It really depends on what industry your company is in and what you’re trying to accomplish. As for standard rules of thumb, academics and analyst have established some guidelines based upon companies that are considered successful in their marketing efforts:
- Those companies in business-to-business focused industries should be spending around 12-15% of their top line revenue on marketing.
- Those companies in “hybrid” industries that sell to both businesses and end-use consumers should be spending around 15-18% of their top line revenue on marketing.
- Those companies in end-use consumer industries should be spending around 20-25% of their top line revenue on marketing.
However, these numbers really are nothing but guide rails that are intended to provide a big picture answer to a very big picture question. So we come back to the initial question: How much should my company be spending on marketing?
Bad news folks, the answer is the same as before: It depends.
What does it depend on?
Here’s the short list: current point in the company’s life cycle, type of product or service, level of interest of the customer you’re targeting, time of month, time of year, number of contacts needed to promote a sale, number of contacts wanted to attract a customer, desired marketing mediums, industry standard marketing mediums, costs of particular medium, size of your mailing list, environmental concerns, competition concerns, new products, new messaging, existing client’s needs, new branding efforts, sales style, size of sales force, push vs. pull selling, proven effective methods v. experimental methods, location, expansion, cost of product, accessibility of marketing resources, hours available for marketing, marketing focused individuals on the payroll, etc, etc, etc…
With that a short list that doesn’t even come close to covering everything you should consider, how are you supposed to know the number should be for your company?
Here’s a few key things you can do to figure out the answer:
- Know your audience. where are they off and online, what appeals to them, what do they dislike, what is the best process to turn them into a customer. Without knowing this, there is no place to start marking smartly.
- Focus on the return you’re after from the start. Don’t push marketing dollars, let the needs and wants of your target clients pull marketing spending to make sure you’re getting the greatest return on your investment.
- Be willing to experiment. The first companies that got out of the yellow pages and diverted that money to the web look pretty smart now, so what will your company look like a genius for trying before anyone else in your industry down the road?
- Mess with the mix. If you’ve always spend the majority of your marketing dollars on magazine ads and billboards, it might be time to consider creating an outstanding website and some really sharp direct mail pieces to get more access to your target clients. The eight words that kill any organization are “we have always done it that way before.” What’s due for a shake up in your company’s market presence?
- Listen to your gut. You know your business better than any academic or analyst ever will, so what seems like the right amount to you?
- Find a partner. You don’t have to be an personal expert in marketing to succeed. Just like you wouldn’t file a lawsuit without a lawyer or perform surgery without a doctor, you need an expert who knows your industry to help develop a marketing plan and create messaging/designs that will resonate with your customers.
Ultimately, there’s no right answer to this question besides the answer that’s right for you. This really is one of those things that you won’t know you found until it’s already working, so its all up to your courage as a decision maker, the resources you have at your disposal, and the information you’re working with to make a strategic decision.
If you’re looking for that partner to help you find that answer and guide you through the marketing landscape, give us a shout at Insivia – A Strategic Marketing Firm and we’ll help you take that next step towards being a better company.