glow marketing

Budget for success in 2009

January 2nd, 2009

The number one question I receive is “how much should I spend on marketing?”. I’m sorry to break it to you but there is no magic formula or clear consensus out there. The good news is, we can use a range to properly plan the right level of marketing that is required in order to meet or exceed your goals and adjust it throughout the year based on the response levels. A rough rule of thumb for business to consumer companies is to budget between 5% - 20% of your gross projected revenue for 2009. If you are an established company with clients and awareness, you could get away with 5%. If you are brand new and no one has heard of you, it’s best to plan for 15 - 20%. Business to business companies can plan for a lower % between 5% - 10% because of the direct nature of marketing in this category.

If you plan to do a lot of your own marketing, including building e-newsletters or writing a blog, make sure you include your time to do these activities as part of the budget. If you have a set hourly rate for yourself, use this rate. If you do not normally charge for your time, make sure you use an hourly rate that is comparable to hiring out this activity. For example, if you have a designer that could set-up your e-newsletter for $50/hour, make sure you budget for your time at $50/hr. The fact is, your time is precious and cannot be viewed as “free” so include it in your budget. Once you see how much time you are spending on marketing you may want to consider farming out certain aspects. Tasks such as data-entry,  web updates, public relations, online marketing and social network marketing are perfect examples of tasks that can be delegated.

As you progress through the year and evaluate what is working and what isn’t, remember that marketing is a process and immediate results are rare. When determining your return on investment, try to look at the long term value of new customers and not just short-term sales.

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