How much of your business revenue should be spent on digital marketing? This is a question we hear a lot, and the simple answer is that there’s no simple answer. The “magic number” you typically hear is 10%. The Small Business Administration recommends budgeting 7-8% of gross revenues to marketing, assuming revenue below $5 million and profit margins of 10-12%.
The reality is that it’s far more important to look at your own needs and goals to determine where you want to take your business.
The Value of a Marketing Plan
Some of our customers are in the enviable position of not needing (or wanting) more business. They maintain a digital presence to present a professional image for their company and continue to engage with their clients, but they’re not spending money on a marketing strategy designed to drive new leads.
On the other hand, most of our clients are in growth mode: seeking out new customers and encouraging loyalty in their past buyers. These clients are actively engaging in a digital marketing campaign that is custom designed for their business. The cost of these campaigns varies greatly based on needs.
Optimize Your Digital Marketing Strategy
At Brentwood Visual, we design all of our campaigns around a digital marketing funnel, which we demonstrate for each of our clients during our first meeting with them. Some of our clients have the need and budget to engage at all levels, from branding and awareness at the top of the funnel, to strategies designed to maintain customer loyalty at the bottom. Other clients pick and choose the elements that are most important to them, based on their current situation, their goals, and their budget.
When we’re setting up your campaign, there will be some expenses for management, and some expenses for ad spend. You can design an extremely effective local ad campaign around a $300 monthly spend. Or, you can spend tens or hundreds of thousands of dollars to reach larger audiences. It all depends on your goals. What type of audience are you trying to reach? What type of geography are you marketing to? Are you focusing on brand awareness and long-term visibility, or are you trying to reach your customers right at the point of purchase? Different goals entail different approaches, different costs, and different results.
Online vs. Offline Marketing
Finally, consider how your digital marketing integrates with other, offline marketing campaigns. If you’re doing newspaper advertising, mailers, billboards, or any other form of non-digital marketing, take a look at how those platforms integrate with your digital strategy.
In most cases, digital marketing is far more cost-effective than traditional techniques, but if you’re doing non-digital campaigns (and we’re not saying you shouldn’t) you’ll want to make them both a part of a coordinated strategy that drives your audience towards your desired conversion goals.
Why You Need to Spend Money on Marketing
One of the biggest mistakes we see is when customers fail to treat their marketing budget as a business expense. Especially when you’re starting to market your business for the first time, it’s easy to look at marketing as something that you can throw “extra money” at – budget left over after all other expenses have been met. The reality is that marketing should be treated just like employees and electricity. It needs to be a budgeted expense that is a firm part of your business’s overall operating plan.
I can’t tell you how many times we’ve heard a business owner say, “There isn’t enough money coming in right now to spend on marketing.” Unfortunately, that’s a self-fulfilling prophecy. Until you’re ready to make marketing a priority, you won’t be able to experience the benefits that come with it.
When we sit down with a client, our goal is to learn as much as we can about their business, then help them select marketing opportunities that match their goals and their budget—regardless of what that is.