"How much should we be spending on marketing?" This is probably one of the most common questions we get asked. Or, on the flip side of that, we hear, "oh, we don’t have a budget. We’re just a small business. We just go with our gut."
No, no, no, no, no.
Let’s get to the most important message first. Every company, even a one person consultancy, should have a defined marketing budget. You absolutely, positively will mis-spend, over spend and wrongly spend if you do not have a budget. I promise you that.
Think of a budget as those bumpers you can use in a bowling alley. (even if you don’t have kids!) They keep you from getting too deep in the gutter. You can still get a little off center, but you can’t completely skip the lane. With the bumpers in place, you’re bound to hit at least a few pins.
You need a written marketing budget that is tied to your sales goals. Now that we know you need one, in the next post we’ll talk about how to create one.
For those of you who have ventured into the waters without a budget, any war stories we can learn from?
For several years my former company operated without a marketing budget. We experienced a never ending struggle to acquire resources, difficulty sustaining programs, and difficulty obtaining buy-in from our internal customers. Since our marketing efforts had no defined purpose, management had no easy way of figuring out what we were trying to accomplish. Unless results were dramatic and immediate (something you can’t always count on), interest would wane, programs would fall by the wayside.
I fully agree it is essential for every business to set a marketing budget, but personally I have always found it challenging and rewarding to work to find ways not to spend the marketing budget and yet still reach marketing objectives.
Now this doesn’t mean I don’t spend on marketing, quite the opposite, but taking this view helps ensure that you explore all the marketing avenues and opportunities that are available to you.
For small businesses this is important as they need make their marketing budget work hard for them and have very little scope for wasting any money.
So yes set a budget, but don’t forget to explore all the different ways you can market your buisness without needing to get the cheque book out!
Thanks for the reminder to all who are beginning their 2008 plans now. Plans provide direction. A budget helps you make decisions on what to spend and where to spend it. It also can give you the flexibility to act upon an opportunity by shifting money around within the budget. Without a budget (and of course the plan that lead up to the budget), you have disjointed marketing efforts that do not deliver results. And then people wonder why marketing is considered an expense, not an investment!
The lack of a marketing budget speaks loud and clear about the organization’s true opinion about marketing’s importance.
When you don’t operate from a marketing plan/budget combination — you are destined to slip and slide all over the place.
Which is ineffective and inefficient. Which of course, proves to the organization that their opinion was correct. It’s a self-fulfilling prophecy.
I think many companies buy advertising because they don’t know what else to do. It doesn’t occur to them that their are other, more effective places to spend their money.
There’s no end to all the places one could spend marketing dollars. I think the key is, to your point, be smart about where you spend.
All too often, business decision makers spend marketing dollars on the mediums that appeal to them as a consumer. But they don’t fit the profile of their business’ consumer. So that should be a non-factor.
There are plenty of ways to build buzz, like having a blog, that don’t cost a lot of money. But…every resource is valuable. When creating a marketing budget, I think a company should consider all costs — dollars, time, energy, etc.
In the end, nothing is truly free. Some things are just much more cost effective than others.
You’re exactly right. Companies that view marketing as an expense have probably never taken the time to step back and look at their business from afar. They’d see that just like training their employees and having properly working tools — marketing is a long-term investment that pays dividends over and over.
Another key point: when the economy gets tight don’t cut your marketing. When you really need more customers is not the time to stop inviting them to do business with you.
Besides, when the economy gets better, think of how much farther ahead of the competitors you’ll be when they cut back and you didn’t.
That is a very important message — thanks for the reminder. When everyone else is cutting back because times are tough, you have the stage to yourself.
It is not the time to step off the stage.
You can gain valuable marketshare that your competitors will not be able to regain.
Great point — thank you!
A marketing budget is vital. I worked in a company in which the CEO was a marketer and had allocated a budget. He also put us on to incentives.
We were selling speakers to OEMs. One salesperson discovered that speakers could be sold to the retail trade of car accessories. They only had to be packaged beautifully as they sold on that basis rather than performance.
So in your marketing budget create incentives.
Bottom line…everyone wants to know what’s in it for them. It’s smart psychology to build in some sort of reward or incentive to encourage sales.
Every time that I have worked with a company that had no set marketing budget, the company ended up accomplishing much less in terms of revenue growth.
Had they agreed on a certain amount, we could have planned better, work more efficiently and catalyze our resources better.
Unfortunately, the fear of commitment to a set budget results in worse results for the clients.
Great conversation in the comments of this post. I agree that you shouldn’t “step off stage” just because money is tight. Establishing a good, concise marketing budget is extremely important, and if done right, it can prevent your company from falling out of the loop throughout the year. Good post. Thanks for sharing! 🙂
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Plans provide direction. A budget helps you make decisions on what to spend and where to spend it. It also can give you the flexibility to act upon an opportunity by shifting money around within the budget. Emo
I really appreciate sharing this great post. Keep up your work.
Plans provide direction. A budget helps you make decisions on what to spend and where to spend it. It also can give you the flexibility to act upon an opportunity by shifting money around within the budget. Emo Clothes
I think the budget depends on how much you think you can earn from the business.
Hey there is a bug or something in your comments section.My comments are being showed under other people comments section.Whats wrong?
Iposted ‘I think the budget depends on how much you think you can earn from the business.’
Keep it up, your writing is always a joy to read that I even told my friends. Simply loving this!
A budget is definitely required no matter how big or small the business is. And when the business is small, having a budget enables you in controlling your finances better so that the path in which the funds roll is taken care of well, and hence it’ll easily produce better results.
Excellent post.I want to thank you for this informative read, I really appreciate sharing this great post. Keep up your work…
I couldn’t agree more! Time and time again I speak with small businesses who are afraid to define a marketing budget.
Where do you think the fear comes from?
Great overview. Your style of writing is really a joy to read.
Great overview. Your style of writing is really a joy to read.
Without a doubt…there’s a wide range of “spend” on marketing tactics. The trick is knowing your budget and what you can sustain for the long haul.
It makes no sense to start something, just to have to stop again because of the budget.
Marketing budget is really very important. If we want to make one PPC campaign then we should aware about ROI, we should invest so much amount so that we get return of our investment.
Serious businesses really need marketing budget. This is one way to let the people know about your stuff and your offering. You just have to be efficient to keep things going according to plans.
Without a doubt…there’s a wide range of “spend” on marketing tactics
clearly written plan?? and here i thought the budget plan only includes the money spent on advertising..
ofcourse i was only talking about online businesses.. if one has an actual business then starting without a budget plan is a one way ticket to failure..
online businesses dont require that much money.. just a lot of hard work 🙂