5 Signs Your Marketing Budget Is Too Small
It takes money to make money, or so conventional wisdom tells us; it is true to a certain extent. Marketing is an essential part of a business’ success, yet many companies cut corners with their marketing budget and penny-pinch when times are tough. In fact, some businesses even fail to allocate any spend for marketing. If businesses want and expect to grow, however, they need to think hard about where to promote the business and how big that budget should be. Effective marketing brings in additional revenue, so it can be seen as an investment rather than an expense. In that context, the question that every business owner must ask is: “Am I spending enough on marketing?”
5 Signs Your Marketing Budget Is Too SmallNo business owner wants to wait until disaster strikes to address a problem they could have spotted earlier. As such, it's important to know what to look for when assessing your marketing budget and deciding where and when to make adjustments. Here are five crucial warning signs that your business is cutting too many corners on marketing:
- Your customers struggle to find you online.
- Your competitors spend significantly more than you.
- Your PPC cost is high.
- Your cost per 1,000 impressions (CPM) is high.
- New tools sound too expensive.
Customers Can't Find YouDo your customers complain that they struggle to find your business online? If so, it's a sure sign that you're not spending enough on marketing. Online visibility is an essential component of running a modern business. Creating and optimizing a website that gets you found is not cheap. Sure, there are tools to DIY your website and SEO, but do you understand the nuts and bolts of how all of that works? If not, you're going to spend a lot of time figuring it out (and waste a lot more on tactics that don't work!) Time might not have an immediate impact on your bottom line, but losing it by trying to do everything yourself will eventually detract from your business. Budget some extra money each month to maintain and optimize your website for search and customers will find you more easily.
Competitors Spend More Than YouYour competitors can offer you invaluable insights into your marketing efforts. If your competitors are outspending you by two, three, even four-fold and their business is thriving, it should tell you that there is both a demand for your product or services and spending more on marketing will return more profits. It is also important to note that the more your competitors spend, the more they will become the known brand for your product or service. You have more than one incentive, therefore, to increase your marketing budget to match or exceed your competitors. In the long-term, if you want to stay competitive, make sure you know what other businesses in your sector are spending to get in front of potential customers.
Inflated PPC CostsHave you ever read an online article that gave averages of PPC campaign costs per click and thought to yourself that your cost per click is much higher? It’s a common problem, and many business owners prefer to shut down the campaign rather than dive deeper into why their costs are higher than average. One of the biggest reasons PPC costs can be high is a lack of budget. Small budgets perform less well against larger budgets precisely because they compete for fewer bids at fewer times. Research has shown that larger budgets average lower costs per click than smaller budgets, and have a higher ROI.
CPM Is Too HighSocial media advertising is a must in today’s highly competitive market. Many business owners test out social ads with small budgets, around $100-$200, and dismiss them with disappointing results. However, the way these ads are shown is similar to PPC, insofar as social media platforms such as Facebook run an auction in the background to determine how, when, and to whom your ads are shown. Small budgets compete for fewer spots at fewer times, which means they get less visibility and less cost-effective impressions. Higher budgets yield a higher ROI, so consider committing a more significant amount of money toward your social ads.
Marketing Tools Aren't AffordableThere seems to be an endless stream of new tools available to marketers that promise to streamline marketing and advertising and increase ROI. Most of these tools do work, but many business owners shy away from using them because they come with a hefty price tag. When you consider how these marketing platforms — such as Hubspot, Sharpspring, or Infusionsoft — work, the cost certainly justifies the means. The problem that many business owners encounter is a matter of perspective. If your marketing budget is $5,000 per month, an $800 per month Hubspot subscription is a small price to pay if it doubles your revenues from your marketing. But if your budget is $500 per month, Hubspot appears far too expensive. If this is the case with your business, chances are you're spending too little on marketing. As engaged observers of promotional strategy, we'd also add failing to take advantage of a memorable 800 number is often a sign that marketing is seen more as an expense than an investment. [search-tag] Licensing a high-value toll-free number doesn't cost a lot when evaluated in terms of return on investment, but some business owners neglect this in favor of keeping marketing costs down. A license essentially means a monthly subscription for the right to use an unforgettable number as your own in a specific market area. Adding a vanity 800 number to an existing marketing and advertising program increases (on average) response rates by 40 percent. Again, the cost-benefit of such a service is a matter of perspective. For example, when a homecare company is spending $10,000 per month on marketing, the $1,000 per month license of 1-800-HOMECARE™ is only one-tenth of that budget and is well justified, given the return rate. For a company who pays less than $5,000 per month will not see it the same way. It's all a matter of perspective, but taken in conjunction with the other warning signs above, it could lead to very real problems in the long-term. If you are seeing some of the red flags above and turning down promotional opportunities like the ones described, consider revising your marketing budget. Without a sufficient spend allocated to promote your business, communicate with potential customers, and raise awareness of your brand, there could be too few prospects in your pipeline to weather the storm when times get tight.
So, What Are You Waiting For?
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