Guidance, Help & Advice, Identity, Marketing, Strategy

How Much Should I Spend on Digital Marketing?

The short answer is, of course, the same amount as the length of a piece of string – because it depends on so many factors: what industry you’re in, the aim of your marketing activity (it costs much more to grow market share than it does simply to maintain it), where you are in your business’s life cycle and, of course, how much you actually have available to spend on marketing.

That said, most people agree that somewhere between 2 and 5% of your total sales revenue is about right. But even that rule of thumb’s pretty vague – and bear in mind that this applies to regular, ongoing marketing activity designed to maintain your position. It’s a whole different and a much bigger kettle of fish for start-ups and businesses in their infant years because you need to factor in the cost of developing and establishing your brand, designing and building your website, and any associated printed materials: it wouldn’t be unusual to spend some 20% of sales revenue here.

You need to factor in the cost of developing and establishing your brand, designing and building your website.

Obviously, it’s important to think hard about where you target your spending – not just the overall proportion. If you’re planning to break into a new market or launch a new product or service, for example,  you could be looking at anything up to 50% of sales revenue – whereas well-established products and services may well look after themselves and call for a spend of as little as 1%! And of course, if your business sells a wide range of products and services, some of which are relatively novel while others are familiar to their markets, you need to tailor your budget for each of them according to their status. By using our digital marketing services, we can use fluid campaigns for optimal performance. Using this reactive approach, allows us to maximise your budget, and generate high-quality leads and fantastic ROI.

We’re well aware you could drive a bus through parameters that wide – so how can we narrow things down? Well, it’s not a bad idea to be guided by practice in your industry because marketing investment varies hugely – from as little as 4% for energy businesses and 8% for banking/finance and insurance to a whopping 24% for packaged consumer goods (Note: here we’re referring to the percentage of overall spending rather than of sales revenue!).

This is all very well, we hear you saying, but what if my overheads and other fast-growing expenses leave less than the appropriate percentage to spend on marketing? Well, you can’t spend what you don’t have – but you can make sure your marketing spend achieves maximum ‘bang for your buck’ by monitoring your customer analytics constantly to identify your most profitable channels so you can concentrate available funds on them – or indeed on any areas that you perceive as under-performing. If the latter is a priority and funds are limited, you might want to scale down your day-to-day marketing activities in order to target that area temporarily and get it ‘up to speed’.

There’s nowhere near enough space here to go into the infinite number of scenarios that might apply but we hope this provides a helpful starting point – and no matter where you set your budget, there’s no substitute for relentless monitoring of the results and constant fine-tuning of your spending to optimise marketing effectiveness. This is a great example of how we use our digital marketing service mix (which we call Augment) to deliver incredible results for our Hertfordshire clients.


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