How Much Should I Spend on Marketing?
Advertising | Marketing | March 31st, 2021
Contributor Phil Robinson. Partner, Founder + CE
How much should I spend on marketing is a pretty common question we get asked. And it’s a fair question. But like anything in the marketing world, it’s like asking: How much does a good logo cost? Or How much does a website cost?
The short answer is… It depends… Not very definitive is it? It depends on what your goals and budget are and whether you see marketing as an investment or a cost. Fortunately, there are some guidelines that can help you decide.
What do the experts say?
While there is no hard and fast answer about how much to spend on marketing, there are some guidelines and general rules of thumb that can help you make the decision about what’s best for you.
Well how about this. According to figures from a recent CMO survey published in February 2021, across all industries the spend averaged 8.9% of revenue on marketing. In theory, this money spent should generate more revenue. When it’s done right, it’s money well-spent.
Finding the sweet spot for spending can be a challenge though. Ultimately it comes down to what you believe the purpose of marketing to be. And if you see it as an expense or an Investment.
Marketing is an Investment
The important thing is to see any marketing spend as an Investment. Not an expense or cost.
Sometimes investments return a lot, sometimes they return a little. Sometimes investments return nothing and sometimes they end up losing you money. However, if you look at any long-term investment, whilst there are always peaks and troughs. In the long run, if you understand what you are trying to achieve, monitor and measure results, and adapt when necessary, most of the time you will see a good ROI.
Marketing is no different. If you define really good SMART objectives, it is much easier to put measures into place to get to the destination.
If you’re throwing money at various activities with no real plan or direction, and not measuring the results, then you are just throwing money away. Marketing without a plan is like driving with your eyes closed. You’re probably going to crash.
How do I know where to start?
When it comes to figuring out How much you should spend on marketing, it can be a little bit of trial and error – especially if you’re trying to figure it out yourself. In the words of Fleetwood Mac, if you want to go your own way, then first you need to figure out who your ideal customer is. Then map out the stages they take on their buyer’s journey. From there you can start to think about where they hang out and how you can reach them.
One of the best places to start is by creating good content. Content is what keeps people interested and coming back. So ask yourself, what content do you need to produce to attract them to you? Implement, measure, adapt if necessary and repeat.
Not sure what content you need? Or what content is? Download our ebook by clicking the image below!
As a business owner, if you’re anything like me, you will understand how much is involved with all of that. Especially if you have come across the 10 Hats of Business before. If you’re running a small business, you will probably be wearing all of them – you just may not know it yet. If you’re good at what you do, then you probably wear the Operations hat most of the time, so to find time to wear the Marketing Hat will more than likely feel impossible.
A good outsourced Marketing Agency can take that hat off your head and ease the weight on your shoulders – it’s surprising how much each of those hats weigh right?
Whilst this is going to be an additional cost to the business, the value a collaborative Marketing agency can deliver is far greater than what you can achieve alone. When you have the right team backing you, they’ll wear the Marketing hat for you–saving you time and making you money too.
How do I choose an Agency and what will they cost?
This all comes back to that question at the start of this article. How much should I spend on marketing? The cost to employ and work with an agency should all be factored into that original budget. The best marketing companies will work with you to help you figure that out, some may charge an hourly rate, some may have packages for what they offer. Others may charge a base retainer and ask for a commission on sales – if you’re willing to be open, honest and transparent with them, then this can be a great way to get started – if you can find such an agency.
Choosing the right marketing company for you involves taking a close look at your budget, goals, and marketing needs. Take a look at our article How to Choose a Marketing Company to get an idea of how to find the right team for you.
How Much you Should Spend on Marketing is up to you!
So as you may have discovered there is no hard and fast rule around spend. It is ultimately up to you and what you think you can afford to invest. I will say this, if you want to see a return, sometimes you need to take a chance and ride the wave. It may take 6 months to see a real ROI. Or it might only be a few weeks. First and foremost you need to define what you want to achieve,
We’ve found that The most successful clients we work with here at Back9 commit anywhere from 7.5% – 14% of their revenue towards marketing – and anywhere up to half of that can be advertising spend alone. The differences depend on their industry, products and services they offer, the quality of the website, how long they’ve been in business, etc.
To get this nailed down from the start, we do a Digital Marketing Roadmap that explores your business, its goals, and much more. Get in touch with us to find out more.