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Tips

Why Do Marketing Companies Ask For Your Budget?

February 19, 2020
marketing budget

What’s your marketing budget?

“I don’t know.”

These three words drive fear into the hearts of courageous marketing companies. It makes our heads spin, and we need Advil and electrolytes to recover. If there is a fainting couch nearby, we might darn well use it.

Why?

Because knowing your budget is essential to making the best recommendations. It gives us parameters to work within, and tells us how to think and act.

When we hear a budget, we make mental calculations in real time and start gameplanning. If there is no defined budget, this could mean one of two things:

  1. “There is absolutely no money to invest into marketing.”
  2. “You know that one dream strategy you’ve always wanted to do but couldn’t justify all that A-list Hollywood talent on the payroll? That’s for us!”

The reality is probably somewhere in between these two scenarios. There is money to put into marketing, and there is (unfortunately) a ceiling into how far the budget will go (you’re off the hook, Clooney).

But here’s the thing – if you don’t know your budget, we don’t know it either. The best we can do is to make assumptions. We could dig deep into your financials, with your permission, but even that may not present the most accurate picture of what to spend. So how do you gauge your marketing budget, to provide an informed and confident answer?

To start, here are a few questions to consider:

“What Would A Highly Skilled Employee Cost?”

Think about what you are asking your potential marketing company to accomplish. Think about the skills and expertise it will require to work on your behalf. Now, take stock of what it would cost to hire an employee each month, with all the talents and skills you are after. What is this amount?

You can validate salary assumptions with job boards like indeed or ZipRecruiter. For equitable comparisons, look at listings for seasoned professionals, not early career postings. Got a rough idea in your head? Great – this is now your starting point for the budgeting conversation.

Keep in mind that a marketing company on a limited engagement will command a higher per-hour rate than an in-house employee. So it will likely be more cost effective to engage your marketing company on a monthly retainer, as opposed to an hourly billable structure.

Also, know that with a marketing company, your budget may stretch much further than hiring only one employee with a specific skill set. With a marketing company, you will have access to a full team of specialists with a diverse set of talents. So don’t look to undercut what you’d pay an internal team member. Instead, think of it as a redistribution of marketing funds to partner with an experienced marketing company, and all the benefits that come with it.

“What Do Our Competitors Spend On Their Marketing Budget?”

Think about your industry leaders, as well as your close competitors. How established are they, and how trusted? Is their website more effective than yours? Are they dominating search engine results? Try to see things as objectively as possible, without championing your own company for a moment.

If your competitors are ahead in one or several areas, then it’s very likely you’ll want to make marketing a top-level priority. This doesn’t mean you have to outspend them, or to carbon-copy their approaches. But it does point to devoting money towards marketing, and to investing a reasonable amount each year into building your presence, market position, and community engagement.

Do a little recon, if possible. How much do competitors spend each year on marketing? If your budget is in the same ballpark, with the right marketing team behind you, then you have a nice chance of going head to head. This is true even if you’re the underdog – marketers love a good fight. But if you’re spending a fraction of what they are, it’s likely you’ll end up with the same fraction of market share, year after year.

“What Does It Take To Become Our Customer?”

We can’t all sell umbrellas in the rain. Purchasing from your company may be a complex and nuanced process. Even if you sell a relatively simple product or service, consumers may agonize over the decision. They may want to read, learn, ask peers, and engage in any number of ways before making the commitment. And what if your product or service actually is complex and nuanced?

Education and behavior change are two of the more challenging types of marketing. Talking people out of what they know and are comfortable with, and into a new solution, takes time and patience. It can be very rewarding, but there is a lot of ramp-up that goes into educating consumers and giving them reason to trust you.

So how much do you spend? If your product or service is a new or revolutionary concept, then you’ll likely want to spend 1.5x or more the typical marketing budget to get the word out. Give your marketing team room to experiment, to prove out the concept, and show you what connects with consumers. This will give you a foundation to build from, and point the direction to next steps.

Once you’ve hit critical mass, and your product or service is virtually selling itself, then consider dialing back the marketing expenditure. But until then, you’re facing an uphill battle. Equip your team accordingly.

So, About That Marketing Budget…

All this is great, but how much should your marketing budget be?

If you go straight according to the numbers, look at spending 5-8% of your total gross revenue to maintain your current marketing position. If you are looking to grow, and take on competitors, then 10-12% of total gross revenue will be more appropriate.

Of course, this estimate varies by industry. It may not account for direct costs like ad spend, or your internal marketing team salaries. But now you have a benchmark to start with, and another way to determine how much to spend on your marketing initiatives. As goals are achieved, don’t make the same mistake that a lot of companies do and cut your spend. Instead, consider budgeting more towards marketing, to experiment, evolve, and gain a larger competitive edge.

Working With Your Budget

No matter your marketing budget, we will apply what you have to work with and use it most effectively. Healthy budgets let us cover more ground, and in many cases work faster. We are able to devote more team members, time, and higher level expertise to your projects.

Slimmer budgets give us a starting point. We may be able to cover one or two areas of your marketing, with the shared understanding that we are working within limitations. To take on your entire marketing program, or work with fewer constraints, the budget would need to be adjusted accordingly. But don’t be afraid to share your budget, and the figure you are able to devote towards marketing each month. We will always provide insights into how to apply this budget most effectively.

