Marketing spend: how much is enough?
I am often impressed when I arrive at a client and learn that they have diligently gone to the trouble of allocating a marketing budget. (You’d be surprised at how many brands work on a pay-as-you-go basis, also known as spend-now-worry-later). But this awe doesn’t always last. You see, budget setting is very often done in the business’ own bubble; divorced from the reality of how far the spend will get them in demand generation terms. It’s a bit like filling your tank with R100 and believing you’ll make the drive from Jozi to Durbs.
There’s a disconnect here, and it leads to disappointing sales figures, a whole lot of head-scratching, and suppliers being shown the door. Sure, there are ways to improve your impact and tweak your marketing spend effectiveness. But there has to be a reality check about what is possible. There’s a lot of talk about marketing combining both logic and magic. But this doesn’t extend to witchcraft and wizardry and so, designs can’t be created and copy can’t be written and media can’t be bought unless there’s budget to do all these wonderful things. Fairly simple, really.
Budgets are often set based on rules-of-thumb. Which is great, if your business’s thumb looks like the thumb in the example you’re referencing. I have yet to see an actual business with thumbs, and so I’m not a fan of this budget-setting method. Snarky remarks aside, I never advise my clients to spend on marketing until they know what they need it to achieve. A budget that is chasing awareness looks different to a budget that has a mature audience and is focusing on loyalty.
I have worked on a lot of pretty big brands, and in all my years in this game, have seen budget-setting done right just a handful of times. What’s the secret? The better budgets have two things in common:
1. They have more detail, and
2. They can be tied back to plans.
I’m not fond of detail for the sake thereof, but when its included in a budget, it usually shows that some homework happened along the way. Real, current costs have been checked. Potential reach has been considered. And choices have been made about which options present the best value for the brand to help achieve the objectives as outlined in its plans. Erring on the side of detail in a budget is bit like posting a nudie: by exposing yourself so fully, you open yourself up to scrutiny. And there’s a lot to be said for greater accountability when it comes to marketing spend.
Most marketing goals will outstrip their related budgets. There are seldom enough resources in any business to fund all the concepts a marketing team can think up. So, should you sigh in despair and lose hope? Certainly not. Set your goals, allocate your budgets, and then adjust those goals in line with reality. Having a realistic perspective on what you can possibly achieve with your budget is far more helpful than hoping to achieve results on a wing and a prayer.
Not sure how to figure out your marketing budget? Step one: contact me. Let’s work through your goals, and figure out what you should be spending. Or we can start with the money and work it back so you know what sort of performance you can expect.
Photo by Michael Longmire on Unsplash
