It’s a tough question to tackle, but an important one to ask of any business, and that goes for whether that business is a start-up or an established firm — how much should be spent on a marketing budget?
As with any decision during the life of a business, several factors are relevant. There are some rules of thumb to follow when determining a budget as well as other variable criteria, which is sometimes more difficult to deal with.
The budget being set should be sufficient and succinct with the long-term goals of the firm. In B2B marketing, for example, the ultimate goal is generating leads that will turn into sales.
Some firms look to attain immediate results, such as lead generation where they can turn sales fast. Other firms aim for long-term goals, such as rebranding. Neither of these goals is better or worse than the other, but either choice affects how money is allocated and both speak to the ultimate goal of a firm.
Firms looking to maintain their current position in their industry should spend at least 6 percent of total sales on marketing. This would include all the marketing efforts and any outsourced work.
Companies looking to grow their brand should spend about 10 percent or more of total revenues. Exactly how much money goes toward marketing ventures depends on the nature of the business. Firms in a competitive industry like retail should spend 25-50 percent of revenues in order to grow.
These percentages might be tough for firms to justify. However, there are metrics to keep track of the return on investment, like awareness ratings and social media influence scores. Some returns might come quickly in the form of leads while others might not come to fruition for a year or two, especially considering the time it takes to successfully rebrand. It’s all about building relationships with consumers, and this takes time and resources.
Marketing efforts should not be pushed forward without being measured as much and often as possible. There are plenty of useful tools to aid in the monitoring process. Check out Google Analytics or Klout, which can be used to keep track of a firm’s online presence.
How much do you think B2B firms should be spending on marketing efforts?