Marketing budgets drive business. They create excitement, momentum, and community around your company. They attract, educate, entertain, and inform your desired audience. They set you apart from the competition, and they set the trajectory for the next 5-10 years. They are an essential component of achieving your business and marketing goals.

So, with all this in mind, what’s your marketing budget?

Interviews

Of Likes and Lattes

July 30, 2019

It is a bleary-eyed morning, and far too early to be productive, let alone cognizant of the world around. Yet here we are at Communal Coffee in North Park, which holds the distinction of being both a coffee shop and a floral boutique. It’s the kind of spot that should appeal to the mysterious creator of the @cali_coffee Instagram feed. And of course, she already knows it well.

Thanks to her Instagram profile, @cali_coffee has become somewhat of a local coffee guru, amassing a dedicated and growing following who turn to her for the next “it” coffee shop. Her caffeine-fueled sojourns across San Diego County and beyond are well documented and artistically photographed, catapulting her over other similar feeds. The location we’re in is fitting, given that Communal Coffee’s own popular Instagram feed (36.5k followers to date) is itself a haven for coffee addicts.

Cali_coffee and I are two of the day’s first patrons, and likely the only ones here to chat about social media content. During our conversation, we talk about Instagram trends and the joys of social content creation. We also speculate about why a lovingly curated feed about San Diego coffee is outperforming many small businesses when it comes to likes and engagement. Fortunately, there is great coffee to guide our conversation (salted caramel latte), so we are buzzing in no time about the topics at hand.

Double Zebra: What was the initial inspiration behind your Instagram feed?

Cali_Coffee: Well, it just started in April of this year. Because I like trying a lot of different coffee shops, I would post pictures of them on my personal Instagram. And then, friends began asking me for coffee recommendations. And I realized that it was something cool, to have one place for all the best coffee shops in the area. Because I feel like they are always hard to find. So I started with pictures of coffee. And then I figured I’d put them all in one spot, and make them accessible.

DZ: Why did you select Instagram as your social media platform of choice?

CC: Because it’s so widely used, more than other social media platforms. And it’s easy to search, and it’s centered around pictures. I like photography, with the variety and angles and little elements you can incorporate. I like the artistic side of it.

images courtesy cali_coffee

DZ: You have more than 2k followers today on a relatively new feed. You consistently gain 2-4% more followers every time you post. People are turning to you as a coffee expert. Would you consider yourself an influencer, or micro influencer? Micro-micro influencer? Where does this designation even start?

CC: Oh, that’s a good question. I don’t think of myself like that at all. I never started it with the intention of becoming anything. It was just kind of a hobby of mine that turned into something.

DZ: Who do you tend to follow on Instagram?

CC: Other pages like mine that highlight places around San Diego, celebrities. A variety.

DZ: Has anything unexpected come from your Instagram activity?

CC: I mean, this interview is pretty unexpected (laughs). I think a lot of my posts were getting 40 to 50 likes, maybe like 30 to 40. And then one of them got 190-something one day. You don’t always know what will get attention, or why.

DZ: Have you experienced any negative reactions to something you’ve posted?

CC: Not really, I think everyone likes coffee. It’s one of those non-controversial topics. If you don’t like coffee, you probably wouldn’t be following me.

image courtesy cali_coffee

DZ: Your posts tend to be lighthearted, and you’re not afraid to break out a pun or two. Do you think Instagram, and social media in general, is taken too seriously?

CC: For sure. Social media brings a lot of good, but there are so many negative things that can happen in this age. I believe in putting something out there that is lighthearted and positive. So people remind themselves that life isn’t always so serious.

DZ: Our Double Zebra team works with clients on their social media strategy and impact. What would you say to a company that puts no effort into their social media, or they barely have a presence?

CC: I’d say they’re kind of asking to fail, because that’s where most people find companies and make decisions. Most of the time it’s through social media, looking at pictures that others have tagged. You can only find so much on Google. Usually, the first thing I do is go on Instagram, and look at photos and posts that match what I’m searching for.

DZ: What about companies that are trying their best, but still have low social engagement? What can they learn from your experiences so far?

CC: I think in order to have people engage with you, you have to engage with them. See what they have posted on their own pages. Get to know the content they are putting out. Then you can start creating content of your own that is meaningful and has value.

DZ: Instagram has recently announced fundamental changes, like hiding the number of public likes. What will the platform look like three years from now?

CC: I think Instagram will be different for sure. But it can’t change that much, because it’s already working pretty well, the way it is right now.

image courtesy cali_coffee

DZ: You’re on a self-proclaimed mission to drink all the coffee in California. Does this include bowling alleys and dive bars that have a coffee pot in the corner somewhere?

CC: Probably not my first choice. Maybe when I run out of all the other options. I never turn down a cup of coffee. So if I’m in a bowling alley, and I want coffee, then yes. Though I probably wouldn’t travel to a bowling alley for the coffee, unless it was really good.

DZ: That sounds incredibly hipster, a bowling alley becoming famous for its coffee.

CC: Yeah!

DZ: Is there a “holy grail” of coffee shops that you’re looking forward to visiting?

CC: I’m headed to Seattle soon, so I’d have to say Starbucks #1. That whole city is like a tribute to coffee shops!

Connect with Double Zebra to learn more about our team’s approach to social media engagement and content production for your business. And be sure to look for cali_coffee on her Instagram feed and at a coffee shop near you.