Play it smart and “back into” your strategy from a defined point. Are you backing in from a set budget, or is your budget flexible to back into your strategy from a set of goals? Gosh, I hope it’s the latter and if so can you deposit some cash into my bank account? If your business is like most start ups, you are not flush with cash and in need of some clearly defined parameters. Let’s examine the high level marketing expense breakdown working from a set budget.
You’ve come up with an amazing idea, designed your biz-dev strategy, defined your revenue streams, identified your end user personas, started building your product inventory, you’re researching for user experience design, and you have either gotten investors to buy into your business or you are funding this yourself, with your life savings. Phew, that’s huge! Congratulations, you have accomplished a lot. Most people have no idea how hard this journey has been. By now you realize how quickly the money can be spent on everything from product development to building your unshakable team.
Unfortunately, very often new businesses and start ups have gotten this far before they consider their marketing budget and even hiring the marketing team. You know you have something great but you are uncertain of how you are going to show the world. You need a marketing team to cast a wide net of awareness and funnel an engaged audience to make a purchase. So please allow me break some things down for you, so that you don’t get sticker shock when your CMO or marketing director tells you what it’s really going to cost to get this done.
If you have investors, they have undoubtedly invested in your product because you’ve given them a researched and accurate forecast of potential market share and revenues. And you very likely identified the people and businesses where your rev’s will be coming from. If you are starting from a budget, you may already have some idea of the ways in which you will reach your audience and hopefully have done some thorough research on potential costs to market using these channels.
NO? You aren’t alone. Very often when a potential client tells me they are starting with a budget, it is the amount of money set aside after all other costs such as product development have been considered. And that is great actually! But often, a realistic idea of what it will cost to reach those goals is not fully developed. You would be surprised how many start ups don’t consider the cost of marketing at all. What is the saying, “Goals are just wishes, with a plan for achieving them.” Poor planners need to be dragged through a strategy kicking and screaming over every nickel and dime, because they didn’t plan for the cost of marketing and promotions. These folks are often heard saying they will build a marketing team with interns. Those folks believe, “If you build it they will come.” But, that’s not you, You cleverly allocated expenses for marketing and now you are ready to back in! Let’s break down where you should allocate those funds.
Diving into the Numbers
Content Development is 25% of marketing budget: A strong content library will become the inventory you use for your website, blog, PR, Advertising, billboards, social media posts, brochures, pamphlets, event booths and signage. If you are a business that will grow over 2 million annually, set aside between 10 and 20k for a first class website. Small businesses should set aside between 3 and 10k. Trust me on this. I know you’ve heard you can get a great website for $1000. You can’t. If you believe thats true, please show me a successful million dollar enterprise with a thousand dollar website. You probably already have a logo. Does that need an update? Do you have beautiful high resolution images and illustrations of your product? What about video content? Any testimonials from your current customers? What about videos of your team that demonstrate your company culture? A word here about copywriting; no one reads much anymore so you have very few words to get your point across. A strong set of terms and clearly defined messages will be attached to every image and video you put out into the world. Make sure to get this right. Be concise, on-brand and in line with your mission. And do not forget to research every word and term you use for SEO competitiveness. Let’s dive in.
Staffing Up,Contracting and Production
- Website-10 to 20k. Don’t skimp on this cost. It’s your storefront and the hub of all of marketing.
- Content Manager-25%- I highly recommend a content manager with excellent project management skills and SEO competency. This person will make sure that all messaging and images are consistent and engaging with your audience across all channels and mediums. Additionally this person can negotiate terms and costs for every freelance contract so that you maximize the value of the content derived from each resource. Remember that your budget has to stretch across the entire year. Every time you add or upgrade a new feature or change any aesthetic of the brand you will need photography, graphics, video and copy. A content manager can oversee this portion of your budget. Content can become a run away train if not tracked and monitored closely.
- A freelance photographer 10-12% of content budget-Must have strong skills in portrait and product photography with a lighting package and editing skills
- A freelance videographer 10-12% of content budget-Will need a lighting package and editing skills.
