
How much should you really be spending on Marketing?
This question is something very important for businesses have to ask themselves! Let us tell you right off the bat that there’s no set ideal dollar figure or golden ratio when it comes to your marketing budget, it all depends on your CURRENT SITUATION. Many gurus or programs out there claim to have the perfect marketing budget for you but 9 out of 10 times, it’s not really effective because their advice is the same for everyone, it’s not personalised for your business’s current phase and future goals.
So what does this mean? When should you spend more money on Marketing?
You shouldn’t spend money on marketing when times are tough, you should be spending money on marketing when things are going well and you actually have the resources necessary to invest in your marketing. It’s all a question of changing your perception of when it’s necessary to inject money into your marketing. When things are bad, you shouldn’t focus on spending money on marketing in the hope of turning things around. When things are bad, your business will have other financial problems to worry about.
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Firstly, well done for making this far! We do appreciate you reading this blog and as a way of saying thank you we’ll now reveal our advice when it comes to your marketing spend.
Drumroll please……There’s a universally accepted rule that suggests 10% of your revenue needs to be allocated towards marketing and advertising. HOWEVER, It’s important to keep in mind that a marketing budget is DYNAMIC. This means that your budget shouldn’t stay exactly the same throughout the life of your business. Just like all businesses go through the stages of the business life cycle, your marketing budget needs to adapt to each phase of this cycle too!
Like we mentioned previously, when it comes to Marketing expenditure, your business’ current situation is a very important factor. If your business is in a high growth phase, then it would make sense to spend at least 20% of revenue on marketing in order to build brand awareness. Another instance in which it would make sense to increase your marketing budget would be if you are introducing a new product or if you are rebranding your business.
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One final thing to consider is that you shouldn’t always be thinking about SPENDING, you also have to consider ALLOCATING. This means that when your business is truly booming, try to allocate some of your revenue towards future marketing expenses. This way, if things go south, you won’t have to tap into the limited cash flow you’re receiving. If you don’t allocate towards your marketing budget when things are running smoothly, you are definitely going to be behind the 8 ball if cash flow starts to become tight.
If you are still not too sure about how much you should be spending on marketing or feel like your current marketing strategy isn’t leading to any results, feel free to give us a call and we’ll happily provide the guidance you need! 🙂
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