Giant corporations have the luxury of throwing millions of dollars into major, full-blown marketing campaigns. Just think of how much your favorite super bowl commercial cost…
For the rest of us, you need to be more mindful about how you calculate and spend your marketing dollars to meet your goals. Your marketing strategy is a key component of your business’s success, and not prioritizing the right amount for your marketing budget can lead to slow or stagnant growth.
Therein lies the conundrum.
Understanding exactly how much your business should budget for marketing can be confusing. So the big question is: how do you set the marketing budget for your business?
To help your business answer this question, we’ll cover important factors you need to consider when setting your digital marketing budget.
Ready to realize true business growth? Let’s start by getting that budget straight!
Are you looking at marketing the wrong way?
Most businesses consider marketing an expense. If you view marketing as something that cuts away from your bottom line, you’re looking at it the wrong way.
Marketing should be viewed as an investment. Without marketing, your brand remains hidden amongst the weeds. Inbound marketing helps you attract new leads and convert them into customers.
Businesses have faced tough decisions in recent years. The pandemic has forced us all to take a step back and reflect on our spending, consider where we can cut a few dollars, and reset for the “new normal.”
Many businesses cut back as a knee-jerk reaction to the disaster that struck. A lot of those businesses learned that cutting back on marketing was a bad idea, and since then they began to invest money back into their marketing efforts.
Calculate your marketing spend as a percentage of revenue between 2020 and 2022
A recent Gartner study shows that while marketing budgets have decreased slightly compared to pre-pandemic levels, the average marketing spend as a percentage of revenue across all industries hovered around 9.5% in 2022. That’s up from a dip to 6.4% in 2021, largely caused by the chaos of the pandemic.
The rise brings spending back near pre-pandemic spending levels, which stayed steady at around 11% in the three years prior.
Image: Gartner 2022 Marketing Budget Study - Source
We recommend sticking within the 7-10% range. For businesses with under $5 million in revenue, a good rule of thumb is to stay toward the lower end of that range. For larger businesses, a bit more spending is typical, and exceeding that 10% mark isn’t at all uncommon.
How hiring a marketing agency can help you reduce your budget
Personnel resources can significantly increase your marketing budget, thereby reducing the amount you have left over to spend on actual marketing.
The average salary of a CMO for a startup is around $150,000– with that number rising significantly as the business grows.
And you will need more than just a CMO. Here are just a handful of the roles you need to fill for a successful in-house marketing team:
- Content strategist
- Web developer
- Inbound strategist
- Social Media Strategist
- Graphic Designer
- SEO strategist
Hiring an entire in-house team can take a lot of time and money just to source and train. And even that cost doesn’t include the cost of equipment, marketing tools, or other potential expenses such as employee benefits.
That’s why hiring a marketing agency is such an effective solution. Not only can you spend your money on the marketing actions you truly need, but you also get experts in each niche marketing discipline to produce amazing work and run top-notch campaigns without the costs of hiring an internal marketing team.
Set up a free 15-meeting with our team member, Brady, to chat about your current marketing challenges and discuss how to better leverage your marketing budget for business growth.
Where to invest your marketing dollars
While traditional advertising and outbound marketing can have a positive impact on your business by nature of being highly targeted, it can also have a major impact on your budget.
Fortunately, there are effective digital marketing tactics that work on a much more cost-effective level and can set you up for long-term success if you do them right.
Let’s take a look at a few of the top, most cost-effective marketing tactics that can help you save money and grow your business like crazy.
Content Marketing
Content marketing is the act of creating content, like blog articles, videos, infographics, podcasts, and other informative types of content that add value for your audience and aim to help them answer questions or solve problems.
The beauty of content marketing is that it offers a way for your brand to boost your website’s position on search engines, strengthen relationships with your customers, and become a leading authority and resource in your industry.
Brands spend between $2500 and $75000 monthly on content marketing according to the Marketing Insiders Group. That’s a pretty expansive range. Wherever your business falls, a successful marketing agency can help you hone in on what would work best for the results you want.
What the most important thing about investing in content marketing is that the content you create supports your overall marketing goals.
Social Media Marketing
Social media is a free tool, with lots of different channels to leverage for your business. Facebook, TikTok, Twitter, Instagram, and LinkedIn, just to name a few. Clever businesses can set up an engaging presence on social media and build a community around their brand.
If you are investing your marketing spend in your website and content marketing, you may want to also consider prioritizing social media marketing tactics. Social media is one of the best tools to help increase awareness of the content you created. Today, some would consider that content marketing and social media marketing go hand-in-hand.
Most social media channels now offer some level of advertising on their platforms, but if you have a solid strategy and you really understand what makes your followers tick, you can build a group of brand loyalists and save a ton of money while growing your business.
Search Engine Optimization
Search Engine Optimization (SEO) is a complex concept but it is highly impactful to your digital lead generation. Before you build your website and launch your brand into the world, you need to start planning how to optimize your online presence for Google ranking.
The wonderful thing about SEO is that the effort you put in now compounds over time. Focusing on the right keywords, adding internal links, gaining backlinks, and producing quality content– these things all position your site to earn clout with search engines and start showing up in targeted search queries.
The key to any good SEO strategy is an ongoing effort. You cannot just “set it and forget it” - you need to keep that momentum going! The value you gain over time from a focus on SEO generates that highly desired organic traffic, which tends to convert at a much higher rate than other types.
Use our Inbound Marketing Website Checklist to assess your current website and revamp it to align with an inbound marketing strategy that fuels your company’s growth.
Final Thoughts on How Much to Budget for Marketing
The amount of money you spend on marketing should be determined based on your goals for growth, the percentage of revenue you can afford to spend, and the general marketing ROI you can expect to achieve to ensure you spend in the right places and spend the optimal amount to drive the business growth you seek.
Digital marketing tactics like content marketing, social media marketing, and SEO can save you money and position your business for long-term success. Do your research to determine what content your audience wants to see, what search queries they conduct online, and what social channels they play on, then start producing optimized content and promote your business on social and via your website.
Our team at Uncle Jake media recommends that you shoot for 7-10% of revenue as a solid goal for setting your budget.
a 7-10% revenue percentage can go a long way with the right strategy. Make sure to reserve extra in case you want to redesign your website or run advertising campaigns. Then let your marketing money work for you.
Set up a free 15-meeting with our team member, Brady, to chat about your current marketing challenges and discuss how to better leverage your marketing budget for business growth.
NEXT STEPS:
Take a look at some of our other blog posts and resources that can help you prioritize what you spend your marketing budget on this year:
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What Should Your Marketing Budget Be? Answer These 7 Questions
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Top Digital Marketing Tools You Should Be Using To Grow Your Business