 Each year as you set your overheads and COS budgets, you should also be setting your marketing budget which is just as important! Many clients I speak to may or may not have set a yearly marketing/advertising budget, so here’s a few tips to help determine what you should stash in your piggy bank!
| How much should I budget for? |
To answer this question, you must also ask your self a question. What are your main objectives for the year? To achieve brand awareness only, to receive a mix of brand awareness and sales, or simply to sell?
This is generally determined by where your company is currently at, for eg: are you ready to roll out a new product? – Well a good mix of brand awareness and sales will be the way to go. |
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| Which types of Marketing should I spend my money on and how much for each? |
As a general rule, we advise clients who have a new business (up to 1 year young), then they should be looking at anything up to 30% of gross sales (or forecasted sales). This would then scale back from year to year for the first five years when the company should be well established. From this stage it should be rolled back to 7-10% of gross sales.
For smaller firms, simply tackling sales increase would achieve a better ROI. So split your budget according to these objectives.
Now you have made that decision, its time to allocate funds to different types of marketing. We always recommend a “Marketing Mix”: that is advertising and marketing using different types of media, whether it all be at the same time or after each other is up to you.
So let’s take a look at standard forms of advertising for you.
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Magazine/print |
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Radio |
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Online/Banners/e-marketing |
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Direct Mail |
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TV |
Let’s say your marketing budget is 60k for the year.
Using the above you could go straight to TV and produce an ad for around 15k and spend a good 2 months on TV at 10k per month. Leaving you with 15k. You could then tackle a radio/print campaign with the remainder. Using both mediums increases your chances of sales and if the sales come in then you can up your budget to include other mediums.
I would suggest any budgets less than 60k would possible steer away from mass media such as TV and radio as you won’t receive the best ROI.
So lets look at budgets under 60k. Let’s say 40k
Print (local papers) – min campaign we recommend at least 8 weeks over 3 months, allow around $ 700 per ad total print = $ 5600 x twice a year or option for a consumer mag x 3 inserts only. Total print $ 11,200
Direct Mail – purchase of data x 4,000 leads, cost of postage, stationary, art, print and fulfillment $ 4,000 x twice per annum = $ 8k
E-marketing – upgrade website, include Search engine optimization, e-marketing, banner ads on 2 sites budget for $ 17,000
Develop a great offer and print for direct mail or use remaining funds for a competition giveaway to drive leads.
There's your total budget of 40k. |
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| Some Do's and Dont's |
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Don't spend all of your budget on one medium only |
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Do spend your budget across various media |
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Don't spread your budget too thin over various media |
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Don't over expect - just because you spend $1 doesn't mean you'll get $1 back! |
Using services of marketing consultants can save you thousands as they can help identify what would be the best ROI for you and save you from buying the wrong types of data and media. They can also advise on expected returns and benchmarks. |
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I hope I have provided some information you can put to use for your next budgeting session! Good luck with it and if I can be of any assistance, please contact me:
Diane Costa,
Director, Sales & Marketing - Marketing Mechanics.
Ph 02 9565 2120 or email me: diane@marketingmechanics.com.au
Speak soon and take care.
Kind Regards,
 
Diane Costa
Director, Sales and Marketing
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