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Where to Spend your Marketing Budget – Complete Guide for Small Businesses

Sep 01, 2021
Where to Spend your Marketing Budget – Complete Guide for Small Businesses

Starting a new SME is an exciting time. There is plenty to do before your business can be declared a success, though. Attracting clients and turning a profit is dependent upon spreading the word about your business through marketing. This process, in turn, needs to be managed to ensure it remains fiscally prudent.

Does a small business really need a marketing budget?

Every business needs a marketing budget, regardless of size. Marketing is a non-negotiable part of doing business, for a wide range of reasons. Consumers will not purchase goods or services from your business if they are not familiar with them, and this awareness comes with a price tag.

It's all too easy to get carried away with marketing spend without a set budget, though. Any experienced businessperson knows that there is no such thing as a free lunch. In the modern world of online marketing, every click and impression that your campaign generates has a price tag attached. If you're not cautious and strategic, these expenses can soar far beyond your profit margins.

How to set a marketing budget

Having established that it's best practice to set a marketing budget for your SME, you'll need to understand how this budget should be set. To achieve this, meet as a team and discuss the possible answers to a range of key questions. These include:

  • How much of your current income can you realistically spend on marketing? While you may need to speculate to accumulate, it's inadvisable to plunge a business into the red in the hope that marketing will pay off any debts – nothing is certain

  • How much are you currently paying for each conversion that your business makes? Can you assign a financial value based on your income against efforts geared toward increasing sales?

  • What are you looking to achieve through marketing? Do you need fast results and immediate cash flow, or are you more focused on building the awareness and reputation of your business?

  • What level – and pace – of growth for your business do you consider acceptable? Are you prepared to minimise spending in favour of slower but steady growth, or do you need to take your fortunes up a level or two within months?

These are all key considerations that must be agreed upon before setting a marketing budget. This process is not as simple as picking a number you think you can afford and betting it all on black. You need to understand what you are spending your money on and the likelihood of seeing a sufficient return on your investment.

How much should a marketing budget be for a small business?

There is no hard and fast rule surrounding this. It depends on your business model. An ecommerce site, for example, will need to spend more on marketing than a website that exists primarily as a source of data and information.

In addition, it really depends on how much money your business has to spare. While a successful marketing campaign will see a return on investment, it may take some time before your cash flow and bottom line match up.

Take the time to think through your marketing budget needs, matching spending to expectations and possible rewards. Some experts suggest that a small business with comparatively low profits starts out maxing its marketing budget at 7% of total annual revenue. Another common statistic is a recommendation of 5%.

All being well, this approach will see substantial profits. At this point, you can increase your speculation to around 20%, enjoying similar levels of accumulation.

Where to spend a marketing budget

So, you have a marketing budget agreed, and the time has come to start spending it. How you do this depends on what you are looking to achieve from your marketing.

There are three primary steps to a successful marketing strategy for an SME. Increasing brand visibility, as discussed, needs to be an immediate priority. Your business will lack the immediate recognition of the biggest names in any industry, so it's critical to build your prominence.

Just having people know your brand is not enough, though. You'll still need to bring revenue into your business – especially when your competitors launch their own marketing campaigns. Think back to the infamous Cola Wars, for example. While Coca-Cola may be the most famous corporation in the world, Pepsi continues to carve out an audience of its own – thanks in no small part to successful, memorable marketing.

This revenue generation needs to balance meeting short-term needs to generate cash flow and futureproofing a business, ensuring that leads and opportunities will not dry up. Let's review how you can achieve this, discussing the best ways to spend your marketing budget.

Increasing brand visibility

As discussed, brand awareness is one of the most critical elements of marketing. This begins in house, ensuring that you have an instantly recognisable product.

Start with your company logo. When somebody mentions Nike, we think of the famous swoosh. If Amazon comes up in conversation, we picture the A-Z symbol. It's impossible to drive past a giant yellow M and not recognise a certain fast food giant.

You can start a marketing push once this logo is in place, alongside an unmistakable colour scheme. Raising brand awareness comes in three formats.

Print and banner advertising

Despite what you may have heard, print is not dead. How effective a print campaign will be, however, is reliant upon your target audience. For example, if you're marketing to Millennials or Generation Z, print is unlikely to yield many results. These audiences simply do not gravitate toward printed matter in any significant number.

However, print can be hugely beneficial if you're looking to reach a slightly statelier audience, especially for a local service. Print campaigns are also considered more impactful than online alternatives, so your return on investment can be more significant.

Banner ads are another approach that some consider outdated, but they certainly have their place. Aimed at the right audience, a banner ad typically has an impressive click-through rate. This could be by accident rather than design, though. Banner ads tend to fill a screen. Be wary of false impressions created by erroneous clicks.


