We get this question A LOT. And it’s reasonable to want to know! You’ve gotta know the financials so you can make decisions that are right for your business.
Think about this though – the answer is important, but the question being asked is wrong.
We’re used to this idea of “transactional” sales.
Meaning I give you X$ for a widget and receive that widget from you. We see this across nearly every sales channel – Spend $1 on an app and get a certain amount of functionality back. Buy $1,000 worth of TV commercials, get a pre-defined amount of TV commercials.
Digital marketing is different.
It’s easy to get trapped in the thinking that marketing is transactional. I give you X$ you give me Y leads. Or X$ for Y impressions. That’s a risky way to do business. When you’re buying leads its a race to the bottom. When you’re paying for impressions you’re paying for eyes on your ad, not action.
Marketing costs are variable based on literally millions of data points.
Your industry, location, target market, demographics, previous marketing history, competition, channels used, search volume, what you’re selling, and even your goals go in to making up your actually marketing investment.
Let’s be honest with ourselves
– a real estate agent, or a roofer with 40 employees in San Diego is going to have very different needs than a 10 man team in Tyler, TX. An e-commerce business selling $1,000 brew kits will be very different than someone selling survivalist supplies.
So how do you come up with a budget if you don’t know the costs until you start?
While there are some tools you can use (like Google’s Keyword Planner) features like that don’t exist for channels like Facebook, Twitter, LinkedIn, etc.
Marketing is a mix of science and alchemy – here’s where the alchemy comes in.
Just. Get. Started.
– Seriously. You don’t have the information because you don’t have the information. You need data! So start a marketing campaign. Even if it’s just a small budget you can get some data.
How many clicks did I get? Did people comment on my ad? What questions was I asked? Who was my ad most popular with? Did I get conversions? What were my costs?
At this point it’s not the results that matter – its the data. With those data points, you can truly start making decisions about your marketing investment
Word of advice:
Give it time
The most powerful element is digital marketing is the element of time. It takes a long time to walk from New York to California (tiny budget). If you want to get their faster you drive (medium budget). Want to get there quickly? You fly! (large budget). You’re covering the same amount of ground – but budget defines how quickly you arrive
Worst case scenario
– How long can you go with nothing? Maybe you don’t really understand your best target market so we have to do some tinkering. Maybe there’s an issue of educating the public on your product or service (first to market, new, etc). Maybe you’re out of season – since marketing takes time you can’t just stop the process. You gotta keep going! So how long can you go? Planning for the worst case scenario ensures that you don’t bail halfway through.
Stick with it
Ever seen a dog swimming in the pool and it can’t decide which side it wants to get out on? They just spin! Constantly changing marketing strategies and budgets is exactly the same. You’re doing a lot of work and you don’t ever end up any closer to the wall.
Start with the end in mind
How much do you have to sell or make to break even? Not make money. That will come later. What is your break even point? If you need to make $5,000 a month to cover expenses and you have a 50% margin then you need to sell $10,000 worth of widgets a month. Now start tinkering with the numbers – what’s your average sale and can it be increased? Can you increase your margin to 55% or reduce your costs?
Thanks for watching!
#Marketing #MarketingBudget #HowMuchDoesMarketingCost
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