How Much Marketing Is Enough?
By Elena Davidson, Client Services Director, Mi Liberty
As many government departments and related organizations start to feel the effects of this year’s budget, your CFO may be wandering around thoughtfully polishing their scalpel and thinking about where they can trim some budget fat. All too often, marketing or PR is the first area catch their eye; the old adage about spending money to make money is very easily forgotten when times are tough.
But contrary to what your CFO might think, marketing departments are more than just a cost centre. Just as in any business sales drive revenues, so marketing drives sales....
...Only a short-sighted company will throw away their lifeline to new business. Smart businesses will instead be asking themselves just how much marketing they need to do?
I’m afraid that there is no magic formula for how much – in monetary terms – marketing and PR is enough to get the job done. The cost of marketing to a business varies depending on its size and the industry it’s in; on top of that, a business that’s launching for the first time or announcing a new product may well look to spend more than one that’s already well established. The important thing is that as a marketer you map out a clear set of objectives and create a budget that’s going to get you there. This is probably one of the most important decisions a small to medium-sized business will make, and something which is much easier said than done.
There are a few rules of thumb that can get you started. An old and established one is that a business’ annual marketing budget should be 1% of the value of the business or 10% of its revenues, whichever is lower (or higher, depending on whether you are the... continued on page two >