A standing ovation for you! 🙌🏻🙌🏻🙌🏻If you’re asking “How much should I spend on marketing” this year, then you’re already leaps and bounds beyond many small business owners. That’s because so many businesses fail to plan for the big picture—and therefore, don’t invest enough in marketing. Or worse, water down their approach and/or spend inefficiently. If you’re not sure where to start with your marketing budget, this guide is for you.
How To Come up With Your Marketing Budget
Start with a Percentage of Gross Revenue
Almost 30 percent of businesses list finding a marketing budget as their top challenge. That’s where this percentage system comes into play and may help.
If your business makes less than $5 million per year, the U.S. Small Business Administration advises you spend 7 to 8 percent of your gross revenue on your marketing budget. If you make more than that, you can bump your budget up to 10 to 12 percent. Yes, that’s a lot. For instance, a $500,000 business should spend $35,000–$40,000 per year on marketing. BUT it’s SO important to invest your revenue back into your business so you can continue to grow—or at the very least, maintain your position in your market.
Plus, when you break down a $40,000 annual budget for the year, that’s only about $3,300 per month to spend on marketing. As you’ll find as you shop around for freelancers, employees, or marketing agencies, you can get a decent amount done within a budget like that. However, on a monthly basis—when you factor in blogs, email marketing, PPC and social media advertising, and other marketing channels—it doesn’t go super far. Hence why it’s important to make an annual marketing budget and divvy it up, so you can prioritize and focus on your most important marketing channels. If you need to do a big project like launch a new website design or rebrand your company, it’s also critical to make an annual marketing budget so you know what you have left for monthly initiatives.
Research The Competition and Your Industry
Your marketing budget will also depend on the competitive nature of your industry and digital marketing trends. If you want to overtake a competitor in SEO rankings or stand out among a competitor with a strong social media game, you’ll need to invest more to catch up, keep up, and shine. That being said, you can only invest what you have. Which brings us to our next point…
Prioritize and Focus
Unless you have an unlimited budget to spend on marketing, you probably can’t afford to establish a presence on every single marketing channel. Even if you do have all the money in the world, you probably don’t need to spend with reckless abandon either. Whatever your budget, you should focus on your business goals to determine your priorities. Some questions to determine this should be:
- Who is my target demographic and where do they hang out online? That’s where you should focus your marketing dollars.
- What are our main challenges? 63 percent of companies list generating leads and website traffic as their biggest challenge. While others struggle to attract more customers into stores, keep up with social media marketing, and improve SEO rankings.
- What are our main goals? Your challenges and goals may be similar. Or, you may be inspired to set goals based on the challenges you uncover during a company brainstorm with leadership.
- What do we absolutely need ASAP versus what we want to do? Your website should be your #1 priority. If functionality, design, or performance aren’t up to snuff, start there. While you may want to dive into video marketing or another tactic, you need to prioritize needs first, wants second.
- Where do our competitors spend their marketing dollars? Do you see PPC ads pop up for them on Google? Do they have a vibrant social media following? Pay attention to glean insights to where you should focus your energy.
Gauge (Wo)Man Power
Another big factor in determining how much you should spend on marketing in 2020 is your resources. Do you have the team or agency to manage social media, write blogs, run email marketing campaigns, rebrand your company, and get your marketing done? Are you ready to bring on more people or an agency to help? The average business spends 40+ hours per month on marketing. You either need to have the time to do this yourself (and well) or hire someone to help. These salaries or agency feeds need to be part of your marketing budget as well.
Budgeting: Where and How Much to Spend on Marketing in 2020
There’s no shortage of marketing channels to dump your budget into. However, some will be better than others for your goals and financial limitations.
1. Website Design and Optimization
Your website is the foundation of your digital presence—the face of your brand. It’s where you funnel your traffic through SEO blog posts, social media accounts, advertising, and email campaigns. It’s where you close sales. For those reasons, we think your website is the most important aspect of your digital marketing.
If you’re starting from scratch, you’ll need to invest a sizable amount into building a functional website that can grow with your business. How much it costs to build a website depends on the size and functional needs. However, with a website design agency like ours, we can work with most budgets—big and small—to tackle your website, SEO, and UX goals. If you only need to optimize your website with SEO website copy or better UX, that will typically cost less.
No matter how you build or update your website, hire a website designer that’s reputable and trustworthy. We’ve had plenty of clients come to us after suffering at the hands of dishonest or flakey designers and developers.
2. Social Media Marketing
About 97 percent of businesses use social media to reach customers. Are you part of the majority? If not, you should invest a portion of your marketing budget in organic social media marketing this year. That may entail starting an Instagram account, posting more regularly to Facebook, venturing into Pinterest, or focusing more on one channel that outperforms others with your audience. In 2018, most businesses spent $200 to $350 per day, $4,000-$7,000 per month, or $48,000–$84,000 per year on their social media marketing budgets. You can spend whatever is reasonable for your budget, but use those averages as a guide.
