What is marketing spend? It’s all of the money your company pays for marketing, including budgets spent on advertising, promotions, content marketing, social media, and any other marketing activities.
Have you ever heard the saying, “It takes money to make money”? That phrase is definitely true in the marketing world. If you want to meet your marketing goals, there will be some costs involved. Those expenses make up your marketing spend.
Research and analyze before setting your marketing spend
When you’re working on the company budget, don’t randomly pick a number for your marketing spend. Instead, take time to research and analyze. Look at where you’ve spent money so far and determine if each activity resulted in a profit or a loss.
You’ll want to check out your conversion rate, return on investment, and traffic growth from each form of marketing. You can also compare your social media reach from before and after implementing your marketing strategy. These numbers can help you determine if what you’re doing is working or if it’s time to change things up.
Common categories included in your marketing spend
Marketing spend isn’t a single line item. Rather, it comprises several different types of spending. It’s essential to think through your marketing strategy and plan which activities you’re going to use to promote your business. This planning phase allows you to make an accurate budget so that you have the money to spend on marketing when you need it.
While types of marketing expenses vary from company to company, here are a few common areas that this part of your budget might include:
- Content marketing
- Paid advertisement (Amazon ads, Facebook ads, Pinterest promoted pins, Google ads, etc.)
- SEO tools
- Social media scheduling tools (Buffer, Tailwind, SmarterQueue, Loomly, etc.)
- Video marketing
- Sponsorship opportunities
- Promotional products and giveaways
How much should a marketing spend be?
As a general guideline, the U.S. Small Business Administration recommends setting aside between seven to eight percent of your revenue for marketing purposes. If you’re just getting started, this can be a good number to aim toward.
But marketing spend varies greatly among different industries and company goals. When deciding how much to spend on marketing, each company needs to evaluate its goals and revenue. Then, you can decide on figures that make sense to spend on marketing.
How to measure ROI on your marketing spend
Once you get started with marketing, you need to analyze your results to see which marketing efforts are worth the cost. By creating key performance indicators (KPIs) for your marketing plan, you can tell which ones are and aren’t working. This allows you to adjust your marketing spend as needed and double down on winning marketing strategies that are making a good return on investment (ROI) for your company.
You can gather your marketing KPIs and metrics onto a single marketing dashboard, making it easy to see where your marketing spend is working for you.
Common mistakes with marketing spend
The goal of your marketing budget is to bring money back into the company. If your marketing efforts are losing you money, it’s a sign that something isn’t working.
Below are three common mistakes companies make in this area. Taking time to correct them should help you see better results.
- Buying too many tools. Do you know how to use each tool that you’re paying for? Are they working for you? Many companies pay for tools they no longer need or don’t utilize.
- Not understanding your target audience. If you’re shelling out money for advertising where your ideal clients aren’t hanging out, you’re getting your message out to the wrong people. Take time to research where your target audience is before spending.
- Spreading the money around too thin. If you’re dropping money on every single network, you probably aren’t seeing great results on any of them. Instead, focus on the channels bringing in the most significant results and increase that budget.