Recently, Marketing Sherpa released a report showing the various levels of marketing budgets for Small, Medium and Large organizations. Interestingly enough, the small organizations (those with less than 100 employees) are spending on average 5% more of their revenue on marketing than the large companies (those with more than 1000 employees) according to this report. Why do you think that is?There could be many reasons for this, but one of the biggest factors to take into consideration is that 6% of a very large revenue number is a lot of money, and could be enough to keep a business top of mind with their buyers, while the smaller companies need to spend quite a bit more of their revenue to even make a dent in the marketplace.
Regardless of what other companies that are similar in size to your business are spending, the best way to decide how much to spend on marketing is to measure your marketing efforts. Make sure to track the return on investment for each marketing dollar you spend, and make adjustments to spend more money in areas that produce better results. It amazes me how few companies take the time to do this the right way.
MatchedMarketing emphasizes the importance of measuring results in all of our marketing campaigns, and that is one of the reasons why a majority of our business is Internet marketing. With Internet marketing, almost all of your marketing efforts can be easily tracked to show you where leads are coming from, and how much it cost you to generate a conversion (purchase, registrant, sign-up, download, etc.). This allows us to then make decisions on how to spend marketing dollars in the future that are based on data, rather than opinion.
What can be challenging is that often we find that people believe that they can spend less money if they focus on Internet marketing. While it is true that marketing and advertising on the Web is typically less expensive than traditional forms of marketing (TV, print and radio advertising), there seems to be a misconception for just how much less expensive it can be. For the most part, the expense with Internet marketing is the TIME investment, so some companies may look to load up their staff with Internet marketing responsibilities, or management will take it upon themselves to tackle. It is important to look at the cost of your time (or your staff's time), per hour, before deciding that handling your marketing in-house is the right way to go. In addition to that, you'll want to consider the knowledge level your team has with Internet marketing and how much time it will take them (or you) to complete an online marketing task vs. someone that is experienced in Internet marketing.
Ultimately, when developing your marketing budget, you might want to follow the guidelines outlined in this report from Marketing Sherpa to decide on a number to start, but to really make sure you choose the RIGHT number, make sure you are measuring all the investments and their return to help you allocate funds in the most optimal way for genereating leads for your business. And when you count your spend (investment), don't forget to factor in the cost for your staff's time if they are completing marketing projects for you as well!
