Determining Your Marketing Budget
Every business, no matter if it’s a startup, a small business or a large enterprise, has difficulties setting aside a budget for anything, let alone marketing. The main reason is that you can never truly predict the exact amount of funds you’ll need to invest in something important.
Costs may vary and unexpected expenses may arise practically anywhere. Therefore, you can estimate a best-case-scenario budget and set aside a bit more than you’ve planned just in case. But what about the digital marketing landscape today?
In 2019, digital marketing is as dynamic as it ever was. Technological and market trends still shape consumer behavior, which in turn influences how marketers develop their strategies, as well as their campaigns.
All of these activities can have an impact on your marketing budget. So figuring out how much and where to invest when it comes to marketing in 2019 may be a daunting task. With that in mind, here are a few ways you can determine how much should you budget for marketing this year.
How much do companies spend on marketing?
If you’re trying to answer the question of how much to spend on marketing, the answer is always “It depends”. Your goals may differ from other companies on the market, which means you may need to budget more or less on marketing efforts alone.
You can compare how much other companies spend on marketing, on average, in order to gain an approximate estimation of how much you should budget. As an example, here’s average spending of companies on marketing in 2018.
Marketing budget as a percentage of a company’s budget:
- B2B product – 9.2%
- B2B service – 8.9%
- B2C product – 16.0%
- B2C service – 14.9%
Marketing spending as a percentage of a company’s revenue:
- B2B product – 6.3%
- B2B service – 6.9%
- B2C product – 9.6%
- B2C service – 11.8%
Invest in marketing research
Marketing research should be one of the most vital factors in your budgeting efforts. Research can help you determine the audience’s preference, needs and expectations, as well as the trends they’re currently following.
In addition, you can determine which marketing channels are best suited to your campaigns, as well as decide whether to consider both digital and traditional marketing in your campaign. Aside from all that, you can conduct a competitive analysis to determine which marketing efforts your competitors opt for and how much they’re investing in their strategies.
Your marketing budget depends on the approach you’ll implement, and research can help you develop such an approach. Even research requires investment, so it may be a good idea to keep the research budget separate from the marketing budget. That way you can clear out any confusion regarding spending and allow research to guide you in developing a budget for your marketing efforts.
Keep the cash flow positive
As mentioned before, digital marketing is quite a dynamic landscape. Things may change sooner than you think and they may change quite often. In such cases, additional and unexpected costs are quite common.
You may have to pour funds out of other business operations to make up for marketing costs that exceed your budget. That being said, it’s very important to maintain a positive cash flow in order to avoid a negative impact on your bottom line. There are various ways you can maintain a positive cash flow, such as by reducing operational or overhead expenses.
Moreover, you can consider various debtor finance options, they can help you manage your accounts receivable and thus help you maintain a positive cash flow. The fact of the matter is that it’s always better to have good financial health when unexpected expenses arise than it is to go into unnecessary debt to cover such expenses.
Consider return on investment (ROI)
Marketing efforts will eventually yield some kind of a return on investment. How much and how long that will take depends on the effectiveness of your marketing efforts. That begs the question of where to invest, in the first place. Again, that depends on your goals and what you want to achieve with your marketing efforts.
As an example, you should consider both digital and traditional marketing methods. In 2018, the majority of companies invested 42% of their marketing budget to online efforts. Digital marketing is oversaturated these days which leaves traditional marketing with untapped potential for ROI. In addition, consider both inbound and outbound marketing.
Inbound marketing, such as SEO (Search Engine Optimization), PPC (Pay-Per-Click) and social media may be more efficient at tracking ROI because you can use metrics to measure results from owned and earned media. On the other hand, outbound marketing, such as called call, trade shows and email promotions may be high-cost-low-gain efforts in some cases, but they may prove effective if your goals align with such methods.
Determining how much to budget for your marketing efforts can be a daunting task. However, if you make an effort to research relevant information, as well as leverage data from your previous marketing budgets, you’ll be able to set aside enough funds for your marketing efforts in 2019.
