How Much Should You Budget For Marketing?
Written by Drew McLellan
on May 26th, 2008 / 4 Comments / Print this
This is one of those questions that business owners wonder about, but aren’t sure who to ask. And yes, you should have marketing in your budget. It’s not a “wait until a good opportunity comes along” sort of thing.
If you budget for marketing and create an actual plan - you are 95% more likely to:
- Actually market consistently
- Spend to your budget, rather than impulse shop
- Track and measure success of marketing efforts
- Be consistent in your message and delivery
So back to…how much should you spend? A good rule of thumb is at minimum of 4-7% of your gross sales. Some marketers recommend as much as 10%. There are many variables, like the maturity of your business, percentage of repeat business and the lifetime value of a client. (We’ll talk about how to figure that out soon!)
But if you’d like to get some specific, every industry has a typical percentage of sales that is generally used for advertising and marketing expenditure projections.
Why not reach out to your industry trade and professional groups? They should be able to give you the specifics in your field.
About Drew McLellan
Drew McLellan gets branding and marketing and he desperately wants you to get it too.
So he tells stories, asks questions, and milks sacred cows. All to help clients discover their brand so they can create authentic love affairs with their customers.
Drew has not only survived 20 years in the advertising and marketing arena, he’s thrived in it. After working for several other agencies, including Young and Rubicam’s CMF&Z, Drew created McLellan Marketing Group in 1995.
Considered a national branding expert, Drew is a highly sought after speaker and has given about a zillion presentations at national conferences, key note addresses, training for his peers in the profession, college students and even his daughter’s eighth grade class.
Over the years, Drew has lent his expertise to clients like Nabisco, IAMS pet foods, Kraft Foods, Meredith Publishing, John Deere, Iowa Health System, Make-A-Wish, University of Central Florida, SkiDoo and a wide array of others.
When he’s not out preaching the good word of marketing & branding at work and on his blog Drew’s Marketing Minute, Drew spends time with his family and pondering why the Dodgers can’t seem to get back to the World Series.
Drew has a Master’s Degree from the University of Minnesota but alas, he cannot remember their fight song.
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4 Comments to “How Much Should You Budget For Marketing?”
May 27th, 2008
2:05 am
Alternatively why not start by determining how many customers you want deciding on an acceptable customer acquisition cost and then multiplying the two?
May 27th, 2008
11:13 am
Drew,
I agree - you could get out of control if you don’t have budget in place
My marketing budget for my offline business is 5% from revenue/sales. For my online busienss, I budget 20% for the marketing.
Cheers!
May 28th, 2008
2:42 pm
John,
Without a doubt, there are many ways to set a marketing budget. And there is probably not one absolutely correct way. My point is — you need to have one.
As long as the methodology is sound — you are probably ahead of 95% of your competitors simply by having a budget at all!
Drew
May 28th, 2008
2:43 pm
Noobpreneur –
Bravo for having budgets in the first place. How did you come to determine your percentages?
Drew
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