Setting the right marketing budget for the right results

By Tony Fannin, president, BE Branded

The big question in every marketer’s mind, how much should I spend on marketing? Then, other questions follow; What do I spend on? How much do I spend for each? How do I know what is working? Whether you are a large corporation or a small business, these questions must and need to be asked. But how do you come up with a valid number? You can depend on past spending habits, such as some large corporations do. You can set a number you can afford as is common with small businesses. Another way to set your marketing budget is found in two questions:

How fast do I want to get there?
First, instead of just picking a number you can afford or depending on what you spent last year, your marketing budget should be dictated by your end-of-year goals. There is no text book formula that will work because each business is different. Each industry category is different. And each individual business or corporation’s goals are different. Your market category could be very competitive with many players in your sector or you could be facing only a few “goliaths.” Your budget size should be in balance with how much you want to achieve over the next year and in the long-term, each year’s budget should be in balance to what you want to achieve in the next 3 – 5 years. An aggressive business plan that requires you to meet a high financial goal or an awareness goal can only be accomplished with an equally aggressive marketing plan. Any cut backs in marketing spending, over time, you will see less ROI in your bottom line. For example, GEICO increased their spending by 75% over 4-years. This was twice as much as their competitors. By 2006, GEICO saw the returns they were planning on. According to J.D. Powers & Associates, GEICO stood far above the rest in new-customer acquisition. Even though they are the No. 4 player in the market, they ranked No. 1 in new-customer acquisition. They also topped the brand awareness ladder over their larger competitors.

Some depend heavily on word-of-mouth. This is a tactic that works and should be considered as a part of your overall plan. Two things to keep in mind; first, someone else is in control of your message and brand, not you, and second, for the most part, it takes time. You have to have the luxury to wait it out until it builds and catches on. Some depend on new media, such as blogs and social media, to drive their message and brand. These tactics are a great supplement in your strategy, but not the silver bullet as some will want you to think. (see

It’s all or nothing
The second part is an “all or nothing” approach. Don’t look at the concept of budget as how much to spend on each tactic, but to see it as what tactics should be FULLY funded and what tactics you should not spend a dime. Like a lot of things in life, if you do it half-way, expect to fail. If you are going to commit your limited resources, then you need to commit to it completely. This brings up a question, “How do I know what to commit to?” This should be answered by taking a hard look at what your core brand stands for. All you do and say as a company should be in alignment with what you really stand for, your true brand position. If your true brand position as a photographer is to “capture romance” then, every marketing tactic that should be FULLY funded needs to be in alignment with romance. If your brand is “self expression” as a national hair care company, the specific tactics you invest in needs to support this concept. I’m not saying to only invest in one or two tactics. You need to still develop a comprehensive marketing plan, but the specifics that go into your plan needs to be only those things that are in harmony with your brand position. And these are the tactics that need your full commitment to realize your end-of-year goals and achieve the ROI you need.

By looking at marketing spending and budget setting differently, you can realistically align expectations and investment amount with your core brand. This will help prevent wasting money with a “shot gun” approach and will further a deeper understanding with your true audience and ultimately gain their loyalty.


About Be Branded

Tony Fannin is of President of BE Branded, an integrated marketing firm who helps clients BE Somebody to their customers. If you aren't somebody, then you are commodity.

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