Knowing when to increase your design budget
The graphic design of your business is intricately tied to your overall company’s image and branding strategies. The last thing you want is to use outdated logos or designs that make you look unprofessional. Let’s face it, though — design work can be expensive. You may already have a design budget and are wondering if or why you should increase it.
Designers spend untold hours creating the perfect balance for your brand. Most businesses are on a budget and working in the extra funding for design is tricky. There are a number of reasons why you should increase your graphic design budget, and things you should keep in mind as you make this important decision about where to spend your business’s cash flow.
1. Branding Matters
You might be able to hire someone off Craigslist to do a logo design, but how will it tie into your overall branding plan? You also may not know how skilled the designer is until you receive the finished project. Good design takes into account every aspect of your brand and your goals for your business. It costs more than just a one-off logo design, because that logo is going to perfectly match all the other aspects of your branding.
For an agency that creates a design focused on your branding, expect to pay between $15,000 and $50,000. Costs might be slightly lower if you hire in-house or use a smaller company or freelancer to do the work. You’ll need to increase your budget to reflect this price range, but understand that you’re paying for more than just a design. You’re also paying for branding, which ties into your marketing.
2. Hourly Rates
Whether you’re hiring a professional agency, in-house designers or contracting a freelancer, understand that these services require a lot of skill and are in high demand. The median hourly wage for graphic designers is $22.90 per hour, and one with added experience or skills will command top dollar. Plan to pay the hourly rate that will allow you to hire a designer with at least a few years of experience in the industry. In design, you often get what you pay for.
3. Don’t Underestimate Time Involved
Non-designers sometimes have a hard time estimating the time it takes to create a truly brilliant design. There is far more involved than simply throwing a logo together, for example. The designer must spend time studying the brand and getting a feel for the overall messaging and style of the business.
The graphic designer then searches for the perfect font or unique designs for the client. Other elements must be pulled in, and then the entire design will go under a microscope to see what elements need adjusted, how well the positive and negative space balances, and if colors and styles match. Allow the designer to give you a ballpark estimate instead of guessing how much time a project will take.
4. Make a Good First Impression
It takes a lot of work to get visitors to your site. From the second they land on your home page, they are evaluating everything — from how visually pleasing your site is to whether or not you seem trustworthy. In one study, it took a mere 50 milliseconds for people to decide whether they liked the look of your site.
Well-done design explains what your company is and does and leaves visitors with a positive impression. Pay for the best designer you can afford, so your first impression has power.
5. Value Your Time
Imagine that you’d like to create a design for a new website, but you have no idea how to put one together. How many hours would it take you to come up with the perfect design? You’d have to learn coding, figure out how colors work together, choose a palette and a hundred other little things. Your time is worth a lot of money. How much do you value your time? Consider this when planning your graphic design budget. An experienced designer can complete the work in a fraction of the time it would take you to learn how to use Photoshop.
6. Consistent Look
In today’s competitive marketplace, brand recognition is vital. A brand that is presented with consistency is about three to four times as likely to be seen, likely due to the number of times a consumer has to view your brand before they remember it. Spending more on your graphic designs allows you to ensure everything has a consistent look that aligns with your brand’s goals.
7. Count Design as Marketing
The typical established business sets aside about 10 percent of income toward marketing, and design should be included in that budget. New businesses may want to allot more of their income toward marketing as they work to build a base. One way to increase your graphic design budget is to look at it as part of your marketing efforts.
8. Color Matters
A professional designer understands the psychology behind color and how people come to recognize and relate to your brand on a subconscious level. Color impacts brand recognition by as much as 80 percent, with colorful logos being more memorable than ones with little personality.
If your brand doesn’t yet have a basic brand color palette, then you’ll want to work closely with a team made up of graphic designers and marketers. This will allow you to choose the color that shows your company’s personality and also speaks to your target audience.
Graphic Design Budget
It’s challenging to figure out how much you need to set aside for graphic design. Costs can vary widely by project type. Make a list of the high-priority projects you’d like completed first, so your graphic designer can focus on those. Adjust your budget as you go along and keep in mind that a designer is experienced at estimating how much time should be spent on a specific project.