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We get asked this question VERY OFTEN. And it's reasonable to want to know! You need to know the finances so you can make the right decisions for your business.
But think about it: the answer is important, but the question asked is wrong.
We are used to the concept of /“transactional/” selling.
That means I give you $X for a widget and I get that widget back from you. We see this in almost every distribution channel – spend $1 on an app and get a certain amount of functionality back. Buy $1,000 worth of TV advertising and get a predefined number of TV ads.
Digital marketing is different.
It's easy to fall into the trap of thinking that marketing is a transaction. I'll give you $X, and you'll give me Y leads. Or $X for Y impressions. That's a risky way to do business. When you buy leads, it's a race to the bottom. When you pay for impressions, you're paying for your ad to be seen, not for actions.
Marketing costs are variable and based on literally millions of data points.
Your industry, your location, your target market, your demographics, your marketing history, your competition, the channels you use, search volume, what you sell and even your goals all factor into your actual marketing investment.
Let’s be honest with ourselves
– A real estate agent or roofer with 40 employees in San Diego will have very different needs than a team of 10 in Tyler, Texas. An e-commerce company that sells $1,000 brewing kits is very different than someone selling survival supplies.
So how do you create a budget if you only know the costs at the beginning?
While there are some tools you can use (like Google's Keyword Planner), such features are not available for channels like Facebook, Twitter, LinkedIn, etc.
Marketing is a mixture of science and alchemy – and this is where alchemy comes into play.
Just. Get. Going.
– Seriously. You don't have the information because you don't have the information. You need data! So start a marketing campaign. Even if you have a small budget, you can get data.
How many clicks did I get? Did people comment on my ad? What questions did they ask me? Who liked my ad the most? Did I get conversions? What did I cost?
At this point, it's not the results that matter, it's the data. With these data points, you can really start making decisions about your marketing investments.
An advice:
Give it time
The most powerful element in digital marketing is time. It takes a long time to walk from New York to California (small budget). If you want to get there faster, drive (medium budget). Want to get there fast? Then fly! (big budget). You travel the same distance – but the budget dictates how quickly you get there.
Worst-case scenario
– How long can you go without something? Maybe you don't really know your best target market, so we'll have to tinker around a bit. Maybe there's a problem getting the word out to the public about 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 have to keep going! So how long can you go? Planning for the worst case scenario makes sure you don't give up halfway through.
keep doing
Have you ever seen a dog swimming in a pool that can't decide which side to get out of? It just goes in circles! The same goes for constantly changing marketing strategies and budgets. You do a lot of work and yet you never get any closer to the wall.
When you begin, always think of the end
How much do you need to sell or earn to break even? Not making money. That comes later. What is your break-even point? If you need to earn $5,000 a month to cover your expenses and you have a 50% margin, then you need to sell $10,000 worth of widgets a month. Now start crunching the numbers – what is your average revenue and can it be increased? Can you increase your margin to 55% or reduce your costs?
Thank you for watching!
#Marketing #MarketingBudget #How much does marketing cost
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