Effective budgeting for marketing is like driving a car, especially when it comes to using the gas pedal. Think about it.
First of all, and from my experience, small business owners are notorious for treating marketing budgets with a bit of disdain instead of confidence. This is because marketing is seen as a discretionary expense item when it’s really an operational investment.
Managing Your Growth
Working with the right team, approach, and budget, marketing dollars can literally be your throttle for positive results in your business. Look at marketing budgeting like driving your car and using the gas pedal. In our analogy, gas = dollars.
Follow me on this road trip…
- When you start out, you hit the gas. (Robust brand identity and awareness campaign.)
- As you get up to speed you can ease up a bit but keep your foot on the gas to maintain a good cruising speed. (Product advertising and promotions for managing growth.)
- When you see a hill coming you get ready to give it more gas and then hit the pedal as you reach the incline, and more on steeper hills. (Responding to new competition, lower industry demand, recession, PR problem, etc.)
- When over the crest of the hill you can ease off the gas, especially when going downhill. (Successful campaigns deliver positive and sustainable results.)
- When back in the flats, more gas is needed to stay up to speed. (Competitive advertising and promotion to keep business steadily growing.)
The healthiest way to apply your marketing budget in a highly competitive landscape is to spend more when revenues decline, which may seem counterintuitive at first but really isn’t when you think it through. Unfortunately, too many small business owners do the opposite when it comes to planning and budgeting for their marketing campaigns.
The No-Go Approach
I can’t put a number on how many times I’ve heard business owners say, “We’ll increase our marketing budget when business gets better and we can afford more on advertising.” Hmm… When is “when?” Or worse, I’ve heard, “How about you put skin in the game and do our marketing upfront, and then we’ll be glad to pay you a lot when we get the new customers.” EEEK!
This kind of thinking is the very reason these businesses don’t have enough capital to respond to changing and sometimes negative market conditions. They lose market share, stay small, and some of them ultimately close.
Follow the Leaders or be the Leader Yourself
Depending on your industry, you should be spending between 6% and 18% of total revenues on marketing. This is the spending range of the market share leaders in each industry.
So, if you are feeling a little pinch from the volatile economy or some noisy new competitors in your market, how do you respond? Do you wait until “business gets better,” or will you make your own brand roar louder and more resonantly by design?
If you want to get business moving faster and in the right direction, get intentional and hit the gas. We’ll keep your engine tuned.