Previously published in YEC. Question: How should bootstrappers allocate resources for marketing and advertising? How…
Scale faster in 2019 with a sound marketing budget
Budgeting should not be a once-a-year event, but December is your last opportunity to plan ahead for the new year. Earlier this year, we talked about budgeting essentials for startups. Now, let’s take a look at how to effectively plan your annual marketing budget.
B2B vs. B2C Marketing
From a strategic perspective, there is typically a different approach for B2B (business-to-business) and B2C (business-to-consumer) when it comes to marketing. For example, social media is a key channel for all businesses. However, the platforms you choose and how much time and financial investment will vary by business model. Enterprise solutions likely won’t generate leads on SnapChat, and most consumer goods won’t convert their audience on LinkedIn. Companies must be mindful of:
- Who their audience is
- Where they spend their time (online and in-person)
- How they like to consume information
- What problems they need solved
Use this information to prioritize your marketing channel options and develop a plan based on the likelihood that your target customer will be reached and they are ready to receive your message.
Business model also impacts what your marketing and sales funnels look like, as well as how you track and measure ROI (return on investment). This will influence how you break up your marketing budget.
How much to budget
The Small Business Administration considers small businesses those with under $5M in annual revenue and recommends they spend somewhere between 7-8% of their revenue on marketing. Startups may want to start with 2-5%. But, any percentage of zero dollars is zero dollars. Pre-revenue startups should “budget” their time for marketing motions like:
- Emailing (start with friends and family as you build your list)
- Blogging and social media posts
- Podcasts and vlogs (host your own and be a guest on others)
- Speak (solo or on a panel) at industry events
- Networking events (though many of these have a small entry fee)
Budgeting without having metrics to base your estimations on can be frustrating. Remember, this is an estimate that can be tweaked along the way. Lean on advisors and consider worst and best case scenarios.
These free and low-cost tactics are all great ways to reduce your marketing spend. Be sure that you’re analyzing what your business needs most when filling up your calendar. If you’re marketing, you’re not selling or pitching investors. Budget your time, as well as your financial investment in marketing.
Types of marketing
Marketing is generally split into two categories: digital and traditional. Both bring their own set of pros and cons, and as mentioned earlier, it’s all about your where your target audience is at. Digital certainly is unavoidable, and most companies will choose to have a combination of both.
For any size organization, the website is likely to be the foundation of their marketing strategy. It’s even tied to your traditional methods like networking. A strong website:
- Acts as an online business card
- Adds credibility and legitimacy
- Is a library for your content marketing efforts
- Captures visitor contact information (list building)
- Tracks behavior on the site
- Is dynamic and evolves with your company
Invest in a web designer and/or copywriter who can build a solid website that showcases your brand. There are also many template-based options to get started if you are pre-revenue and pre-funding.
Email marketing is a long-term strategy that should be budgeted for. Be sure these campaigns are adding value to the audience and not just talking all about your business.
Just as a website has become a staple for businesses, a social media presence is key. This includes company and personal profiles. Make sure your bios and the content you share reflects the values and mission of your company. Share personal and team accomplishments, especially on LinkedIn. Outside of the professionally-focused LinkedIn, the most widely-used platforms are Facebook, Instagram, SnapChat, and Pinterest. This Volusion blog does a great job breaking down the pros of each one. Other publishing platforms like Medium should be part of this discussion, too.
In addition to the ability to post and share content, all of these platforms have boosting and paid ad options. Be sure to consider affiliate/influencer marketing costs, pay-per-click, banner ads, and other ways to leverage existing communities. There are several ad calculators online like this one from inbound marketing leader, HubSpot, to help you determine spend.
In-person networking is the most traditional – before marketing and advertising existing, meeting people face-to-face was the only way to make a deal. Conferences, networking events, and, coffee meetings can add up (money and time). Make sure they are included in your budget – not only for individual attendance, but sponsorship and exhibition opportunities.
Consider hosting your own events. Think about partnering with complementary products and services. Who has the same target market, but isn’t a competitor to you? How can you jointly attract and add value to your prospective customers?
- Build relationships with individual reporters by sending them leads about other stories and supporting their work before asking for coverage.
- Be active in your local community and consider participating in events that will likely get media coverage.
- Reach out to local public outlets – what expertise/knowledge can you share?
TV, radio, and print are the three pillars of traditional marketing, advertising, and public relations. These are much more expensive and provide a less targeted approach. Spending budget with these media sources is not the best use-of-funds for an early-stage startup but getting media coverage should be a part of your strategy. Many startups focus on local business press like Business Journals and geographically-focused magazines, and on coverage from local startup-focused websites.
Once you’ve outlined a plan, there’s no need to wait until January (or whenever the time period of your budget begins) to get started. Get a jump start on building your content, sourcing vendors, and any other leg work that doesn’t require spend.
What it Takes to Excel at Startup Marketing
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