Budget Marketing Dollars for Results Not Numbers
The Small Business Administration (SBA) recommends spending 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales. According to the SBA, if you are doing $5 million in sales, you should budget of $400,000 per year.
That’s a big pile of money, but it is a benchmark based on averages across many sectors. However, if you want a successful marketing budget, you should start with your goals, not a percentage. The percentage only tells you when you are indexing higher or lower than other businesses, it doesn’t tell you if you will be successful.
If you are not forecasting ROI, then you don’t have benchmarks from which to target money or reduce money depending on the success of a particular campaign or effort.
When you have benchmarks based on ROI, then you can and should adjust your budget to support the digital channels that are exceeding the benchmarks and delivering the desired results.
So set your total, or not-to-exceed budget level, and then readjust every 3 months based on the data and your KPIs. Invest more or heavy-up in digital channels where there is potential or signs of significant growth.
1) Start with goals 2) Develop benchmarks 3) Assign budget to reach those benchmarks. 4) Adjust every 3 months 5) Report in a dashboard. It’s budgeting to results, not to a number.
Mark Mathis
Mark wrote his first direct-mail fundraising letter in 1981 for the University of Iowa Center for Advancement. The effort raised a few million dollars in undiscovered wills and legacy gifts. From that day forward Mark discovered a love of the big idea that moves the needle. After 12 years at KWWL, Mark became a business owner as a co-founder of ME&V — rebranded as AMPERAGE in 2015. After 25 years of leading creative teams in video production, graphic design, PR, writing and web development, Mark transitioned out of ownership in 2021. Today he serves in an employee role as special projects consultant. He is creatively ambidextrous — son of an artist and engineer — and famous for distilling complex ideas down to a few words and a few visuals. Mark is a writer. When he found that many nonprofits struggled with complex branding puzzles, he wrote the book, “NonProfit-NonMarketing .” He also wrote a novel called “Reenactment.” Mark is an active blogger OneMinuteMarketer® with nearly 1,000 readers each week on LinkedIn, Facebook, Twitter. One of his most popular YouTube videos is on “How to Look Good on Zoom.” One of Mark’s fondest business memories was being named to INC 500 two times and attending the INC 500 conference with other winners. Mark is considered by some a Civil War expert (and that explains his novel). Mark also served as an adjunct professor in the business and in the communications departments at Wartburg College. Mark is a graduate of the University of Iowa and is currently vice president of the University of Iowa Journalism and Mass Communications Advisory Board. Mark is married to state Sen. Liz Mathis, and the two love to travel, even when it means being trapped by a volcano in the Czech Republic for three weeks.
