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Do I need a marketing budget?

October 9th, 2007 · 69 Comments · Agency Life, Marketing, Strategy

Bowling "How much should we be spending on marketing?"  This is probably one of the most common questions we get asked. Or, on the flip side of that, we hear, "oh, we don’t have a budget.  We’re just a small business.  We just go with our gut."

No, no, no, no, no. 

Let’s get to the most important message first.  Every company, even a one person consultancy, should have a defined marketing budget.  You absolutely, positively will mis-spend, over spend and wrongly spend if you do not have a budget.  I promise you that.

Think of a budget as those bumpers you can use in a bowling alley. (even if you don’t have kids!)  They keep you from getting too deep in the gutter.  You can still get a little off center, but you can’t completely skip the lane.  With the bumpers in place, you’re bound to hit at least a few pins.

You need a written marketing budget that is tied to your sales goals.  Now that we know you need one, in the next post we’ll talk about how to create one.

For those of you who have ventured into the waters without a budget, any war stories we can learn from?

69 Comments so far ↓

  • Brad Shorr

    For several years my former company operated without a marketing budget. We experienced a never ending struggle to acquire resources, difficulty sustaining programs, and difficulty obtaining buy-in from our internal customers. Since our marketing efforts had no defined purpose, management had no easy way of figuring out what we were trying to accomplish. Unless results were dramatic and immediate (something you can’t always count on), interest would wane, programs would fall by the wayside.

  • Lewis Green

    Drew,

    Excellent post and a message most businesses need to hear, especially small ones. I think the biggest mistake made by those without marketing budgets is spending money wrongley, particularly in buying advertising when another solution would work better.

  • John Jackson

    I fully agree it is essential for every business to set a marketing budget, but personally I have always found it challenging and rewarding to work to find ways not to spend the marketing budget and yet still reach marketing objectives.
    Now this doesn’t mean I don’t spend on marketing, quite the opposite, but taking this view helps ensure that you explore all the marketing avenues and opportunities that are available to you.
    For small businesses this is important as they need make their marketing budget work hard for them and have very little scope for wasting any money.
    So yes set a budget, but don’t forget to explore all the different ways you can market your buisness without needing to get the cheque book out!

  • Debra Murphy

    Drew,

    Thanks for the reminder to all who are beginning their 2008 plans now. Plans provide direction. A budget helps you make decisions on what to spend and where to spend it. It also can give you the flexibility to act upon an opportunity by shifting money around within the budget. Without a budget (and of course the plan that lead up to the budget), you have disjointed marketing efforts that do not deliver results. And then people wonder why marketing is considered an expense, not an investment!

  • Drew McLellan

    Brad,

    The lack of a marketing budget speaks loud and clear about the organization’s true opinion about marketing’s importance.

    When you don’t operate from a marketing plan/budget combination — you are destined to slip and slide all over the place.

    Which is ineffective and inefficient. Which of course, proves to the organization that their opinion was correct. It’s a self-fulfilling prophecy.

    Drew

  • Drew McLellan

    Lewis,

    I think many companies buy advertising because they don’t know what else to do. It doesn’t occur to them that their are other, more effective places to spend their money.

    Drew

  • Drew McLellan

    John,

    There’s no end to all the places one could spend marketing dollars. I think the key is, to your point, be smart about where you spend.

    All too often, business decision makers spend marketing dollars on the mediums that appeal to them as a consumer. But they don’t fit the profile of their business’ consumer. So that should be a non-factor.

    There are plenty of ways to build buzz, like having a blog, that don’t cost a lot of money. But…every resource is valuable. When creating a marketing budget, I think a company should consider all costs — dollars, time, energy, etc.

    In the end, nothing is truly free. Some things are just much more cost effective than others.

    Drew

  • Drew McLellan

    Debra,

    You’re exactly right. Companies that view marketing as an expense have probably never taken the time to step back and look at their business from afar. They’d see that just like training their employees and having properly working tools — marketing is a long-term investment that pays dividends over and over.

    Drew

  • Chuck McKay

    Another key point: when the economy gets tight don’t cut your marketing. When you really need more customers is not the time to stop inviting them to do business with you.

    Besides, when the economy gets better, think of how much farther ahead of the competitors you’ll be when they cut back and you didn’t.

