Even a small business needs to market themselves and for that you will require some money. How much should you set aside for advertising, marketing, print, industry membership fees etc?
Sometimes when you get around to adding all these things up you will be surprised at the level of spending involved and that’s before you have even looked at the actual advertising. Like anything in life, having a plan and working to it will help get you better results in the long run.
How much should my marketing budget be?
One of the first questions we usually ask a new client is “What is your budget?” That is usually the point when their eyes get wide and issue the reply “I have no idea!”
Having worked with hundreds of companies ranging from new startups, small businesses to larger corporations, we have seen what works and what doesn’t.
Failing to allocate the correct fees for marketing can be make or break for your company.
For companies who are just starting out (first 4 years of business), we would suggest somewhere in the region of 15-20 percent of your gross revenue (or projected revenue) be spent on marketing. For new startups (under a year old) that figure can be higher as they need to ramp up their efforts to become established.
For companies who have been in business for more than five years, we would suggest a figure of between 6 and 12 percent of your gross revenue or projected revenue.
This may seem like a lot of money to spend but remember that new and emerging brands have to develop brand recognition with an audience that have absolutely no idea who they are as well as capturing market share from competitors. Once the brand has gained market share and become established then the cost for marketing drops significantly.
Chicken and egg marketing
Time after time we meet new clients that say “I need to grow my business and my brand but I have no money left to do that because I spent so much on…X” Does this sound like you? This is called chicken and egg marketing and to get your brand established you will need to crack enough eggs to make 10 omelettes per day! That is why it so so, so important that new companies and established ones are well funded and ensure that their money is spent wisely, tying the spend to specific and measureable deliverables.
Like building a house, the first thing you need to do is lay your foundations but if you don’t have the money to even put the walls up, how are you ever going to get to the point of fitting the roof?
It will almost certainly take you more time and far more money than you planned for and there is nothing worse than spending every penny you have only to realise you have done things the wrong way.
What to spend the money on
Every business is different and you will need to write up exactly what you think your business is going to require but there are certain things that you simply HAVE to spend time and money on so you don’t miss out:
The actual mix and spend on each of those things will differ significantly depending on the type of business you are in but recognise that these will be a sizeable chunk of your budget.
So how much does branding, websites, social media and advertising cost?
Inexpensive: There are sites such as 99designs that cost around £300 for the initial branding. That does not include the business cards, letter heads etc
Reasonable: A small agency may charge around £2500 – £3500 and that will include all the business cards, letterheads, email templates etc
Great: More than about £7500 and you will be looking at a large agency who will be creating everything for you brand including your style guide, story and all collateral assets.
Inexpensive: Wix or WordPress can be a do-it-yourself solution if you have the time and the patience to learn.
Good: For a wordpress site designed to look like your brand, it will usually cost around £3000, add on another £1200 if you want shopping cart functionality and E-commerce. Don’t forget maintenance fees of between £100 – £250 per month.
Great: At least £10,000. The price will depend on functionality, automation, design and many other factors as well as maintenance fees of around £200 – £400 per month.
Inexpensive: Hire an intern, apprentice or a student to do it for you.
Good: Between £1000 to £2000 per month for a small agency.
Great: More than £4000, this price is based on number of platforms used, analytics employed, amount of real time interaction and PR integration.
Inexpensive: Get your friends and family to spread the word
Good: Between £250 – £400 per month will give you some social media marketing. If you include targeted ads on relevant websites expect to pay at least another £350
Great: A full social, outdoor, print, digital, pay-per-click will cost at least £2000 per month
Inexpensive: Hire an intern, apprentice or student to do it for you.
Good: A freelancing platform such as upwork.com, where you can name your own price
Great: Agency content usually starts from around £100 up to £700 per piece depending on word count and graphics.
There’s no magic wand for marketing, but there are things that you can do to ensure that you’re building your brand and business wisely.
BEWARE the cheap option
One last word of warning, we hear these from clients time and time again
“I paid someone £3000 to build my website and manage my social media and they did a runner with my money”
“I hired a firm in India and it only cost me £1500 but after 4 months they still haven’t delivered”
“We paid a foreign firm £500 for branding but it was awful and we couldn’t use it”
DO NOT be suckered in to thinking that going with a cheap supplier is going to get you where you need to be on a budget. You will most likely get your fingers burned and find that you have set yourself back both in terms of time and money.
As a rule of thumb, Agencies will ask for 50% of the money upfront – this is normal, but do your homework first. If the agency is UK based then you can find testimonials and reviews from past clients, if the agency is reputable enough, call them and ask them if you could get some references from their past clients or even speak with them.
Make 2016 your best year yet
Digital marketing is becoming more important each year—so make sure that you don’t get left behind. Determine your digital marketing budget for 2016 and make it count.
We’d love to hear how you’re going to make 2016 your best year yet.
What new things will you be trying this year? What strategies will you carry over from past campaigns? What are your marketing goals for the coming year? Share your ideas in the comments!