Determining the Right Marketing Budget for Your Business [Blog Post + Interactive Tool]
Many marketers wrestle with the question “how much should I really be spending on my advertising and marketing promotions?” Often the left-overs of the operational budget will be given to marketing without much thought, or marketing expense is a “nice to have” that receives funding only when extra dollars are available.
In a competitive market place, marketing activities must be moved from an afterthought to a strategically planned exercise to truly differentiate businesses of all sizes.
Nice intro… So really, how much?
Unfortunately, there is no definitive answer. However, a safe approach is to understand the guidelines that drive marketing spend. Here are three things to consider:
1. Where is your company in the product life cycle? Managing your brand overtime is an ongoing strategic issue. Using the traditional product life cycle may seem a little academic, but really is an effective way to understand what advertising activities would best benefit your business:
Adapted from William M. Pride and O.C. Ferrell, Marketing; 2014 Edition.
2. What is my marketing objective? Understanding what you are trying to accomplish is the second step in determining funds to allocate – either to one marketing program, or to an annual marketing budget. Acquiring new customers looks different than cross-selling or up-selling existing clients. Consider how well the audience you are trying to target already knows your business and scope the efforts of your marketing plan to reach them most effectively.
3. What are my competitors doing? As the the core products of many companies start to look the same to consumers, ensuring your unique message is delivered with enough frequency and across the platforms your customers interact with the most is more important than ever. Want to know how your ad spend stacks up against others in your industry? Here’s a quick assessment tool that will help you get started.
Determining marketing spend is never easy. And in a time of increased pressure on businesses to ensure they stand out in a crowded marketplace, ensuring you are spending your dollars in the most effectively way possible is critical. Taking the first steps to understand your strategy and the competitive landscape won’t lead to a one-size-fits all answer, but it will unravel the mystery for your business.
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