As a startup entrepreneur, mapping a marketing budget can often take a lot of work. Lack of historical data, uncertainty of audience, limited resources, and sometimes inexperience. However, with ROI and Marketing Budget continuing to display a robust correlation, planning and setting up one must be independently managed. It demands a concrete strategy matched to business objectives.
In this blog, we will look into;
– What’s included in a marketing budget
– Sample marketing budgets across Canadian businesses
– Approximate costs of individual marketing services in Canada
– Best practices for implementing a startup marketing strategy
– Cost-effective marketing tips
What’s included in a marketing budget?
Today a holistic startup marketing budget typically includes the following key components:
- Advertising: Expenses related to paid advertising, offline or online. Offline includes newspaper adverts, flyers, magazines, and online ads include social media ads, Google ads and SEO.
- Public relations: This includes all expenses related to creating and maintaining a positive image for the company or product, such as press releases, influencer outreach, media outreach, and events.
- Content creation: The creation of content such as blog posts, videos, podcasts, and other media types would be included here.
- Marketing technology: Marketing automation software, email marketing software, and other tools used to streamline marketing processes.
- Creative services: This includes all expenses related to creating marketing materials, such as graphic design, copywriting, and photography.
- Sales promotion: Sales promotion activities such as coupons, discounts, and special offers
- Events and sponsorships: Expenses related to hosting or sponsoring events, such as trade shows, conferences, and sports events.
- Market research: Includes all expenses related to researching the target audience, competitors, and market trends.
Budgets associated with each component vary depending on the size of your company, product or service, and target audience.
Sample marketing budgets across businesses
When identifying an outline of a budget, a good place to start is a percentage of total budgets or if you’re a revenue-generating startup, then a percentage of revenue. We have collected some industry benchmarks to help you understand average spend.
BDC: Marketing budget benchmark by the number of employees
In a 2019 survey of 1400 Canadian businesses, the Business Development Bank of Canada found that small business marketing costs average just over $30,000 annually. Those with 20 to 49 employees spend twice that amount. Companies with 50 or more employees tend to have marketing budgets over $100,000.
CMO Survey: Marketing budget benchmark by type of business
The June 2020 edition of The CMO Survey reports:
- Service-based B2B companies allocate 12% of their revenue toward marketing
- Product-based B2B companies invest 8.3% of their revenue toward marketing
- Overall, B2B companies spend 11.3% of their overall budget on marketing
- Service-based B2C companies spend 15% of their revenue on marketing, and their marketing budgets are 14.9% of their overall budgets
- Product-based B2C companies spend 13.9% of their revenue on marketing, and their marketing budgets are 17.3% of their budgets
State of Marketing, SalesForce: Allocation of Marketing Budget by Activities
SalesForce, Sixth Edition, State of Marketing Report shows us a breakdown of the allocation of funds across various marketing components.
- B2C brands are allocating the most to advertising costs.
- B2C brands are spending heavily on marketing technology and content creation too.
- B2B companies also spend the highest proportion on advertising, although slightly less than their B2C counterparts.
- B2B is also spending on their marketing technology heavily.
- B2B is prioritizing Account Based Marketing in their marketing spend too.
Approximate costs of individual marketing services in Canada
While there is no one-size-fits-all approach to allocating marketing budgets, we have provided some benchmarks that can serve as a helpful starting point for your startup.
How to execute marketing plans as a startup
As a startup, you may not be working with a historical blueprint, so staying agile with your marketing is imperative. There will be a lot of testing, experimentation, hits and misses. Unfortunately, this is the necessary path to figuring out what works and does not work for you.
Here is a simple 5-step plan to get started.
1.Match budget allocation to strategy: Your budgets and strategy must always be aligned. As we saw above, there is a multitude of marketing and advertising avenues, but where you direct the funds must support the business strategy. Are you looking to reach out to millennials? Then ensure your spend is focused on tools that reach millennials. Are your customers’ corporate clients? Then focus your spending on channels that reach corporate clients.
2. Start small: At the beginning, everything is a hypothesis. Spend no more than a few hundred or a few thousand dollars to pilot a marketing strategy or tool to test your hypothesis.
3. Set goals: Even if you’re starting small, you have to give it a goal to help you assess your next steps. For each marketing channel, identify realistic, specific, measurable goals you may want to achieve. Increase followers to 1500 on Instagram. Bring in 10 inquiries a week, double the number of brand mentions, etc.
4. Track: Give your strategy sometimes – don’t be a fool in the shower. Using marketing software’s analytics and dashboards to gauge your campaign’s results. Trust your data.
5. Regroup for the next steps: If you’ve given the campaign enough time to prove itself, find ways to improve it and invest in it further. If it didn’t go how you expected it to, pause, reassess, improve and try again.
Tips to maximize your marketing budget with cost-effective strategies
Digital over Traditional Marketing
Digital marketing has proven itself time and again as a much more efficient method of reaching online audiences. It has a lower cost of entry, is easily trackable, and has a higher ROI. Leverage social media to engage with your audience, build brand awareness, and promote your products or services. Social media platforms like Facebook, Instagram, Twitter, and LinkedIn offer affordable advertising options. However, it does involve consistent effort and time to remain a sustainable investment.
With content becoming such a core part of our lifestyle today, it has become a valuable, long-term investment for brands. Blog posts, e-books, webinars, or podcasts are all great investments that can take your brand a long way with minimal financial investment. However, much like digital ads, this also requires more time and effort to keep sustained.
If you’re an offline brand, a brick-and-mortar store that requires neighbourhood activation. Then experiential is the way to go. It involves creating a memorable and immersive brand experience for customers. This can be through participating in events, collaborative pop-ups, or interactive marketing campaigns on the ground. This may require a lot of planning in advance, but if done right, it can be an effective marketing tool that is cost-effective.
Finally, the one aspect that doesn’t cost extra but many brands tend to forget about is customer service. Be it a B2C or B2B company. If your customers walk away with a good experience, you jay have gained a loyal customer for life. But quality customer service has to be built into the business values and processes.
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