If you are an entrepreneur, this is a common question you would ask. Although there is no specific answer to it, rule of thumb always applies to this question.
According to this rule, you should spend 5% of the total proceeds or the budget on marketing to mark your web presence. Conversely, if you look forward to capture greater market share, you can budget a higher percent, say about 10%.
The figure, however, varies with the industries. If you are into a business that faces tough competition, you might be required to spend 20% to 50% of total revenue generated on advertising, like many healthcare companies, along with others dealing in consumer goods do.
However, prior to deciding upon the marketing cost, it is viable to know what does marketing budget entail?
It usually incorporates costs for public relations, promotion and advertising. In addition, overall marketing budget includes:
- Print media and broadcast advertising
- Website development
- Trade shows
- Social media marketing
- Design and printing costs for brochures, press releases, news letters
- Any other special events needed
Determine the amount for each category. Remember that it is always beneficial to know how much of your proceeds can go towards paying for marketing activities and then divide the money into subcategories.
A formal budget would assist you in defining the marketing needs. Work on a detailed marketing budget before the beginning of fiscal year and make changes to it on annual basis, in order to ensure business growth. Evaluate marketing costs and outcomes around the year to gain better insight into the effectiveness of your budget. With precise marketing strategies and budget, you are sure to find yourself in a position where you would have to manage high revenues.