How Much Should I Spend On Marketing?

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This definitely is the most important topic, but also, the most misunderstood. Truthfully there is no right or wrong answer, in short, your budget is decided by you, it needs to be something that you’re comfortable investing for at least a few months with returns that might not completely be there. What’s most clear is that it’s not exact science, it just needs to be something that you as a business owner are comfortable with.

The Research

There are a few studies that we can lean off here. Small Business Administration in the U.S. Explains that business under 7.5m (AUD) annual revenue allocates 7% – 8% of gross revenue to marketing. Whereas Deloitte’s study on Australian businesses indicates that B2B Product businesses, and B2C Service businesses allocate 10% of gross revenue for marketing, whilst B2B Service and B2C Product businesses allocate 15% – 18% of gross revenue towards marketing. My research, assessing clients’ aggregate marketing spend and publicly available P&L figures, also holds to the above statistics in saying that it does vary, and it depends massively on the business owner, model, and vision.

Now, what are your goals?

0-5%

In order to maintain the status quo, in some industries you can get away with 0%, in most you will need 5% of Gross Annual Revenue.

10%

In order to steadily grow your business, you’ll need around 10% of Gross Annual Revenue.

15%

To Scale Fast & Efficiently, you’ll need around 15% of Gross Annual Revenue.

Not one size fits all

This isn’t a one size fits all statement, and really should not be compared too heavily. Every business is different, and every business owner has different goals, the best thing you can do is back your self, and your product, oftentimes that means doing something, or investing in something that is out of the ordinary.

If you’re starting up, to do things right, I recommend having a budget of at least $15,000, which will cover your website, branding, strategy, and any collateral that you might need. You always want to start strong. There’s no point doing something twice. Investing smart at the start will save you a lot in the long run.

For an ongoing campaign, I recommend an ad spend budget of at least $100 per day per channel, your ad spend gets diluted quickly and when it comes down to it we want to be testing and evaluating strategies quickly, what could take months with an inadequate budget, will only take days with the right spend.

Really, your marketing spend depends on what you want out of it, this is obviously something we can help with, and something personally that I can assist you with. I always recommend reverse engineering it, figuring out what you want to achieve, then what you can afford to spend to get it in 12 months time, this normally will leave you with a really solid budget that will propel your growth while protecting your margin.