As the end of the year approaches, it’s the million-dollar question. (Fortunately, the answer to that question is a lot lower.) How do you determine your marketing budget as an SME? How many euros should you invest to be seen and heard? We hope to provide some clarity by giving you insight into our approach.
That approach always starts with research. Because simply slapping a figure on it just doesn’t work. And the rule of thumb that you should invest 2 to 3% of your turnover in marketing is just that: a rule of thumb. Determining the right marketing budget depends on several factors.
What is happening in your market? How hard are your competitors pushing to market their products and services?
If they are barely spending any money, it makes no sense to add a zero at the end when determining your marketing budget. In that case, you’re better off investing your money elsewhere. As a communication agency, we are very honest about that.
But avoid the opposite scenario as well: you won’t achieve the same results with only a fraction of the competitor’s marketing budget. Yes, things can always be more inventive, creative, and targeted. But there are limits. Playing a tennis match against Roger Federer with a ping-pong paddle is pointless. That’s the same as forfeiting immediately.
How high or low is the barrier to purchasing your product? An impulse buy of five euros happens quickly. But an amount of 500 euros… you don’t take that lightly. You look at that product once and let the idea simmer. Then you look up some more information. And finally, you weigh all the pros and cons one last time. In that case, you really prepare for that purchase. And you buy consciously.
That requires a different type of marketing. In the second case, when determining your marketing budget, you will, for example, invest more in customer awareness.
And so we go through parameter by parameter:
Every parameter influences the determination of your marketing budget. Take those channels, for instance. Advertising in a magazine simply costs more than a digital ad. But for your target audience, it might yield six times as much.
All these questions are addressed in our research. We then translate that into an initial plan of action. Based on that, we determine the marketing budget.
This is, of course, a target budget. It’s not like we say This is it. Take it or leave it. We then discuss that plan and budget together with you. We provide suggestions and explain our choices, but you, of course, make the final decisions. And then it’s a matter of finding common ground.
Finding common ground is quite different from cutting certain blocks without justification. The plan we propose is always balanced. And even if we end up with a lower marketing budget after our conversation: at the end of the day, that balance must still be there. Otherwise, we won’t achieve the desired effect. A solution could then be, for example, to move something to a later phase. Or to first focus fully on a specific target group.
There you go, we hope that determining your marketing budget goes just that little bit smoother next time. And if you happen to get stuck: let us know!