How much marketing costs, or how much to spend on marketing can be a very tricky question for a lot of companies to their collective head around. It’s kind of like the chicken and the egg scenario. You need to undertake marketing to attract clients but unless you have clients (and therefore a bit of cashflow), you can’t afford to undertake marketing. Sound about right? And when it comes to working out a marketing budget, how much to spend can be impossible to work out. How long is a piece of string? While we can’t answer that for you, we can give you some elements to consider when putting together a marketing budget.
First of all, do you know what marketing actually is? What is marketing in a nutshell? In case you aren’t sure here you are: marketing is everything that your company does in order to reach your target audience and convince them to buy your product and service. Don’t forget about the second step in that definition. It is no good to just ‘reach’ your audience. You must motivate them to take action, to buy your product, to log on to your website, to phone your service number. This is the only way you are going to convert your marketing spend into profit. Otherwise, what’s the point of spending the cash at all?
The next thing to remember is that marketing is a process, comprised of many elements, steps and phases. A good marketing campaign is not a two day TV ad placement. It is an integrated program which may include (but in way should be limited to): television, radio, social media, print, PR and mobile marketing elements. As such, you will probably need to purchase a few resources and bring in an expert consultant to help you out with all these elements.
How much you need to spend on these resources and experts is up to you and will differ greatly, depending on the industry you might be in and the scale of the business. There are a few ways that you might like to work out your marketing spend: a percentage of your total revenue; a percentage of profits; or a specific amount each year.
Regardless of how much you actually spend on marketing, the most important thing to keep in mind is return on investment. There is no point in spending big bucks and getting nothing back in return. Marketing should increase revenue and profit. Maybe not immediately, but definitely over time.
Just remember that free marketing does not exist. Unfortunately, to grow your business, you will need to invest in it. You will either have to pay with your time or with cold hard cash for results in the world of marketing. In today’s fast-paced, consumer driven marketplace, there just isn’t any other option.
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