Tactical Thursday: Creating Your 2015 Marketing Budget

Video Transcription

Tiffany Sauder

Hello, everyone. I’m Tiffany Sauder, the president of Element Three, and today I want to talk about probably the number one question that we get asked when it comes to marketing plans, and that is: how much money should I spend?

So I wish I could hold up a card that would say some magic number as a percentage of revenue and if you did that you would find success every single time. But as you might guess, it’s a lot more complicated than that. So let’s look at a couple of drivers.

The first and foremost is to look at what can your business afford. That’s a really important paradigm to look at this investment through because you don’t want to put undue stress on the business to help it grow through marketing.

The second important framework to think through is: are you in maintaining mode as a business, or are you in a high-growth mode? If you’re in high-growth, chances are you’re going to be spending perhaps even multiples what someone who’s in more of a maintenance mode as a brand or as a company could be investing in marketing.

For us, we’re in a high-growth situation and we’ve spent upwards of about 10 percent of our overall revenue in marketing, and we’ve done that consistently over the last three to four years. That’s a really good number for our business. We know we can sustain that from a financial perspective and we see an appropriate return at that level.

So that’s another important thing: what’s the momentum and what’s the goal for the business?

The other important factor to think about when it comes to overall budgeting is: how much time do you spend on executing tactics and how much time do you spend on planning?

The rule of thumb that we use is about 10 to 15 percent of your overall budget should be spent on planning. So if your budget is $100,000 overall, take $10,000-$15,000 of that and invest that either with an agency like ours or in overall time for your own internal team to really plan the work.

We have found if you take the time to plan and then execute, you’re going to get far more return than if you try to just use up all of your budget doing stuff. There’s not a lot of confidence that you’re necessarily working on the right things.

So good luck in 2015. If you have any questions about marketing plans, certainly don’t hesitate to submit them and we’ll do our best to answer them. Thanks. Bye.