  • Drew McLellan

    Chuck,

    That is a very important message — thanks for the reminder. When everyone else is cutting back because times are tough, you have the stage to yourself.

    It is not the time to step off the stage.

    You can gain valuable marketshare that your competitors will not be able to regain.

    Great point — thank you!

    Drew

  • atul chatterjee

    A marketing budget is vital. I worked in a company in which the CEO was a marketer and had allocated a budget. He also put us on to incentives.
    We were selling speakers to OEMs. One salesperson discovered that speakers could be sold to the retail trade of car accessories. They only had to be packaged beautifully as they sold on that basis rather than performance.
    So in your marketing budget create incentives.

  • Drew McLellan

    Atul,

    Bottom line…everyone wants to know what’s in it for them. It’s smart psychology to build in some sort of reward or incentive to encourage sales.

    Drew

  • Daniel Faintuch

    Every time that I have worked with a company that had no set marketing budget, the company ended up accomplishing much less in terms of revenue growth.
    Had they agreed on a certain amount, we could have planned better, work more efficiently and catalyze our resources better.
    Unfortunately, the fear of commitment to a set budget results in worse results for the clients.

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  • Lisa Randolph

    Great conversation in the comments of this post. I agree that you shouldn’t “step off stage” just because money is tight. Establishing a good, concise marketing budget is extremely important, and if done right, it can prevent your company from falling out of the loop throughout the year. Good post. Thanks for sharing! :)

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    I think the budget depends on how much you think you can earn from the business.

  • SEO Tips

    Hey there is a bug or something in your comments section.My comments are being showed under other people comments section.Whats wrong?

    Iposted ‘I think the budget depends on how much you think you can earn from the business.’

  • DIY

    I don’t have a budget, well I do actually, it is zero. I do however plan to have a budget eventually.

    It would be good if you could have an article on where to spend budget. Maybe readers could write in with what has worked best for them.

    I used Google ads, but It did not really work for me. I had the visits, but as soon as I stopped, the visits stopped and went back to the previous amount. There was no natural increase from word of mouth after finding us from Google ads.

  • Marketing campaigns

    Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic. If possible, as you gain expertise, would you mind updating your blog with more information? It is extremely helpful and beneficial to your readers

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    With online advertising like http://www.adwido.com, you really don’t need a huge marketing budget. All you really need is a little time to create great video and article content.

  • Annette

    Hi,

    I totally agree with you in this article

    Thanks.

    Annette.

  • Make Money Online

    Keep it up, your writing is always a joy to read that I even told my friends. Simply loving this!

  • Digitalwebtalk

    A budget is definitely required no matter how big or small the business is. And when the business is small, having a budget enables you in controlling your finances better so that the path in which the funds roll is taken care of well, and hence it’ll easily produce better results.

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    HI,
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  • Jeff Walden

    I couldn’t agree more! Time and time again I speak with small businesses who are afraid to define a marketing budget.

  • Drew McLellan

    Jeff,

    Where do you think the fear comes from?

    Drew

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    Determining your marketing plan is critical if you are in any kind of business, but particularly an online business. Online marketing has become a must-have pillar in any marketing strategy, especially with big networks/search engines like Google and Yahoo. You have to be where your searchers are.

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    Thank you for this post, Drew. I always marvel at how people assume that marketing will take care of itself, and it is a free and easy world. I think there are some cheaper ways to get the word out, than others, but your most made it clear that sometimes we need to put our money where our mouth is. Thanks for the words

  • Drew McLellan

    Without a doubt…there’s a wide range of “spend” on marketing tactics. The trick is knowing your budget and what you can sustain for the long haul.

    It makes no sense to start something, just to have to stop again because of the budget.

    Drew

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    clearly written plan?? and here i thought the budget plan only includes the money spent on advertising..

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    ofcourse i was only talking about online businesses.. if one has an actual business then starting without a budget plan is a one way ticket to failure..

    online businesses dont require that much money.. just a lot of hard work :)

    -Andy

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    Any business expecting to achieve any good outcomes will require a dedicated marketing strategy and a budget to match the desired approach. Without a marketing strategy, the business will not have a clear market direction, sales will not be focused and service will be adhoc.

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