get the best value. If you get to the end of the year and haven’t spent all of your marketing budget, be sure not to waste it.