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How Much Should Your Business Be Spending on Marketing

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Marketing is an essential business element that can make or break your company. When you’re first starting out, it can be difficult to know how much you should invest in marketing and what mix of marketing methods will net the best results for your business. If you’re wondering how much should your business spend on marketing, the following research will help set a benchmark.

According to the U.S Small Business Administration, small businesses should spend 7 to 8 percent of their gross revenue on marketing and advertising if they’re doing less than $5 million a year in sales. Other marketing experts advise that small businesses spend anywhere from between 2 to 20 percent of revenue on marketing depending on a number of factors, including how long you’ve been in business and how competitive of a market you’re in. Gartner’s annual CMO Spend Survey for 2015-2016 found that, of those surveyed, marketing budgets on average comprise 11 percent of company revenue.

On the whole, marketing budgets are growing year-to-year. Gartner reported that nearly two-thirds of marketers said their budgets would increase in 2016. Strongview’s 2015 Marketing Survey also found that more than half of respondents plan for their marketing budget to increase. According to Gartner, digital commerce, social, marketing analytics, and consumer experience are the top-ranked areas of investment for marketing technology. Strongview’s survey found that email marketing, social media, search, and online display area were the top programs where marketers plan to increase spend.

increase marketing spend

Source: http://media.strongview.com/pdf/StrongView_2015_Marketing_Trends_Results.pdf

An iContact study by Edge Research also found email to be a popular place to invest marketing dollars. Respondents from small and midsize businesses spend the majority of their marketing budgets on email, followed by tradeshows and events, and person-to-person contact.

marketing budgets

Source: http://marketingland.com/email-marketing-takes-highest-share-of-marketing-budgets-38386

Small and medium sized businesses overwhelmingly use marketing emails to share news about the company and its products or services.

uses of email marketing

Source: http://marketingland.com/email-marketing-takes-highest-share-of-marketing-budgets-38386

When measuring the success of marketing emails, small and medium businesses consider the number of click-throughs, website traffic numbers, and sales numbers, among other metrics.

Source: http://marketingland.com/email-marketing-takes-highest-share-of-marketing-budgets-38386

It’s no wonder email marketing is an approach on which so many businesses concentrate spending. A Marketing Industry Census by Econsultancy found that marketers find it has the best ROI compared to other marketing tactics.

metrics used for email marketing

Source: https://econsultancy.com/blog/64614-email-remains-the-best-digital-channel-for-roi/

And, when it comes to ROI, Folio: found that most marketers measure the success of their programmatic campaigns based on sales/conversion rates.

How do you measure the success of programmatic campaigns?

  • Sales/conversion rates: 75%
  • Brand lift: 51%
  • Reach: 23%

How companies rate ROI on marketing channel

Source: http://www.foliomag.com/2014/what-advertisers-really-think-programmatic-2/

When pondering how much should your business spend on marketing, research the advice of experts and others in your industry, but acknowledge that much of that knowledge will come with experience and learning firsthand what works for your company and what doesn’t.

If you don’t have the capital to make the marketing investments you feel are necessary for the growth of your business, consider a small business loan or alternative financing.

 

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