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| Setting a Budget |
Setting an effective branding/marketing budget...the right amount, at the right time, in the right way
One of the most important decisions that businesses (especially small to medium-size) have to make is, how much money to spend on a marketing budget. We are often asked, “How much should I spend on branding and marketing?” The answer is, “It varies by industry and business size.” It is also based on how much you want to grow, how fast and where you are in your branding objectives. Independent sources define the variable for a proper marketing budget to be between 2% and 10% of sales, noting however that for B2C, retail and pharmaceuticals this can exceed 20% during peak brand-building years. Most companies under spend on their budgets; thinking that, not to spend is to save. This, quite simply, isn’t true. You’ve heard it before, and it bears repeating – "you have to spend money to make money". The trick is to spend your money wisely, on a tailored marketing plan aimed at fulfilling your company’s goals. Keep in mind that your marketing efforts are directly correlated with your revenue, so it is not the time to be penny foolish. Can I still grow my company with “baby steps”?You sure can. We call this organic growth, and it is how nearly every business starts off. Many businesses initially grow their clientele on word of mouth alone, and are very successful. But they usually hit a brick wall. That’s where building a solid branding campaign in conjunction with organic growth makes a difference. To rely on partial branding, or organic growth alone, you risk losing revenue from business you did not get, because X% never discovered you, or they did not have their interest piqued when they interacted with your brand. Nor can you account for lost revenue from those who perceived your current brand negatively and left your site without you ever knowing it. This is why it is so important to build your brand correctly. Why risk hundreds of thousands or millions to save a few thousand. Do it properly, and lay the foundations for your continued business growth! Why do so many small and medium-sized businesses fail?One reason is that companies do not allocate enough money for marketing. Successful and highly profitable small and medium businesses (SMBs) know how to allocate adequate funding to marketing each year. SMBs realize that marketing and branding, if done properly, brings back solid returns and vice versa—whereas not allocating enough in your budget for marketing could spell disaster. Think of it this way: It is a fundamental ingredient for profitability and growth. Budget-Setting GuidelinesThere are two main things to consider when setting a marketing budget:
For most small to medium-sized businesses, the percentage of revenue dedicated to a branding/marketing budget is determined by industry and size. Below is a table showing figures based on several creditable sources.
important considerations:Every industry is different, so companies that sell to specific government branches, or one that has an ultra-specialized niche may be able to deduct 1–2% from the above figures. If your company is B2B or B2C, you may need to raise your budget by 1–3% to see solid results. Retail and pharmaceuticals lead the spending, with many of these companies spending more than 20% of net sales. Overall average is reported as 6%. Many other circumstances will merit an increase or reduction in your marketing budget as a percentage of revenue. Feel free to contact us to discuss this.
Branding Budget Adelaide | Brand Development Adelaide | Brand Building Adelaide
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