Business Marketing Cost: How Much Should You Spend?
How much does marketing cost? Most entrepreneurs have a hard time setting their advertising budget because they don’t fully understand how it works. To avoid the common mistakes of underspending or splurging, here are some tips in planning your marketing budget.
The COVID-19 pandemic caused a major shift in business marketing. Stay-at-home orders had people turning into digital nomads. Which in turn, rapidly advanced the transition towards digital transformation. This subsequently led to the change in nature of marketing. Nowadays, companies are racing to build their online presence and adopting a new way of doing business. Globally, the total digital ad spending is about to reach $455.30 billion. It’s safe to say that companies are indeed taking marketing seriously.
But with all the excitement about modern marketing, the dilemma about how much to budget for it remains. As an entrepreneur, you have to learn how to market your business without breaking your bank. You can easily overspend on useless ads without making any progress with your engagement. In the same way, too little effort will not get you on anyone’s radar. In marketing, it pays to be smart on where you spend your money.
Understanding Marketing Cost
One thing to note about marketing cost is it doesn’t have to be expensive. It will solely depend on what you include in your marketing plan. You don’t have to try all the marketing trends, you simply need to choose which ones work for your business.
With that said, there isn’t really a one-size-fits-all marketing budget. It will depend on a lot of factors. As an entrepreneur, you can start by setting your company’s marketing goals. Are you using your campaign to acquire more customers? To sell your products? Or to establish a following online?
Once you’ve figured out what your marketing goals are, you must consider the other factors that may affect them.
Factors that Affect the Marketing Cost
The marketing cost varies by industry. Some industries spend a higher percentage of their revenue on advertising while some only allocate a small amount. For example, consumer services would budget 18.9% of their revenue for marketing. On the other hand, the manufacturing sector only spends 2.4% on promotions. Companies also differ on how they categorize their budget, some don’t separate marketing expenses with their overall business budget.
As a startup owner, you have to consider what kind of industry you’re in. You also need to research what works for your nature of business. What would get you on people’s radar?
Despite the inevitable transition to tech-driven advertising, some companies still go the traditional route. The Manifest survey reported that 63% of small businesses still use traditional advertising methods such as print marketing. Although traditional marketing can’t compete with digital marketing’s extensive customer reach, it makes up for its effectiveness in converting sales. Hence, we can assume that the marketing medium will not be limited digitally.
Marketing online is considerably cheaper in some aspects and expensive in others. For one, to fully maximize the benefits of online marketing tools, you have to subscribe to their premium plans. Along with that, you have to hire people to constantly track and monitor your progress. This also includes experts who can extract, analyze, and interpret insights from those platforms.
Whether you’re going for traditional, digital, or a hybrid of both, you have to make sure it’s within the limits of your marketing budget.
In the most recent CMO marketing survey, marketers reported an 11.5% increase in digital spending since 2020. Digital marketing has pretty much become the dominant marketing strategy for companies. In fact, it even saved a lot of businesses from going bankrupt during the pandemic. With the popularity and demand for digital marketing rising, so do the prices. Keep in mind that the more popular a certain technology becomes, the most likely their pricing will surge.
Setting your Marketing Budget
According to Criteo’s Marketing Survey, businesses are drastically adjusting their advertising budget. Because of the pandemic, online marketing has become the primary strategy for most companies. They are increasing their spending on social media, content marketing, and website/app advertising. And with the consumers’ increasing demand for a great digital experience, companies are heavily investing their marketing budget in their online marketing tools. They’re tapping new strategies such as website optimization, omnichannel marketing, and video ad campaigns.
A Backlinko study revealed that businesses spending at least $500 per month on SEO are 53.3% more likely to be “extremely satisfied”. And most of them tap SEO service providers to help them reach new customers.
So, when it comes to determining the budget for website optimization, you have to consider various factors. This includes your goal for the website and the timeline for those goals.
Hiring the right marketing experts will ensure the success of your campaigns. Hence, you’ll have to consider the number of people you will hire in your marketing budget. According to the US Bureau of Labor and Statistics, marketing managers are paid around $68 per hour. On top of that, you need to consider hiring other marketing experts like graphic designers and content writers. They will create the materials needed for the campaign.
Again, this will depend on the type of marketing campaigns you’ll run. If you want to boost your social media presence, then you’ll have to invest in scheduling tools such as Hootsuite or Buffer. Likewise, if you plan to do email marketing or data analytics, you may need to spend on marketing automation tools. And lastly, if you don’t have in-house graphic designers, you’ll need tools like Canva to create your graphics.
Ad costs build up over time and you don’t want to overspend on them. However, they are quite useful in extending your market reach. Some of the biggest ad platforms are Google AdWords, Facebook Ads, and Instagram. Most companies alternate between these platforms to diversify their reach. Google Ads cost an average of $2.32 per click on the search. For Facebook, the average cost per click of an ad is $1.72. And the typical CPM for an Instagram ad is around $5.
The above mentioned items are just a few of the most used strategies in marketing. Small startups usually won’t need a large-scale campaign. The key is to create a solid marketing plan that will effectively capture the audience’s attention.
Work with Full Scale
Marketing is a broad and complex topic to tackle. As a startup owner, you may get overwhelmed by the amount of information you have to absorb. Fortunately, you don’t have to take the journey alone.
At Full Scale, we can help you run and grow your business. We can assist you in all your startup needs. Whether you want to run a marketing campaign or build a website, we’ve got the talents for you! We have a team of creative graphic designers, content writers, and project managers to help you with your marketing plan. On top of that, we’ve got seasoned software developers and tech experts to help you create your website or application. You won’t have to worry about finding the right people for the job, we’ll take care of everything.
Are you ready to turn your business dreams into reality? Talk to us today!