What is an Ideal Marketing Budget?
What is an Ideal Marketing Budget?
What’s an Ideal Marketing Budget?
The whole idea behind great marketing is making it an investment rather than an expense. So, how much should a company spend on marketing?
An ideal marketing budget includes time, team, effort and money. A general rule of thumb is 4-10% of gross revenues. For example, if your gross revenue per month is $20,000 a month, you would want an ideal marketing budget of $800 to $2,000 a month. Does that sound like a lot to you? What if you’re getting 5x return on investment [ROI]? Then it may not be enough …
Another consideration is to future pace your marketing investment. If you are at $10,000 a month gross income and you want to get to $20,000 a month fairly rapidly, then do your calculations based on $15,000 then $20,000 over a time interval.
While you are in the development stage of marketing, start with 4-5% of gross revenue. Once you are getting adequate ROI, you can scale up to 10%.
Consider how much time it will take you and your team to implement and include labor costs in this formula. Effort comes into consideration with pacing the action items. You may want to spread out intensive items and plan them on your marketing calendar. For things like blog writing or video creation and editing, I block out the time on my calendar to make sure these important items get done.
What if expenses increase or income decreases? Shouldn’t we cut marketing expenses? That’s the quickest way to kill a business. Keep your ideal marketing budget no matter what. Rather than decreasing your spend, do more split testing, experimenting, and asking peers what’s working in their business.