How much to budget for marketing.

by John Howlett

This article is a follow up of a previous article that I posted on my blog last week. (That’s a first, I normally don’t write two-part stories as a rule, but what the heck.) If you want to read the first part it’s on the blog. Go to www.avizagroup.com/Letstalk
Do some soul searching.

Developing a budget is not a perfect science. There are so many items to consider. Do you want to be the market leader? Is this a new category? Are you looking to be purchased within the next few years? Is slow, controlled growth part of your plan? In a very general sense this will help determine your goals for budgeting.
Do you want to be aggressive? Then count on spending at least 10% or more, may be as much as 35%
of your total expenditure. Do you want to enter the market quietly? You’ll be happy to make a nice living, without disturbing the elephants. (One of my favorite clients said “In the jungle when the elephants fight it’s the ants that get hurt and sometimes killed) This is simple thinking, but extremely important to consider. If quiet is your mantra, then 3% may be 5% of anticipated sales projections should do it.
Three ways to go:
Analyzing the marketplace, what are people and companies spending in my category?
Today with technology (software) you can get a good estimate of what competitors are spending.
I never liked this type of “keeping up with the Jones” budgeting. I think it’s stupid even if you have tons of money you want to throw away.
Sales projection budgeting, no doubt most companies use this method for marketing budgets. The main issue is always the same. Marketing is viewed as an expense not an investment into the future. Despite the fact that companies who ramp up their advertising and marketing come back stronger when the climate improves. See my article titled Tell your boss… (Under articles) at www. Avizagroup.com
The range for this type of budgeting is 7.5% to 15%
The business plan, assuming you have one. This is the smartest way to develop a marketing budget.
It takes everything into consideration with equal weight. It helps keep the business on track of where you want to go. What it will take to get there. It also provides a system to monitor how you are doing naturally. To tell you how much to budget is impossible, unless I reviewed the plan. (Hopefully you have one)
What ever method you use to develop a budget, the critical issue is to constantly review (every 90 days)
make adjustment when needed. After all, if 50% or more of your marketing budget works you will be considered a business genius. The next thing you know, you’ll be on the cover of Fortune. I hope you have the courtesy to say John Howlett taught me every thing about marketing budgets. Ha! Ha!