What Is A Good Digital Marketing Budget For Your Company? |
Posted: February 13, 2019 |
One of the things that business owners need to understand is the importance of digital marketing. While there are yet some business owners who have a hard time figuring this out, we just want you to remember about Apple from the 90s. Not the Apple today but from back then.
When Steve Jobs took the company in his hands, he knew that the company needed a lot more than good products. They needed a well-thought marketing strategy that allowed people to get to know their products. So, with this in mind, he set up his action plan and the reality is that he did it. No one can believe that when Jobs took over Apple at that time, the company was near bankruptcy.
While not all companies can be Apple and not all small business owners are Steve Jobs, the truth is that we can all learn from this real example. A good digital marketing plan can help your company grow.
So, what percentage should you devote to marketing? What should be taken into consideration?
The truth is that there isn't a right or wrong answer to this question. Nevertheless, and even though you may have the biggest budget in the world, you need to know how to apply it.
If you decide to pose this question to different marketers, most of them will say that it depends on your industry. And they are absolutely right. However, if you push them to give a more detailed answer to this question, most of them will say that if they need to say a number they would say 10%. 10% of your revenue should be spent on marketing.
In our opinion, there isn't a magic number like 10% or 15% of your revenues. The truth is that the budget that you dedicate exclusively to marketing depends on many different factors.
For example, the marketing budget of an established company like Apple, for example, should be completely different than the marketing budget of a company that is still in its beginning or in the growth phase.
According to a study made by Gartner Research in 2016-2017, larger companies which have a revenue over 5 $billion tend to spend, on average, 13% of their revenue. In what concerns to smaller companies which include the companies that have a revenue between $250 and $500, they tend to spend about 10% of their annual revenue, on average, in marketing.
While having some amounts in mind is a good thing, you can't forget that the money or percentage that you decide to invest in digital marketing ultimately depends on your industry. Education tends to be the industry that has a high budget for marketing, followed by consumer services, and transportation, and the industries that tend to have smaller marketing budgets are usually a part of the mining/construction and energy industries.
So, overall, while 10% may be exactly the percentage of revenue that some companies should invest in marketing throughout the year, for others it may be more or less.
Besides the amount of money (or percentage of the revenue) that you should dedicate to marketing, many business owners also question themselves about how should they actually apply it. What marketing strategies are better to invest?
While regarding the marketing budget every company should have is not consensual, the same can't be said about where business owners should spend it.
The truth is that most marketers have no questions in replying "digital marketing". Most marketers and business owners tend to spend most of their marketing budgets on digital advertising, digital commerce, and their own websites. However, the money spent on content marketing has been increasing over the years.
Conclusion
With a higher or lower budget for marketing, the most important thing to retain is that this budget is crucial as well as where you apply it.
Digital marketing has a huge influence on how people look at your company, at your products. So, successful digital marketing campaigns can bring a lot of value (sales, revenue, leads, new customers) to your company.
The truth is that we believe that if your business is starting to grow, this is the perfect time to make a true investment in digital marketing. And 10% won't be enough, especially during this phase.
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