How Much Should Small Business Spend on Digital Marketing
A common question among our clients is how much they should be spending on digital marketing. A chronic challenge among smaller businesses is not setting aside enough budget to manage their online presence.
How much should small businesses be spending on their marketing?
The guideline set out by the Business Development Bank of Canada (BDC) is that a Business-to-business (B2B) firm should allocate 2%-5% of revenues to marketing. A Business-to-Consumer (B2C) firm should allocate 5%-10%. Click here to read the full article.
The shift to more online marketing means today’s growing businesses are implementing annual digital marketing campaigns tied to overall business goals. And they’re seeing results.
What’s changed? Digital marketing delivers powerful analytics data that measures campaign performance 24×7. The search engines never sleep and your campaign data are awaiting your review, the next A/B test, or a critical pivot based on competitive manoeuvring.
Establishing the right budget empowers your marketing team and your digital agency to create measurable success. It’s exciting to see a talented team produce amazing results in building online awareness, generating new business leads and seeing the resulting revenue growth with the right budget and tools to do so.
The Perils of Under-Investing in Digital Marketing
However, if a business under invests in marketing then they are putting themselves at a disadvantage relative to their competition. If your competitors are spending $80,000 annually and you’re spending $20,000, you are at a clear disadvantage today, and that disadvantage will grow over time.
What do you do if your business is under-investing and does not have easy access to additional funds for marketing purposes? How do you catch up if you don’t have the wherewithal to spend in the recommended range?
The first step is to revisit your financials and make some tough decisions in order to free up cash. Every business wastes money in one way or another. Perhaps you’re spreading your marketing budget across too many initiatives, or you have annual expenses that no one has questioned in a long time. Carry out an audit of expenses, including sales & marketing and flag waste. Get laser focussed on fewer priorities, and cut out low performing marketing expenses. If you find waste in another department, craft a compelling case, and gain the support of executive sponsorship in lobbying for the funds needed to grow the business faster.
Like taking on the challenge of losing weight, cutting some fat out of your expenses will be difficult at first. Digital marketing delivers a better ROI than many forms of traditional marketing as we explain in this article. The sooner you correct the deficit, the faster you’ll see greater traction and success.
Making online gains when you are at a budget disadvantage takes persistent discipline and creativity. Both of these are essential survival traits in today’s competitive online world. The upside makes the challenge more than worthwhile!
Now that you understand how you should develop your marketing budget, the next step is to understand our fees.
