This may be the time of year when you’re ironing out your business budget for 2019. And a key part of your decision-making is likely whether to expand, reduce or retain the status quo with your marketing spend.
If you’re just getting started, you may be in a Catch-22 situation — you’re short of the money needed to boost your chances of making more money. Still, effective marketing is crucial to your ability to compete and grow your business, especially if you’re working within a highly competitive market and/or a down economy. If you’re not achieving your target ROI, that may mean you need to fine-tune your marketing methodologies, not reduce the amount you’re spending.
All told, 60 percent of businesses worldwide expect to boost marketing spending next year, 43 by 5 percent or more, reports a recent survey by the Dentsu Aegis Network. The automotive, financial services and technology segments project the biggest boosts.
Further, 54 percent of businesses expect to spend more on digital platforms such as Google and Facebook in the next two to three years.
What are some guidelines to follow when finalizing next year’s marketing spend? Consider the following.
- Research industry trends. Industry and trade groups in your field may reveal standards that help you determine whether you’re on the right track. A recent Gartner survey found the average spend across industries to be 6.9 percent of revenues, with examples by industry including education (19 percent), consumer services (17 percent), transportation (11 percent), consumer packaged goods (11 percent), service consulting (9 percent), tech/biotech/software (9 percent), healthcare (6 percent), manufacturing (3 percent) and construction (2 percent). One side note: If your margins are below 10 percent, the U.S. Small Business Association recommends you avoid the percent-of-revenues formula and establish a marketing spend that’s realistic for your situation.
- Establish your goals for growth. If you’re a new company still focused on brand awareness and exponential growth, analysts generally recommend spending 12 to 20 percent of revenues. Once you’ve established a solid reputation, have a regular client base and expect more incremental growth, you might reduce that to 4 to 12 percent.
- Evaluate what’s been working. While you may need to try several methodologies at first, the ROI of each should soon become clear, after which you can invest more in some techniques and shy away from others. During this process, you’ll also want to gather data on your key audiences to ensure you’re reaching them through the right marketing venues. Once all your campaigns get rolling, use every tool at your disposal to continually measure results so you can funnel money wisely and stop wasting money in the future.
- Scout out your competition. Competitors may have already done legwork to zero in on the best ROI. Pay attention to what they’re doing and whether it seems to be working. If you’re going head-to-head with a high-spending firm, you’ll probably have to up your marketing ante.
- Use appropriate tools. You can always enlist professional assistance to help you set an optimal budget, or if you’re a do-it-yourselfer, you can find free marketing plan templates.
Dial800 can help you drill down into your most profitable marketing spend by offering better numbers and real-time reporting on inbound campaigns. Call us to learn more at 1-800-700-1987.