Session 9: What should I budget for marketing

In session 9 of A Marketing Podcast I discuss how to develop a budget for marketing using one of three different calculations/methods. At the end of this session you’ll have developed a budget that suites your business and delivers on what we’ve worked to achieve in our marketing strategy.

Session 9: Show Notes

Recap of Previous Sessions (related to strategy development):

* Session 2: What is a marketing strategy and why do I need one?

* Session 3: Establishing goals and objectives

* Session 4: Understanding and developing your target audiences

* Session 5: Performing a marketing SWOT analysis

* Session 6: Creating your selling proposition

* Session 7: Developing a marketing mix

* Session 8: Tactical and Campaign Planning

* [FREE DOWNLOAD] Small Business Marketing Strategy Template

Some stats on SMB marketing spending

Some amazing numbers around small business marketing budgets of SMB’s in North America.

* 70% are spending less than $500 on marketing per month (vs. 73% in 2013) total of less than $6,000 a year – making the average marketing budget for small business less than $6,000 a year. WOW – that’s not much.

* 83% are spending less than $1,000 on marketing per month (vs. 85% in 2013)

* Just 16% are spending more than $1,000 on marketing per month (vs. 16% in 2013)

* The highest percentage of smb’s spending between 0-100 per month.

* As the smb company size grows so to does the budget – makes sense.

*  31% of smbs saw phone calls as the major metric measuring success (collection of emails was no-where to be seen)

Some notes on the stats presented:

* In this survey we had a wide-range of small & medium businesses take part; from plumbers, event planners and private investigators, to locksmiths, mechanics and party entertainers. It’s fair to say that the participants don’t come from any one industry alone, and so the results should be treated as such.

* The study was conducted in October / November 2014

* 736 SMBs completed the survey with 95% located in North America

These numbers are according to Bright Local – you can see the report here: https://www.brightlocal.com/2015/01/07/37-smbs-plan-spend-internet-marketing-2015/

Different methods for establishing a budget for marketing

There’s essentially three methods of developing your marketing budget. They are:

* Percentage of previous years sales

* Percentage of previous years overall budget

* Tactic by tactic, prioritized, and scaled approach

1. Percentage of sales approach

As a general rule look to spend around 5-10% of your sales number on marketing.  In my research as to the percentage other marketers recommend, it ranged from 5 – 15%.

This approach requires that we divide the established number towards our marketing mix in the prioritized order we created when developing our marketing mix.

2. Percentage of Budget

This is the more traditional, and simplified calculation used to figure out your marketing budget.

If you’re just starting your business, it’s likely that you’ll be looking to grow at an increased r...