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What should my marketing budget be?

Written by: Peter Lawless

Article Overview: Getting the most from a limited marketing budget is quite a challenge for the average small business owner. I always ask, business owners how much they spent last year - and how much business did that bring in. Can you answer that question? And are you sure that all of your spend brought the best possible return? This article, gives some simple rules of thumb on setting budgets, an easy way to track your spend and some tips on where to spend your valuable budget. Generally people look for a 1:10 ratio on new products and 1:20 ratio on established products to maintain momentum.

What should my marketing budget be?

Before you allocate any marketing budget, you must have set some goals on what sales you are looking to achieve. After all a game of soccer would be pretty pointless without goalposts!

Generally people look for a 1:10 ratio on new products and 1:20 ratio on established products to maintain momentum. This means that for every Euro spent, you should get at least 10 euros in sales.

Going back to last year's budget, did you track it? Did you measure the effectiveness of all of your spend on Marketing? Large companies do micro analysis on all campaigns, with lots of testing. At minimum, you should track and monitor everything you spend.

Who should I market to?
Most people think that if they spread their message around, then someone is bound to respond. This is simply not true. You need to carefully select who your likely "suspects" are.

Most business plans, suggest that you do huge amounts of market research, however if you have sold your offering already, and you have delighted your customers, then you already know who you should be prospecting to in the future.

Let's assume you are an accountant, and you do some analysis of your existing customers and find that you have 10 plumbers on your books. This actually makes you an expert on helping plumbers with their financial matters.

It would make sense to target plumbers, by ensuring your message, preferably by using testimonials from other satisfied plumbers, is visible in the places that plumbers spend their time.

You should ask your self the following questions

1. Is there a trade magazine that they subscribe to?

2. Are their key suppliers that run trade shows, that you could piggy back on?

3. Are their websites that plumbers buy materials from that you could advertise on?

4. Are their specific stores that Plumbers go to, that you could leave some flyers, telling plumbers what advantages other plumbers have got from using your services?

5. Is their a plumbers association, that you could contact, and offer them some special discount or introductory offer through?

The list is endless, and indeed each industry niche that you service, will have their own specific haunts and influencers whose advice they seek.

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Article Tags: accountant, business plans, campaigns, existing customers, financial matters, flyers, game, goalposts, market research, marketing budget, micro analysis, momentum, plumbers association, soccer, testimonials, trade shows, would make sense



Related Forum Posts
Marketing is Marketing - I think what seems to be getting lost here is that marketing is marketing. Whether you use broadcast, print, event marketing, cause marketing, PPC or other internet marketing strategies makes no difference. Your strategy needs to include all the appropriate different outlets. And 'appropriate' is defined by more than just where your market can be found - your budget is also an important factor. The Expedia example is a good one - they do a lot of PPC advertising, but they don't rely on that alone - I see their billboards everywhere, ads in magazines and commercials on TV and radio. That makes sense, they are a business to consumer type of company and they have the budget. However, let's say you are a smaller company or a startup selling B2B, focused on the small business market. With a limited budget, 'traditional' off line advertising can be priced out of your range, but with PPC you can create an advertising campaign that fits your limited budget. Something you might not have been able to do with local print or broadcast media. And depending on your local market and the product/service niche you are in, it might be fairly easy to obtain organic search results. So in this case it would make sense to spend your limited budget on online marketing, strictly from an ROI point of view. Later, when you have the budget a mix of the two would make sense if you can reach your target market through traditional media. The reality is that most people reach for the computer to look up information these days, and if you're not there being found - your potential client will find someone who is. That means that part of ANY marketing strategy that includes advertising needs to have some kind of online component to it.
Re: How do you budget your life? - Why Budget? Here are twelve good reasons: A budget is a guide that tells you whether you're going in the direction you want to be headed in financially. You may have goals and dreams but if you don't set up guidelines for reaching them and you don't measure your progress , you may end up going so far in the wrong direction you can never make it back. Can you imagine the government or a major corporation operating without a budget? No, and neither should you. A budget can help you meet your savings goals. It includes a mechanism for setting aside money for savings and investments... A budget helps your entire family focus on... A budget can keep you out of debt or help you get out of debt. A budget actually creates extra money for you to use on things that matter to you. A budget helps you sleep better at night because you don't lie awake worrying about how you're going to make ends meet.........................
Re: Why Your Business' Website Is Not Making You Money - Hi All, Internet marketing is the new kind of viral marketing which helps your business to grow online on internet. It also depends upon your budget because to get high ROI, you also have to invest bunch of money.
Re: Promote Websites You Don't Own! - For most new small businesses jumping into online marketing for the first time I would steer clear of PPC advertising. For a while at least. Without a decent understanding of how search works and the whole PPC thing, including quality score, split testing of ad copy and landing pages, negative keywords, etc., you burn through your money pretty quick while trying to just learn and often end up with a deeply negative return on investment. Instead I would maybe spend that part of the budget on doing more of some of the other things you mentioned. Maybe buy another directory link or two. Another press release. More local offline advertising. Save the PPC for when the budget is not quite so tight and those other marketing efforts are already bringing in business. You can then better afford the learning curve costs and time required to get it right, and most importantly get it profitable.
Re: A note for software companies struggling in this bad economy - Hi Hasnaeen, I will be interested in outsourcing my software need to your company, but I don't have huge budget to use, do you work for people like me who have low budget


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