For SME’s, it can be hard to put money aside for marketing, however, it’s essential for businesses looking to improve their reach and conversions.
When times are tough, such as the coronavirus pandemic, businesses often look at pulling budget from marketing. But, there are countless examples and studies that demonstrate, during tough times, investing in marketing and business growth pays off in the long-term. For example, the two famous US cereal companies in the 1930s – Kellogg and Post – took opposing marketing strategies during the depression and you can probably guess which one invested and won the day (i.e. the brand of cereal you have in your cupboard today).
It’s understandable to be cautious and focus on mitigating risk. But there is a very real risk to your business from not investing in your marketing. We are here to explain how to allocate a budget for digital marketing, how much digital marketing costs and managing the perceived risk of investing.
How much are marketing services?
How much do digital marketers charge? To cut straight to the chase, we (a digital marketing agency) have standalone activities starting as low as £150+VAT, and regular marketing service packages starting from £450+VAT per month and could scale up to several thousands of pounds per month if necessary.
But determining how much you invest in your marketing is actually trickier to answer than simply what the market price is for a service or deliverable.
So let’s look at the intention and real concerns that are going on in the mind of business owners when they ask this question.
Can I afford to do marketing?
This refers to both whether you have the cash for the expenditure, now and ongoing, but also can your business ‘afford a failure’.
Business owners need to be confident that they can invest at the level they need to for long enough to allow for a realistic chance of success.
Nothing is guaranteed in the world of marketing, but our team can determine the strategies and approaches that are most likely to generate a positive return, and show you how that would work so you can make an informed choice.
You need a little upfront cash to get the ball rolling, but thereafter, with decent reporting, you should be able to see the returns fairly quickly.
How much should I spend on digital marketing?
Your digital marketing budget all depends on the size of your business. A new SME, who is just starting out, is going to have a smaller budget, compared to a larger business that has been around for a while.
If you want to retain your current position in the market, we recommend spending between 5-7% of your revenue on digital marketing. If you’re looking to grow your business within the market share, we recommend spending between 7-15% of your revenue on digital marketing.
Marketing cost vs marketing investment
When starting out on marketing, the costs tend to be categorised as ‘additional expenditure’. That isn’t actually the case however, if you choose your marketing tactics (and agency) well. The initial upfront cash should deliver a return beyond its original value fairly soon.
So once you’ve dealt with the initial affordability question, it’s then a matter of measuring your return on investment (ROI) – figuring out what is profitable for you, including your overheads and employees’ wages etc.
It should always be the intention that marketing generates more back than you spend. At Growth by Design, we always focus on what will return the greatest ROI in the shortest amount of time.
For example, for Sussex & Surrey Partitioning, by investing in a new website, search engine optimisation, and content, they saw a ten-fold increase in enquiries which doubled their revenue.
What do I want the business to achieve?
It’s fine wanting to know the price of a service, but does that help you make a decision on what your marketing investment level should be?
The better question to ask, is what do you want your business to achieve?
If we said that your marketing investment would be £10,000 per month, but there was a very high likelihood of returning £100,000 per month, you’d find a way to finance it.
By contrast, if it were only £50 per month, but it was definitely not going to work, how keen would you be to engage on that basis?
How much risk do I take with my marketing?
Investing in marketing, especially when you aren’t an expert in it yourself, can feel like a risk – to your cashflow and business.
However, no one ever became successful by taking no risk. It’s about managing risk and mitigating it, primarily through having confidence in your marketing partner.
Therefore, it’s not about finding the cheapest supplier, but finding a partner who understands your business and marketing, cares about your business as much as you, and is accountable for the results.
Book a free marketing review today with one of our experts today and learn how your marketing can deliver more success for you and your business.