I’m often asked the ‘how much should I spend on my marketing budget?’ question….and my response is always…well it depends.
The bottom line is that the marketing budget for your business is not something that can easily be determined by a formula. Spending on marketing support varies widely, with industry commentators estimating that most companies spend between 2% to 4% or 22% to 25 % of gross revenues depending on the business model.
So if you’re sitting down to plan your marketing budget, here’s some points to consider.
What are your goals? Stating the obvious – until you define your goals, there’s really no logical way to establish a marketing budget. You will need to have a well defined marketing strategy with measurable objectives.
% of gross revenue If a company has aggressive goals for increasing revenues, then establishing the marketing budget as a ratio of the revenue goal makes sense. Reducing marketing spending is likely to reduce the acquisition of new customers or even jeopardise the company’s current market share. Companies that have plans to grow rapidly generally need to spend a …