How Much Does a Company Spend on Marketing?
Every business will go through a phase where they’ll need to do marketing to attract customers, increase sales, and compete better against other fellow businesses that are in the same respective market as you are, however, a lot of small business owners struggle to know just how much does a company spend on marketing. There’s no one-size-fits-all answer. It’ll all depend on the kind of business you have, as well as your business objectives and revenue.
Researching Your Industry
In simplest terms, your marketing budget should be a percentage of your revenue. A common rule of thumb is that B2B companies should spend anywhere between 2% – 5% of their revenue on marketing. For B2C companies, the proportion is often higher – between 5% – 10%. This is because B2C companies typically need to invest in more marketing channels to reach various customer segments. A 2019 BDC survey of more than 1,400 Canadian businesses found that Canadian small business marketing costs average just over $30,000 a year, while those with 20 – 49 employees spend twice that amount. Companies with 50 or more employees tend to have marketing budgets in excess of $100,000.
Setting Clear Goals
It’s important to be clear on your marketing goals – they have to be measurable and specific. Answer these questions: How many people do you want to visit your website over what period of time? Do you want them to visit your store for a free sample or consultation? What’s your target audience? How many of them do you want to come in? Answering these questions will allow you to plan what needs to be done – what kind of investment will be needed.
Consider All Your Potential Costs For Future Operations
Very similar to any business expense, marketing has many components. You must allocate your marketing budget to each of the following categories, then you can adjust the amounts over time based on what’s most effective or doing well
- Social Media
- Online Advertising
- Traditional Media
Track Your Costs and Adjust Regularly
As you work through your marketing budget line-by-line, it will become clearer what you can afford, according to your priorities. Keep track of these things and review web analytics regularly. Assess your marketing budget quarterly and annually to see if your projections are aligned with your actual spending. Monitoring your marketing costs and refining your efforts will allow you to generate more accurate budgets as time goes on.
Before you go, our team behind Digital Specialist Co. provides free consultation for anything digital marketing-related to give the best ways to capitalize on your budget.