The debate around our marketing and advertising budget is a lengthy one that tends to last year-round within our company. It seems that our marketing team never has enough allocated to fulfill our set objectives. If this sounds familiar, you are in the right place!

Let’s talk about your marketing budget. Specifically – how to determine what percentage of your overall budget you should allocate to marketing your business.

In order to begin, it is imperative to have an accurate picture of your gross revenue or estimated revenue before determining your marketing spend.  Discuss and review with your CFO, finance department, or accountant for a thorough understanding of your gross revenue.

That was the easy part! Figuring the remainder of this equation now becomes a series of “it depends” statements. The first of those statements being, your marketing budget depends on the age of your business:

• If your business is less than five years old, a general rule of thumb is 12-20% of gross revenue be dedicated to marketing.

That seems like a lot and can be intimidating to many first-time entrepreneurs and new business owners.  But, what if you think about it this way: You have this fantastic new product or service – a significant game-changer in your industry. But, no one is buying. Why? Well, probably because they have no idea it or your company exist! As Henry Ford once said, “Stopping advertising to save money is like stopping your watch to save time.”

Word-of-mouth only does so much, and new businesses must maximize their exposure to set themselves apart from competitors and take their company to the next level. Marketing should be a significant focus when beginning; not only does it bring in new customers and leads, but it establishes your brand in the industry.

Once your brand is known, you can consider lowering your marketing budget. Established brands or well-known companies, on average, allocate 7-12% of gross revenues to marketing efforts.

Commonly known brands don’t need to promote themselves as heavily. They have loyal and, oftentimes, life-long customers who aren’t going anywhere. While they still need to advertise, they certainly don’t need to invest as many resources as a new company vying for its share of the market.

A February 2020 Pre-COVID CMO (Chief Marketing Officer) Survey determined an anticipated 8.6% of revenue for the average marketing spend, with

• B2C product companies devoting 11.9% of revenue to marketing, and
• B2B service companies spending only 4.8% of revenue.

You have already caught this – it was all pre-Pandemic. And we know that the Pandemic changed everything for businesses in a heartbeat.

In June 2020, at the peak of the Pandemic, the same CMO’s were again surveyed. They then reported that average marketing spend had increased to a whopping 11.4%.

Another “it depends” statement to factor into your budget:  Your marketing spend depends upon your industry and the effects that COVID has had on it and your community…

• Consumer services – almost 19%
• Education & Financial service – 9%
• Manufacturing is just under 3%

It is challenging when setting your marketing budget, as there is not a one-size-fits-all solution – not all companies include the same criteria in their marketing budget. While some companies include any marketing and even sales-related expenses, others would categorize some of those expenses separately as a part of their total budget.

Your target audience and overall brand establishment also play a significant role in this allocation. If you want to learn more about identifying your most valuable audience, tune in to episode #5 of our Down & Digi Video Series or read our blog post,  Who’s Your Target Audience ? (It’s Not Everyone).

While there is no magic number when setting a marketing budget, these percentages are a great starting point when determining your marketing strategies. As a resource for you, we have added a marketing budget calculator to our website. Experiment with it and determine the budget that is right for your business.  As always, our digital marketing experts are available to help you or answer any questions you may have when figuring your marketing budget.

https://www.wordstream.com/blog/ws/2016/10/26/marketing-budget

https://www.webstrategiesinc.com/blog/how-much-budget-for-online-marketing-in-2014 (updated 2021 for COVID)

Industry:  Manufacturing

Client: National engine manufacture.

Objective: Generate product awareness and benefits to small engine dealers and lawn care professionals by driving a large volume of traffic to their website and adding qualifiers to increase time on the site and pages per visit to ensure qualified visitors.

Challenges:

• Facing multiple B2B audience channels.
• Marketing component products.
• Confusion with consumer products.
• Technical obstacles while tracking conversions.

Optimizations:

A 30-day test run of the client’s campaign to analyze performance and discover the best keywords, optimize the best performing ad copy and optimize site links.

Additional optimizations include:

• Create Mobile Ads
• Dayparting
• Add and test Site link extensions and phone extensions
• Included ads with dynamic keyword insertions
• Variation of matching types
• Optimize Geotargeting

Campaign Results

After testing different keywords and ad copy for the first two months, we found that our approach increased the CTR above the industry average of 1%. We finished with an overall CTR of 5.42%, which is extremely rare.

• Bounce Rate: 25.55% – Better than Organic and Direct Traffic
• Pages / Session: 4.51 – Higher than Organic and Direct Traffic
• Session Duration: 3.10 min – Higher than Organic and Direct Traffic
• Conversion Rate: 28.09% (Find a Dealer page, Visit a partner page or go to Engines page)
• Auction Insights: #1 in the Industry by far! (Monopoly)

 

Data	Organic	KeyMedia Solutions	Difference
Bounce Rate	37.95%	25.55%	-32.70%
Pages/Session	3.33	4.51	35.44%
Avg. Session Duration	2.50	3.1	24.00%

 

 

 

Client Case Study

KeyMedia Solutions has been partnering with SDN Communications, a business-to-business broadband service provider to run multiple digital marketing campaigns for the past couple of years. The client’s campaigns seek to reach business decision-makers in certain industries in order to gain leads, specifically business’s looking for broadband services. B2B targeting can be challenging, but KeyMedia Solutions has been able to help businesses such as this meet campaign goals within their specified marketing budgets.

