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How Much Should You Spend on Marketing?

Last updated March 11, 2014
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So how much should you spend on marketing? A tricky one to call but as it's so much easier nowadays to see what your marketing budget is achieving it’s much easier to make that call. As a past marketing director, my financial director would always throw in this question at budget time; "So, Shirley which half of your marketing budget will you waste this year?"

And it is still true today; some of the money in your marketing budget can be totally ineffective. The marketing budget is made up of two budget elements; staff and £’s spent on marketing activities, such as print, exhibitions, advertising etc. Add those two numbers together and that’s your total marketing budget.

Now I appreciate that industries do differ, but we have seen a massive rise in the use of social media & online marketing where the biggest cost to you is the staff you employ, or your costs for outsourcing this function.

Take for example, 1 person running your entire online marketing effort; posting blogs, comments, Facebook, Twitter, Google +, Instagram, e-mail campaigns, SEO, PPC, newsletters, etc. That will probably cost you, all in £30 - £35,000 (salary + benefits + tax + overheads). So it’s not viable if that person isn’t generating any more than £35K worth of benefit to the company – they need to be producing at least five times their cost in value to the business. How will you know what benefit you are getting for the cost of this employee? Well in the online world everything is measurable, but in order to measure anything you must have set very clear and precise objectives for this person to achieve.

Even off-line can be measured and accounted for. An off-the-page advert is track-able if you have a response code and a method of recording what sales and enquiries you get from the advert. Once you set objectives, track and record results you can refine what you do next time and time after that. Very soon more than 50% of your marketing spend will be ultra-effective.

I always believe that you should always start with a zero marketing budget and build upwards. Don't allocate a random sum to the marketing team for them to spend, because they will. Match your marketing objectives to your corporate goals & sales targets and then establish your recording mechanism to track results and continually refine your activity.

By all means test new marketing techniques but please, please, please measure the results. Just because somebody else is doing the next "new thing" doesn't mean that you should just follow them. The key is to establish where your customers are and the best method to communicate to them.

It's almost time to re-forecast at the end of Q1 so make sure that your marketing budget is fully reviewed. Creativity can be enhanced when marketing budgets are cut.

Shirley Mansfield
Master Business Problem Solver

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