Get In Touch
Many businesses looking to hire an agency for the first time will quickly learn that there’s a wide spectrum of services–and associated costs–to choose from. But many haven’t given much thought to how much they should be spending on marketing.
It’s common for a new client to come at the topic with an idea of how much they want to spend, without any real basis for that number. But like anything, that number should have meaning that’s rooted in your current revenue numbers, and your goals for the coming year. And remember that this is one area where investing time and money actually pays dividends–there’s a return on this investment that directly corresponds to the level of effort and priority that you assign to it–so you shouldn’t be afraid to reach. The final answer will obviously be different for every business, depending on its industry, its current growth rate and its goals, but national averages indicate that:
Companies looking to maintain their current level of visibility and income spend about 5% of their total revenue on marketing.
Companies looking to increase visibility and grow their customer base spend 10% or more of their total revenue on marketing.
No doubt you can do the math–but for perspective, let’s spell it out: If you’re a growing business with $5 million in revenue, you’re competing with companies that are likely spending an average of $500,000 on marketing. In fact, if your goal is to outperform the competition, statistics say you should be budgeting at least $680,000, or 13.6% of total revenue, on your combined marketing efforts (stats per Captora, 2015: source).
How should you prioritize that budget? Recent studies show overwhelmingly that companies are focusing on online initiatives, with Email Marketing, Social Media, Online Display Advertising, and Mobile Marketing seeing increases of 50% or more this year (stats per MarketingCharts.com, 2016: source).
And of course all of those online initiatives link back to your website, which emphasizes just how important it is to strategize and prioritize your website development efforts, to make the most of those inbound leads.
We’ll continue that thread next time, when we look at How much should I spend on my website?