- In house or freelance graphic designer 20% of content budget who can design illustrations and graphics to support messaging for brochures. (You might consider putting this person on staff if you can afford it, you won’t regret it.) This person ideally can layer graphics onto photography and video as well as design layouts for event displays, brochures, social media and advertising formats.
- A contracted Copywriter -10-12% of content budget This person must commit to developing messaging over time on an as needed basis. If Blogging is involved some of this budget will need to be allocated to timely blogs, not to mention email copy.
- Project Management software-7-10% of content budget
Driving Awareness and traffic to the top of your funnel is 50% of budget: Identify where your audience will see you. If you are a completely new product, look at the most similar, nearest competitor. How and where are they connecting to their audience? If you have existing similar products or have been testing the water in a limited release, who is engaging or buying?
Staffing Up, Contracting and Production:
- Social Media Management-10% of budget-This full time position is 2 parts; calendar management (posting of campaigns) and consumer engagement across all channels. If you have multiple pages or identities for each channel, this may be a 2 person job.
- Advertising Management-15% of budget-This full time position will optimize and A/B test your social media and SEM campaigns to make sure advertising dollars are bringing you open wallets not falling on closed fists.
- AdSpend—25% of budget These are the costs allocated to pay for your broadcasted advertising across the digital landscape. Your Ad manager will advise on the most strategic locations and tactics for your ad placement such as banner, affiliate, retarget,
- Public Relations/Media–20% of budget-(50/50 10% for service 10% for distribution/execution.)This is a contracted service. Your public relations firm will get you mentions and links on other blogs, press/media mentions,
- Email Management-10% of budget-This is at least one full time person who will work closely with your content manager or with your content library to execute emails promoting your brand, specials, sales, newsletter, product updates
- Lead Management-10% of budget-Your leads are precious. A lead manager will make sure that the leads are segmented appropriately so that they get just the right amount of email.
- Influencers–5% of budget-Influencers are a great way to expand your audience awareness quickly and accurately. Find influencers that have already captured your audience who will genuinely love and believe in your product.
- software–5% of budget-The right software will reduce stress on your staff and promote accountability.
Events and Off-Line Marketing is 25% of budget:Much of the costs associated here are actually built into your content budget. The tangibles included here will be designed by your graphic designer and the messaging will come from your copy library.
Staffing Up, Contracting and Production
- Production Coordinator-15% One cost that will save you money in the long run, is having a highly resourceful, organized coordinator who will research value, pricing and distribution timelines as well as follow through on all invoices and deadlines for everything from promo items and printing costs to staffing and setting up travel for your team attending events, not to mention setting up booth displays and tracking sponsorships. These are time intensive projects.
- Promo items-15% Buy less volume and higher quality if your budget is limited. People throw trash away.
- Billboards-10% Be extremely strategic in choosing high traffic locations where your audience travels and consider seasonal placement.
- Print materials-10% Quality over volume.
- Conventions, seminars and trade shows-50%-If your budget is small, chose one show that will have a high volume of an extremely targeted audience. If your product is consumer tech, be at CES. If you are in fashion, be at Magic. Show up and show well. Buy a sponsorship. Have a beautiful booth in a good location. Try to get a speaker on a panel. Bring excellent promo items and have engaging social media activations with growth hacking potential.
The table below illustrates how quickly the budget can get eaten up, but having a birds eye view like this can be a valuable rubric when you are trying to keep every penny straight once you get into the trenches. A qualified CMO or Senior level Director of Marketing will know how to take a baseline budget such as this and make the appropriate shifts and tweaks to fit your product or service. I don’t recommend juggling all of this yourself. If you are the CEO, CFO or CTO, I assume you have important business development matters to focus on and orchestrating all of your teams from the highest level should have you too busy to manage social media posts and optimizing advertising. Hire a Pro and let them build your strategy. I promise I will do an article on time line expectations next so that you can keep your CMO accountable to budget and timeline.
Please feel free to reach out to me if you have any questions about your marketing budget: