Heaviside Digital

Setting a Successful Marketing Budget

We are often asked this question: “How much should we spend on our marketing budget?”

Determining the right budget can be challenging in the dynamic digital marketing landscape. The Small Business Administration recommends spending 2-3% of your revenue on marketing. Are they right or wrong?

In this blog post (and the accompanying video below), we’ll show you exactly how much you should spend for a successful marketing budget and why it is worth every penny.

Learn more about digital marketing on our YouTube Channel. 

The Traditional Recommendation

How much should businesses spend on marketing? The traditional advice, particularly that of the Small Business Administration, suggests allocating 2 to 3% of revenue to marketing. Unfortunately, this percentage is insufficient, especially for small businesses. So, what’s a reasonable percentage a business can expect to spend?

The 5-10% Recommendation

The bare minimum you should allocate for marketing is 5% of your gross annual revenue. This investment is important, especially in our digital era, where online presence plays a pivotal role in attracting and retaining customers. Relying solely on referrals and repeat business is insufficient in today’s competitive market, necessitating a proactive marketing strategy that costs at least 5%.

For businesses aiming for substantial growth, you should allocate 10% of gross annual revenue to marketing. This higher percentage reflects the need for more aggressive marketing efforts to capture new markets, outpace competitors, and navigate economic challenges.

Applying the 5-10% Rule

Here’s how this would look at various levels of annual revenue. First, imagine that your business generates $250,000 in annual revenue. That means you should allocate a minimum of $12,500 to sustain and up to $25,000 if you’re pursuing growth. That’s around $1000 – $2000 per month.

Now imagine that your business is generating $500,000 annual revenue business. The budget would range from $25,000 to $50,000 annually (around $2000 – $4000 a month). For a million-dollar business, it would be $50,000 to $100,000 annually (around $4000 – $8000 a month).  This scaling approach ensures marketing efforts align with the company’s size and growth ambitions.

A table showing examples of a successful marketing budget

Where Should You Spend Your Marketing Budget?

Marketing budgets, like most investments, need to be diversified. Your marketing budget should encompass various marketing channels, including print advertising, digital marketing, social media, SEO tools, and other promotions. The more ways you can connect with your customers, the better returns you will find. Then, as you spend, you can evaluate which channels are most effective and reallocate your budget to ensure a positive return on investment. This comprehensive approach ensures businesses invest wisely in strategies that yield tangible results.

A Personal Example

We don’t just talk the talk; we walk the walk and have deployed this strategy in our own company. When spending the recommended 2-3%, we didn’t experience much growth. Once we changed strategies and started to spend more aggressively, in the 10% range, we started to see business growth. We also began to leverage more diverse marketing channels like videos, emails, ads, calls, and blog posting. This multi-faceted approach has proven the importance of an aggressive and diversified marketing strategy.

Set Your Own Successful Marketing Budget

Is it time for you to think beyond the 2 to 3% recommendation, too? If you’re looking for substantial growth, you need to make a substantial investment. That means investing between 5 to 10% of gross annual revenue to compete in today’s market effectively.

Crafting an effective marketing budget is critical to your business strategy. We hope these pragmatic and actionable recommendations will help you set the right budget based on your business’s unique circumstances and growth ambitions. By understanding the significance of a well-thought-out marketing budget, you can position yourself for success in our competitive landscape.

Want to learn more about marketing budgets? Check out this recent blog post: How Much Should Digital Marketing Cost?

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38 CONVERSIONS AT $2.55 EACH WITH GOOGLE ADS FOR A BIKE SHOP.

Our marketing funnel starts with a bike inspection. We want to attract “bike people” within 6 miles of our coconut grove shop.

HOW WE DID IT

  • We set the proper geo-targeting and picked hyper-specific keywords

RESULTS

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Campaign provided a whopping 38 conversions in the first week at $2.55 per downloaded coupon.

ATTORNEY-NICHE LEADS AT $4.22 EACH WITH GOOGLE ADS.

McLaughlin Sanchez is a real estate law firm that specializes on eviction, tenant buyouts, HOA disputes, and real estate dispute.

HOW WE DID IT

  • Developed targeted, niche keywords that would only generate highly relevant, high-value clicks.

RESULTS

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Achieved an extremely low $4.22 CPC, which is difficult to do in the competitive attorney PPC landscape

PET NANNY COACH GENERATED 3,328 SIGN-UPS IN A SINGLE CAMPAIGN AT THE RATE OF $1.41.

Pet Nanny Coach was established to assist the pet sitting businesses become successful. They provide webinars to coach the pet owners.

HOW WE DID IT

  • 64 ads
  • split testing of eight audiences

RESULTS

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The strategy generated 3,328 sign-ups in a single campaign at the rate of $1.41.

GOOGLE ADS - INCREASED CONVERSIONS 13X WHILE REDUCING COSTS BY 5X

Radyne is the world leading manufacturer and pioneer in the development of advanced induction and controlled atmosphere heating equipment. From induction power supplies to full-turnkey induction heating machines and processing lines for almost every industry sector, we provide our customers with industry expertise, process engineering, inductor design and development, power supply and machine design, manufacturing, testing, and 24/7 service and support- under one roof from our Milwaukee Headquarters and throughout our participating Inductotherm Group Companies worldwide.

 

HOW WE DID IT

  • Removed the underperforming keywords
  • Adjusted the bid strategy
  • Monitored the search terms

RESULTS

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Monthly average of 14 conversions at $152/conversion to 192 conversions at $32/conversion.

BONNYPACK GENERATED 1,531 SIGN-UPS AT JUST £0.23 EACH.

Bonnypack is a cash and carry wholesale company that helps people find the perfect product at the right price. They offer a wide selection of home decor, furniture, appliances, electronics, and much more.

HOW WE DID IT

  • HVG ran split testing of multiple audiences

RESULTS

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The campaign spent a total of £351.76 and generated 1,531 sign-ups at just £0.23 each.​

F45 RECORDED 257 IN 4 MONTHS WITH AN AVERAGE COST OF €4.99.

F45 Training is a global fitness community specializing in innovative, high intensity group workouts that are fast, fun and proven to get rapid results for members. It offers different classes that can cater the needs of the their clients.

HOW WE DID IT

  • Street Gym offered a 2-week free trial.
  • HVG Team split tested 8 audiences along with a number of ad combinations

RESULTS

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Based on the result of the test, the sign-ups increased to 257 in 4 months with an average cost of €4.99.

VENN SOCIAL RECORDED162 APP INSTALLATIONS AT THE RATE OF $1.27 IN JUST 9 DAYS.

Venn is a downloadable mobile application that is designed to connect the users to their niche, whether to meet Friends, Dating, or Business. This platform is a virtual avenue to discover and meet people nearby who has a common interest

HOW WE DID IT

  • Dynamic ads
  • Split testing of four audiences
  • Optimize for App Installs

“The service was excellent. The project was completed quickly and with precise. Thanks”

RESULTS

0 APP
installations at $1.27 per install in just 9 days.

RAPID ALARMS INCREASES LEADS 148% THROUGH ON-PAGE AND MAPS SEO OPTIMIZATION

Rapid Alarms is the leader in alarms and CCTV services in Perth. They sought Heaviside Group’s help in improving organic search and map pack rankings and lead generation.

After three months of working together, their organic traffic increased 42% while the number of inbound lead inquiries increased 148%. Through continued focus on expanding maps reach, we expect to see these numbers grow.

HOW WE DID IT

  • Geo-localized keyword research
  • On-page SEO optimization
  • Citations and guest post link building
  • Technical audit and improvements

“Excellent results! Very happy with the service and looking forward to continuing to see improvement.”
James, Owner

RESULTS

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increase in organic traffic
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increase in ecommerce transactions​
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increase in lead form completions

RETAILBOUND INCREASES ORGANIC TRAFFIC 57% THROUGH SEO OPTIMIZATION

Retailbound helps make marketing to retail easier. They sought Heaviside Group’s help in improving organic search and lead generation.

After eight months of working together in a very niche area, their organic traffic increased 57% while the total lead flow increased significantly. Through continued focus on expanding organic reach, we expect to see these numbers grow.

HOW WE DID IT

  • Niche focused keyword research
  • On-page SEO optimization
  • Content strategy

“We hired Heaviside 8 months ago to help improve the searchability of our updated website Retailbound.com. Chris and his team were able to quickly fix the on-page SEO issues. Once the on-page work was done, Heaviside worked on the off-page SEO (i.e. building blog content). We saw an increase of traffic to our website, which resulted in more in-bound inquires for our services. We closed two clients thanks to the work done by Heaviside.”
Yohan, Owner

RESULTS

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increase in organic traffic
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Increased inbound inquiries
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(high-value) sales

BULL SHEATH LEATHER INCREASES REVENUE 65% THROUGH ECOMMERCE SEO OPTIMIZATION

Bull Sheath Leather is a group of artisans that love to live, laugh, and create things out of leather. They sought Heaviside Group’s help in improving organic search and ecommerce results.

After six months of working together, their organic traffic increased 81% while the total ecommerce revenue increased 65%. Through continued focus on expanding organic reach, we expect to see these numbers grow.

HOW WE DID IT

  • E-commerce focused keyword research
  • On-page SEO optimization
  • Technical audit and improvements
“They continue to do a great job!”
Ernie, Owner

RESULTS

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increase in organic traffic​
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increase in ecommerce transactions​
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increase in revenue