Many companies often find themselves unsure of how to allocate their marketing budget. How much should they spend on marketing in total? How should they divide up their budget for maximum returns? Below, we will explain how businesses most commonly approach determining what to do with their marketing budget. For a custom analysis of your business, please call us and one of our Digital Strategists will help you do an evaluation.
How Much Should You Dedicate Towards Marketing Overall?
Research provided by Entrepreneur magazine (https://www.entrepreneur.com/article/243790) and Gartner (http://www.gartner.com/technology/research/digital-marketing/digital-marketing-spend-report.jsp) states that generally, you should commit around 10% of your total revenue to your marketing and advertising budget. For businesses that do not have any revenue, it is recommended investing as much money as you can afford over 12 months into your marketing efforts to get ramped up.
A 2014 survey of CMO’s by Duke and the American Marketing Foundation found companies with:
- $25 million or less in revenue spent an average of 11% on marketing
- $25-$99 million in revenue spent an average of 9% on marketing
The study also found that different types of businesses spent at different levels:
- B2B Product Businesses: 10.6%
- B2B Service Businesses: 10.1%
- B2C Product Businesses: 16.3%
- B2C Service Businesses: 10.9%
Some companies with aggressive growth goals spend far more. For example, Salesforce invests 53% of its total revenue into marketing.
How Should You Spend Your Marketing Budget?
If you are an online only business, clearly you will spend all of your marketing budget targeting online resources such as Search Engine Optimization, Pay Per Click, Social Media, etc. If you have a bricks and mortar business (like a Walmart), you should anticipate spending at least 50% of your budget on online advertising.
Based on our experiences working with over a thousand clients, we have discovered that on average the following breakdown works well for the average business:
- 50% of total advertising spend should be dedicated to SEO as an established website almost always receives the vast majority of it’s traffic and revenue from Google’s search engine.
- 30% of total budget should be dedicated to PPC
- 20% of budget should be committed to email and social media marketing
Each business is different though, so please call our Digital Strategy team to get a custom evaluation of your business and budget recommendations that will provide you the greatest return on investment.
Estimating Your Budget More Accurately
To get a better sense of how much you should spend on marketing, it’s imperative that you understand your business goals. You should ask yourself some fundamental questions:
- What is your total monthly revenue?
- Are you looking for average growth or high growth?
- What percentage of your total revenue comes from the internet?
The answers to these questions will definitely affect how much you should put into your marketing budget. If you’re looking for average growth, you only need to put 10% of your revenue into marketing, but if you’re looking for more robust growth, allocating 20-30% of your total revenue will help you achieve that.
Small Business Budget Example
Let’s say you operate a small business and you’re looking for high growth. If your company generates $30,000 in monthly revenue from online consumers, you should dedicate $6,000, or 20% of your revenue, towards online marketing.
A simple breakdown of your total revenue into the three main online marketing strategies should resemble this:
- SEO: $3,000
- PPC: $1,800
- Email & Social Media: $1,200
Here, you can clearly see that SEO takes up 50% of the budget, PPC comprises 30%, while email and social media take up 20%.
Coalition Technologies’ Hours Based on Your Budget
If you decide to work with an SEO marketing firm, you’ll encounter many different rates. Unfortunately, most SEO companies do not explicitly disclose how many hours they spend on actual work, especially because they do very little aside from using automated tools.
At Coalition Technologies, we stand by the notion that a winning SEO campaign takes man hours to build, in addition to automated solutions and quite a few tools we’ve built ourselves. With a hypothetical budget of $6,000, you can anticipate that our team will budget 27 hours to SEO, 17 hours on PPC, and 11 hours to your social media and email campaigns. Over a 6 to 12 month period, your business can anticipate powerful results with our marketing strategies.
Budgeting for Success
This overview of budgeting for SEO marketing can give you an idea of how you should plan your online strategy for the coming year. If you’re looking for more information on SEO marketing rates and services, reach out to Coalition Technologies today at (310) 907-7823, send us an email at [email protected], or message us on our Contact Page.