Once you determine a budget, you should post at least three times per week (our recommended minimum to slowly grow a following or maintain your current one), you will need to invest in authentic, high-quality content. That should entail creating a content calendar so your posts stay fresh and varied, using hashtags, and publishing video along with imagery.
3. Email Marketing and SMS
Email marketing campaigns may only be seen by your email list, but they are so essential to your marketing funnel. The same goes for SMS marketing which has nearly a 100% open rate. Email is a great place to test personalization, nurture new leads, reconnect with lapsed customers, and drive traffic to your social media channels and website, or generate reviews. Play around with email drip campaigns, and analyze your data! You can use insights from email to hone in on customer expectations and get more out of what you spend on marketing.
4. Graphic Design and Branding
Humans are highly visual creatures. And as much as we’d all love to not judge a book by its cover, we 100% do. That’s where professional branding and graphic design come into play. Branding is what makes your company instantly recognizable. It’s what helps you stand out from your competition and speak to your audience’s preferences. In short, quality branding is super important and should be a part of your 2020 marketing budget if it needs a facelift.
Ensure you set aside a budget for branding. This should include funding for logo design, a brand style guide, and an editorial style guide. Here are more tips to brand your business well and keep a consistent brand identity across marketing channels.
5. Outreach and PR
Outreach and public relations aren’t dead! They’re a specialized skillset that may help fast-track your business to better SEO rankings, brand recognition, and growth. Link building is costly—creating viral content and securing links don’t come cheap. However, you will be able to add trust signals to your website and piggyback on larger publication “endorsements” with proper PR and outreach.
6. Video Marketing
Video continues to be the way of the future. And most customers will watch a video compared to written content they quickly scroll by. While you can spend thousands on highly produced videos, most companies can shoot tutorials, simple in-house edited videos, and social media videos with the help of a smartphone and $100 worth of lighting and sound equipment. That means, you should start at least a little video marketing in 2020. Then, you can use these videos on your website to improve SEO, on social media channels to boost engagement, and across other marketing channels like email.
7. PPC and Social Media Advertising
Pay-to-play. That’s a term most companies are getting used to when it comes to ranking in Google and on social media feeds. If you have the means, we suggest pairing social media advertising with your organic social media marketing program. We also recommend PPC (or pay-per-click) to most businesses depending on goals and demographics. That being said, you need to have a solid budget to make this happen. Most companies will start out needing at least a $500 per month commitment for a management fee plus your ad spend.
Also, ads require landing pages for proper tracking and conversion. So don’t forget to factor landing pages into your PPC and social media advertising budget! Here are some tips to make your landing pages more strategic and increase the chances of conversion.
8. Search Engine Optimization
SEO, or search engine optimization, is still going strong. So does your business need SEO? Yes! This is what helps you rank highly in Google search results, get more organic traffic, and maintain high visibility among new, current, and local customers. There are multiple ways to improve your SEO, including:
- Write SEO optimized content for your blog and website to bring in traffic. The longer people stay on your page, the better for algorithm appeasing! So make your content educational, high quality, and relevant. No clickbait.
- Improve UX and functionality issues on your website
- Do an SEO audit
- Launch a link building campaign for backlinks which improve your domain authority
- Add video to your website
- Realize Google Maps ranking has nothing to do with your overall website SEO
SEO is something your business can focus on primarily or secondarily since it’s symbiotic with many other marketing tactics. As in, they work together for the good of your digital presence.
9. Website Content and Blogs
You need to give your customers something before they give something to you—their time, money, and loyalty. That’s where content strategy in the form of blogs and website copy should come into your 2020 marketing budget. These pieces will help improve your SEO, give customers educational, entertaining, or useful information they want and need, and keep site visitors coming back for more.
If you allocate marketing budget to content marketing, here are tips to write engaging content, ensure it’s FDA compliant (if you’re health and wellness-focused), and make it a worthwhile read for your audience. You can also get inspiration from other companies to see how they’re producing content for their websites and business blogs.
Here are more resources to make the most of your marketing budget in 2020 when it comes to publishing successful content:
- Creating content buckets
- Creating a content calendar
- Making content part of your routine and avoid burnout
10. White Papers and Case Studies
White papers and case studies are super important for green businesses, medical practices, law practices, and any company that has data to back up products and services. You can use these case studies as proof of your good work to build trust with new patients, customers, and clients. You can also use it as a gate to generate leads—by offering a download to a case study or white paper in a website popup if someone gives you their email address. Case studies and white papers typically have a long lifespan, so making room in your 2020 marketing budget for a few may be beneficial to your bottom line.
The answer to the questions, “How much should I spend on marketing in 2020?” is ultimately up to you. We hope you’ll use this guide to make an informed decision that helps your business reach new goals and grow! If you need help along the way, we’re always here to chat.