Startup budgets are often tight. You need to think long and hard about every dollar you spend, especially when it comes to marketing. Ideally, every dollar you spend on marketing will be brought back into the company a few times over.
Unfortunately, this is not always the case; not every marking channel will work for your company.
How do you know which marketing methods will give you the biggest bang for your buck? The truth is, you don’t. Instead, you need to figure out which will get you the most traction as quickly as possible, and make adjustments as needed.
In order to figure out how you should be allocating your startup marketing budget figure out:
- Who is your audience?
- Where should you be communicating with them?
- How should you spend your budget to reach your audience?
Research Your Clients
The best marketing strategies start with researching your potential clients. This doesn’t mean you have to hire an agency or research firm. Get your team together to identify your target audience or customer. Then you can figure out how you can best reach these people. Are they on social media? Do they frequently check their e-mail?
Once you determine what your target customer looks like (basic demographic information), you can research their media preferences. You can also do some preliminary research regarding your customer’s browsing habits and tendencies regarding mobile searching.
You can purchase data reports for your particular industry, but that may not be the most cost-effective approach. If you can spare the time, doing your own research allows you to use information specific to your business and saves you money.
The Importance of Digital Marketing
More companies are focusing their efforts on digital marketing because it has a higher return on a dollar-per-dollar basis. For example, studies have indicated that content marketing can create as much as three times as many leads as traditional outbound marketing, and it costs approximately 62 percent less.
However, this higher return often only occurs when you have the right mix of various digital marketing platforms, including your website, social media, blogging, and a lot more. Your work on these channels and how they’re integrated is usually planned in advance and defined in in a marketing strategy.
Even if you know you want to focus your startup marketing budget on digital marketing, you need to have a plan that’s tailored to your company.
The Hard Numbers of Marketing Budgeting
How much you actually spend on marketing will vary depending on the kind of marketing you want to do and where your target customer will consume it.
If your target customer is more likely to see billboards than Facebook, then your marketing strategy is going to look very different from the average campaign focused on digital marketing, and it may be more expensive.
Consider which generation your target customer falls into and use that as a starting point to set your startup marketing budget.
- Pre-Depression Generation: print media, television, AM radio
- Silent Generation: in-person interaction, billboards, television, direct mail, magazines
- Baby Boomers: word of mouth, online resources, television, social media
- Generation X: e-mail, social events and peer gatherings, websites, direct mail
- Generation Y (Millennials): social media, websites, promotional events, word of mouth
- Generation Z: television, social media, websites
The United States Small Business Administration (SBA) reports that marketing budgets also vary by business size and whether your business is established or not.
Your industry will also play a role in your marketing budget. The SBA reports that small businesses that have less than $5 million in revenue should try to allocate between 7 and 8 percent of their revenue to marketing. QuickBooks, on the other hand, indicates that most businesses only actually spend between 2 and 6 percent of their revenue on marketing.
While you’re getting started, it is better to allocate too much than not enough. Price checking a variety of marketing methods is a good way to get started with determining which marketing methods will reach your customers and will also be within budget.