For the majority of businesses the new financial year is now here. This provides the opportunity to implement new budgets and new targets for sales growth. In this article we will look at
- How much should you spend
- Setting a budget
- Whats working for others
- Whats really important
How much should you spend on marketing?
One of the most common questions we get asked is “How much should we spend on marketing?” or “is there a formula that we can use to calculate the amount we spend on marketing?” Unfortunately the simple answer is “It depends!!” there is no magic number i.e. as a manufacturer with a turnover of £5 million spend £50,000 on marketing is something that just doesn’t hold true.
All companies are unique and therefore having a ratio isn’t going to work. Whats right for your business will depend on your individual business, your strategy and your business objectives.
Setting a marketing budget.
Information from ALF Insight (2016 survey of 200 UK marketers working in house and agency side) indicates that over 30% of companies spend less than 2% on marketing as a percentage of revenue.
|Marketing budget as % of Revenue||Percentage|
|2.1 – 5%||27%|
|5.1 – 8%||12%|
|8.1 – 10%||15%|
|10.1 – 14%||8%|
Whats working for others?
There is no one marketing silver bullet. The table below shows the marketing and advertising channels that businesses were going to be investing in next year. Hopefully this indicates that they have been closely measuring the performance and establishing the effectiveness of the various tactics they utilise.
|Type of Marketing (Will invest in next year)||Percentage %|
|Print, Press and PR||50|
|SEO / PPC||45|
It appears as if more money is being allocated to digital activities, though it is interesting to see “Events” making a comeback as a marketing tactic.
Whats really important to making the most of your marketing budget
- Whilst the actual £ budget is important it is equally (if not more so) important to consider the amount of time that will be expended on the activities. Also consider whether you actually have the skills and capabilities to actually complete these competently. This is born out of the ALF research which identified the following marketing issues that worried business owners.
|Marketing Issue||Percentage %|
|Limited staff to get the job done||43|
|Lack of skills within the team to get the job done||19|
|Being seen as a cost centre rather than a profit centre||17|
|Not being able to effectively track marketing spend||15|
|Our 2017 business strategy is flawed and having a knock on effect||10|
|Relationship with peers||6|
How To Make The Most Of Your Marketing Budget Summary
- Make sure you have a robust marketing and business strategy in place before you commit to tactical spend
- Develop a marketing plan that will identify the marketing tactics to be completed over the next 12 months
- Measure sensibly (its good to measure everything – but sometimes you need to be realistic)
- If marketing activities (and spend) can be directly linked to growing sales consider if you should be looking to do more
For more marketing information click here To talk to a marketing expert click here