Execution

The campaign started branding efforts before the network buildout was complete to build name recognition and generate leads for the sales team. As the campaign progressed, different tactics were introduced and tested.

Promoted Video, Pre-roll & Display ads: These ads were served to IT professionals and other industry-specific business decision-makers.

Content Distribution: Using LinkedIn, KeyMedia Solutions sponsored posts and shared content in relevant groups that had active business decision-makers, allowing for direct interaction on the posts.  Additionally, we tested sponsored posts, sponsored ads, and company page updates.

Paid Search: To support the display and content tactics, a targeted paid search campaign using specific, relevant keywords to business connectivity was developed. This effort was backed through precise ad copy, site links, and ad extensions.

Coordinated Efforts: In addition to paid digital media, KeyMedia Solutions worked closely with the internal marketing team to ensure a keyword-rich landing page was developed with conversion points built-in. Constant communication between the teams allowed for mutual support of the local events, email strategy, direct mail, radio, television, out of home, print, and Facebook efforts.

 

Campaign Results

Since starting in early 2015, the campaign has continued to see success in both brand awareness and lead generation.

• Online form submissions have increased by 350% year over year.
• Site traffic in the new territory doubled; while paid traffic increased by 359% in 2016.
• The users new to the site increased by 311% in 2016.
• Average session duration was up 109% compared to the previous year.
• Referral traffic from LinkedIn increased by 15% as a result of the promoted content.
• Monthly searches within related keywords driving traffic to the site increased 25% year over year.

 

 

 

“When I was a boy and I would see scary things in the news, my mother would say to me, “Look for the helpers. You will always find people who are helping.” ― Fred Rogers

This quote reassures us that we are not alone when things are scary and reminds us to see the good in one another.  Every day, we see examples of people doing all they can for others during this time of uncertainty.  How inspiring it is to observe American ingenuity, innovation, and generosity in action! We are sewing face masks, delivering groceries to those who are unable to leave their homes, supporting local shelters, and food banks. Businesses that cannot operate in their usual capacity have retooled their establishments to serve the needs of their communities. Breweries are making hand sanitizer, manufacturers are pumping out PPE (personal protective equipment), and closed-down restaurants are shifting to serve as grocery stores.  Businesses are not only helping their patrons, but they’re also aiding other businesses with discounts, cash grants, loans, ad credits, and more.

At KeyMedia Solutions, we are committed to being helpers in every way we can.  If your business is struggling during this pandemic, we want you to know that you do have options. Figuring out how to start and where to look can feel overwhelming.  To make finding the assistance you need easier, we have compiled a comprehensive list of resources available to businesses during this economic crisis.  Here you will find links and information to successfully navigate your way through this challenging time.

https://sdgoed.com/covid-19/ Governor Noem’s Small Business Relief Fund for businesses within South Dakota.

Google Ad Grants for Nonprofits. Google is offering USD 10,000 in ad grants to nonprofit organizations.

https://support.google.com/google-ads/answer/9803410?hl=en Google is giving ad credits to small and medium-sized businesses.

https://www.facebook.com/business/boost/grants Facebook is offering $100M in grants and ad credits to small businesses around the world.

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options The Small Business Administration COVID relief options.  Here is information on the Paycheck Protection Program and other federal resources available to small businesses right now.

https://www.lisc.org/covid-19/verizon-small-business-recovery-fund/Verizon Business and LISC have teamed up to offer small business grants to those struggling to remain open.

https://www.gofundme.com/c/small-business-relief-initiative-and-fund-faqs Go Fund Me has started a small business relief initiative to help small businesses throughout the country.

https://www.uschamber.com/save-small-business The Us Chamber of Commerce Foundation, in partnership with Vistaprint launched the Save Small Business Fund which provides  $5k for businesses that employe between 3 and 20 people along with other qualifications.

https://businessforall.helloalice.com/ In partnership with Verizon, the digital fundraising and advocacy platform Hello Alice is offering emergency grants of up to $10,000 for companies impacted by the coronavirus pandemic.

https://blog.yelp.com/2020/03/yelp-covid-19-response-and-support-for-local-businesses Yelp is offering advertising credits and more for small, independently owned restaurants and bars.

https://beautychangeslives.org/horst-rechelbacher-foundation-covid-19-relief-grant/ Beauty Changes lives is offering $1,000 grants for licensed beauty professionals who are out of work due to the coronavirus.

https://www.globalgiving.org/redbackpackfund/ Spanx and The Spanx by Sara Blakely Foundation, administered by GlobalGiving, are providing 1,000 grants of $5,000 to women-owned small businesses affected by COVID-19 in monthly rounds. The application will open again on May 4.

https://www.digitalundivided.com/dooniefund Digitalundivided, a nonprofit that supports black and Latinx women entrepreneurs, is providing quick grants of $100 to black women business owners.

Check back often as this list will be updated regularly to provide the latest information on resources available to businesses during this time.  If you would like to discuss your business needs or if we can be of service in any way, please contact us today!