How Much Should You Spend on Marketing in 2021?
This is a common question you might be asking yourself right now as we approach 2021. Some people say, 1% others say 2%-10% of your sales revenue. This is a huge gap between the two recommendations.
That’s because “How much should I spend on my marketing budget?” is a highly individualized and specific question and every business will have a different answer depending on several main components.
- Profit margins
- How much is your competition spending
It’s still important to remember, however, that no businesses can afford not to invest in marketing. It’s just important to hire the right person for the job that will think holistically with all aspects of the company and integrate all facets of your company, not just focused on solving one side or keeping a silo’s approach. In other words, sales must work with marketing and communication teams to truly be successful.
The average marketing budget can vary wildly by industry:
- Some small businesses invest between 1-4% of their annual budget in marketing
- Some medium-sized businesses and larger will opt for closer to 9-12% of their annual budget
A lot depends on your overall overhead costs and the capital available to you.
As an outsourced brand & marketing expert who works from home, for example, my overhead is very low; I pay for a bookkeeper, small offices in the past, printing, invoicing software, services for an accountant, and credit card fees as my primary expenses. This is nothing compared to businesses shelling out thousands of dollars in storefront leases and shipping fees, so I have more money to invest in marketing than someone with much higher overhead.
A good place to start though is to use a free (no need to add to your budget!) marketing budget calculator and see what they recommend. These calculators will typically ask for information about your revenue, your industry, and how aggressive you want to be with your marketing campaigns and give you a rough estimate of where to start.
Check out these marketing calculators (which can make great budget planning tools):
Many of these calculators will include a suggested breakdown of how to divide up the ad spend, though this shouldn’t be followed religiously; different brands will want to prioritize different platforms.
A small business that is just starting out and wants to find customers in a hurry, for example, will likely need to invest more in outbound campaigns like PPC advertising, while one that’s been around longer may choose to invest more in referral programs.
Interested in having me take a look at your current marketing strategy? Please reach out!
Marketing on a Shoestring Budget: The Basics
If you’re seeing these numbers and starting to sweat a little, take a deep breath – there’s no minimum amount that you need to spend on marketing. It’s more than possible to set up low-budget marketing campaigns that are effective and inexpensive at the same time.
While you will typically need to spend something to drive cold traffic quickly, it’s also important to remember that there are plenty of free or cost-effective platforms that you can put more energy into. They may take a little longer to drive results, but they can work well for you. Marketing, in the beginning, is about investing. Sure, there might be some low-hanging fruit – but in the meantime build, build, build.
Free or low-cost options include:
- Social media marketing
- Strong brand positioning and a category of one
- Email marketing
- Content marketing
- Search engine optimization & GMB (Local)
- Having a strong, branded website
- Asking customers for reviews (which will cost less than an official referral program where you offer financial benefits in exchange for referring customers)
It’s important for you to develop a compressive marketing plan that involves tracking, advising, and making sure that it’s being managed so that you’re able to make pivots when needed. Use best practices to build credibility and consistency in order for your marketing to be effective, not to mention a solid brand message and positioning are often overlooked but are crucial to long-standing effective marketing strategy.