marketing budget

My answer to a LinkedIn question from Leanne Smith

Short on money? Substitute time. For most  of us small-biz types, marketing is time intensive. So you’d better have a time budget plus a money budget.

Where do you get the biggest bang for your buck? or for your hour? List all the things you do for marketing down one column. Ads, press releases, networking lunches, social media, taking a prospect for coffee, etc. Whatever you spend money or time on related to marketing.
In other columns, list for each of these things:
— How much money you spend on this in a year
— How much time you spend on this in a year (Multiply by what an hour of your time is worth.)
— What results you’ve gotten: contacts, prospects, customers, nibbles, “laters”, etc.
— How much revenue this has brought in over the past year

Now you rate all these things you do, and compare them. What’s paying off? What isn’t? How could you improve the payback from any of these?

I hereby give you permission to STOP DOING THE THINGS THAT DON’T WORK! Networking groups? Yellow page ads? Online directories? Feh.

Do more of what works, and tweak it so it works better.

If your marketing pays off, brings in customers, and boosts your revenue and profit, then you won’t be on such a tight budget.

But beware! Marketing is like a yacht. If you’re around boats, you’ve probably heard people say, “A yacht is a hole in the water that you throw money into!” Marketing is the same way. There’s no end of ways you can spend money on marketing, and most of them don’t pay off.

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Q: I’m curious if anyone has a rule of thumb on what should be spent annually by solopreneurs on marketing. Would anyone care to share their own marketing expenses? Or percent of revenue?
Maria

A: Maria
I’ll bet that not 1 out of 20 of us knows how much we spend on marketing. Three reasons:

1. Our biggest marketing cost is the value of our own time we spend on marketing, and we don’t track that, let alone assign an hourly value, or check the results for the hours we spend.

2. We don’t collect all our marketing expenses under one account called “Marketing.” Instead, we have line items for Professional Services (web design, podcasts, etc.), Advertising (display ads, google ad words), Memberships, Business Meetings, Travel, etc.

3. We don’t create marketing budgets, then track how much money and time we spend, compare budget to actual, and compare effectiveness of different marketing activities (“bang for your buck”).

“A yacht is a hole in the water you throw money into,” we’ve heard people say. I think this is the way most entrepreneurs treat marketing. “If I’ve got some money, spend it on marketing. A free evening? Go to another networking meeting.”

So I’ll be very interested to see if anyone can give a meaningful answer to your question. I hope you can prove me wrong!

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Most bang for your marketing buck — right now!

June 29, 2009

Hopefully nobody says, “Business is down, money is tight, so let’s cut advertising.” But you SHOULD ask, “Where do we get the most bang for our scarce marketing buck?” Then examine advertising along with your other options.

Read the full article →