How much should your business spend on marketing? It's a question that many business owners ask themselves on a regular basis... especially when they are bombarded with offers that promise the earth for very little outlay.
The first thing you need to remember is that marketing and advertising are not the same!
Marketing or Advertising? What's the score?
Marketing is the process of bringing buyers and sellers together and educating the buyers about why they should choose the seller's product or service rather than their competitor's.
It's a whole process that encompasses every interaction that your target buyer may have with your brand.
From what they see and hear while researching your product to the customer care and after sales service that persuades them to recommend your product to a friend.
There are lots of ways of marketing your business, and advertising is just one tactic in that process.
It's the promotion of a carefully crafted message about your brand, using television, radio, newspapers or online via Google's paid ads. It's often the most expensive marketing method and not always the most effective - despite what the PPC reps may tell you.
So how much should your business spend on Marketing?
With 40% of all UK GDP generated by small to medium-sized businesses, it is worrying that only 18% of the UK Marketing spend comes from this sector. On average, SMEs spend around £24k per annum on marketing according to the Centre for Economics and Business Research,
However, marketing gurus recommend that if you want:
- to maintain your current levels of awareness and visibility you should spend 5% of your total turnover
- to grow and gain market share, the figure rises to 10% of your total revenue.
While not an exact science, it's good to have a guideline.
Sanjay Aggarwal of DentRecruit wrote on Marketing Week back in April that:
SMEs are frightened of Marketing
With a restricted budget, many SMEs rely on DIY because they view marketing as
- time consuming;
- slow to bring value.
At the end of the day what they are after is enquiries or leads.
So, to save money, some will take what they see as an easy option and create and run their own Pay Per Click advertising campaigns.
Sadly, the sales teams at most SMEs are novice advertisers and they need to beware of the stupidity tax. Google Adwords or Facebook Ads campaigns seem so very simple but, without proper guidance, it's very easy to waste a lot of money.
As a result of this fear of an expensive mistake, the C-Level executives at many SMEs will turn to advertising agencies for advice. Some can have a bad experience with unqualified 'Google Partners' who charge £200-£2000 per month just for managing advertising campaigns - but where very limited managing actually gets done. It's a dangerous world out there for the unsuspecting and uneducated sales executive.
And yet it could be so much more simpler if you trust to your own knowledge of your ideal customers and what makes them buy. Create content on your own website that is specifically aimed at telling the story of how your product can resolve the problems or your target market.
Why Content Marketing is nothing to be scared of
What? You mean write my own stuff? How's that going to work?
Well it's going to be alot more cost effective for starters.
It's like the rent vs. buy scenario for homeowners.
With Pay Per Click advertising, you are only renting space - if you stop paying, your ads and your audience disappear.
But, once you have written your blog posts, you own them forever!
And critically, the more content you publish, the more your cost per lead decreases because the existing content continues to work for you by bringing in website visitors.
Content marketing generates 3 times as many leads as traditional outbound marketing, but costs 62% less. (Demand Metric)
By using great content to attract people who are genuinely interested in your product, your readers will keep recommending that friends with similar problems come to view your articles too.
Inbound Marketing is the Future For Sales
The creme de la creme of content marketing is Inbound. It follows a precise methodology that uses your knowledge and experience of both your customers and your products to attract the right people to your website.
These new visitors are encouraged to exchange their email address for some more detailed information on their problem. Ongoing emails educate and build trust in your brand pushing them further into your sales funnel until the lead is ready to buy. At which point, they either make contact with you or you can get in touch with them... it's a warm lead, not a cold call.
Inbound is an investment that keeps on giving - every blog post is another way that a potential customer can find you. It turns your website into an ever-expanding marketing machine that works 24/7 and 365 days a year.
Are you ready to build a cost-effective strategy that really does make people who have never heard of you become customers? Click the link below to find out more.