As a rule of thumb, your marketing budget should represent 6-8% of your revenue. The advertising budget should account for 40-60% of that overall marketing budget. For example, if your company makes $1 million in revenue, the marketing budget should be $60,000-80,000 and the advertising budget should be $30,000-40,000.
If your company is established and your marketing goal is to just maintain your current volume of business, you would work with the lower budget. If your goal is growth then you would budget on the higher end of the scale. A brand new company or new brand should invest even more than 17% of projected revenue for the launch, in order to quickly build awareness.
Leaders Spend Money
The budget should be allocated between various divisions of your company, since each department or division may have different goals and will have different strategies to achieve those objectives.
Following is a template that you can use for creating your budget.
Marketing Budget (6-8% of Revenue): $_____________
Salaries for Marketing & Sales Staff: $_____________
Trade Publications $__________
Unaddressed admail $__________
Addressed admail $__________
Broadcast email $__________
Total Advertising $__________
Sales Promotions $__________
Public Relations $__________
Design & Production $__________
Contingency fund (5%) $__________
Stretch your Budget with Co-op Funds
I’m surprised how many companies don’t approach their suppliers to ask if they have co-operative funds available. You could easily double the size of your budget if your supplier will pay for 50% of your marketing. If you represent a manufacturer, be sure to ask if they will match your funds when you’re advertising their products. Remember, they also benefit from the additional sales your marketing will generate. Start your negotiations in the fall when your suppliers are planning their budgets, so they can include that extra expenditure.