SEO, or search engine optimisation, is the bread and butter of most online marketing campaigns. The stats do not lie. There are approximately 4.39 billion internet users worldwide, and 4 billion of them make use of Google. That's a lot of potential customers, on paper. Alas, 75% of Googlers do not scroll past the first page of results.

As a result, it's indispensable that your business appears as close to the top of page one as possible. You can pay for this privilege, as we'll discuss in a moment - that's known as pay-per-click marketing. Alternatively, you can appeal to Google's algorithms by packing your website with relevant content.

Now, we recommend bringing in the services of a professional SEO agency for this. Google frequently move the goalposts as to what is worthy of a higher page ranking, and an SEO specialist will remain on the bleeding edge of these changes. You're more than welcome to manage your SEO in-house, but history is littered with businesses that saw their traffic drop off a cliff overnight following an algorithm update.  

Guest posts

Finally, consider spreading awareness of your brand through guest posting on popular niche blogs and websites. Guest posting will enhance your reputation as an expert on any given subject, resulting in users searching out your brand directly in future. You can also enter into a mutually beneficial relationship with your host, providing content in exchange for exposure to their audience.

Guest posting is also an effective way to generate backlinks, a powerful weapon in your SEO arsenal. Just be mindful of who you connect with. Backlinks from an inappropriate source can do more harm than good to your business reputation. Thankfully, high-quality backlinks are worth their weight in gold.

Attracting immediate conversions

One of the most notable concerns with marketing campaigns is that they take time to reach fruition. This is why a marketing budget should start small and gradually increase. Spending too much can lead to a cash flow problem if funds are not promptly replenished

There are ways around this, though. Any business can undertake high-impact, low-cost techniques to attract immediate conversions. These tend to be one-off sales that do not build consumer loyalty, but they can keep the wolf from the door while you focus on longer-term marketing approaches.

Cold calling

It seems like a hopelessly outdated idea, and it brings to mind visions of a 1990s call centre populated by depressed telesales operatives. The fact is, though, cold calling is still effective in 2021. It's not going to win your business many friends, and if done incorrectly, it could earn you a reputation as a pest. Done well, however, cold calling still sees results.

Cold calling is best handled by an external supplier. Do not use the time and expertise of one of your existing team members, unless they are gifted with a silver tongue and can spare capacity. Enlisting an external sales business, however – along with a set of black-and-white targets that must be reached to make the campaign profitable – generates immediate income for your business.

Email campaigns

Email campaigns, much like cold calling, have been consigned to the dustbin of history for some businesses. Email marketing remains a great way to attract new clients and retain the interest of your existing customers. Hire a copywriter to create a compelling message and unleash this to impress your audience.

To succeed with an email marketing campaign in 2021, particular trends need to be followed. These include personalisation and interactivity. Simply mailbombing the same message to hundreds of addressees is a fast way to end up being declared a spamming annoyance. Done correctly, though, email marketing is a cheap way to encourage action – and quick wins for your bottom line.

Pay-Per-Click (PPC) campaigns

Finally, we have arguably the most popular form of immediate conversion in 2021, PPC. As we touched upon previously, this approach is most utilised on search engines. It can also be beneficial in social media, though, especially Facebook.

As the name suggests, pay-per-click campaigns attract attention from customers and charge according to their success. Perhaps the most common format for PPC marketing is Google Ads (neé AdWords). Google Ads invites a business to bid on keywords, with the price defined by the word's popularity and quality of the website's SEO strategy.

If a price is agreed between Google and your business, your website will appear at the very top of page 1, labelled Ad. Consumers are far likelier to click on your business website if it's at the top of the first page of Google.

That's good news for you. As a result, though, Google will charge you for every click. For a PPC model to be profitable, you need to ensure that your return on investment is greater than your cost per click and conversion.

To bolster your chances of this happening, work on your organic SEO strategy. The more your website impresses Google, the higher your quality score will be – and thus, the lower the cost of your keywords.

Generating leads for present and future business

Of course, living hand-to-mouth and relying upon immediate conversions will only take you so far. Any business needs a measure of forward planning, providing an array of leads for future campaigns. Content marketing is the best way to achieve this.

Content marketing

Content marketing revolves around packing your website with helpful, informative content. That's it. Unlike most forms of marketing, content marketing is not interested in selling. Any CTA needs to be extremely subtle.

The purpose of content marketing is to build loyalty from customers. As well as generating traffic for your website, this means that readers will start to trust your brand. Your business becomes a source of reliable information and expertise.

Such a reputation has a long-term advantage. When your target audience is ready to spend money, customers will not take to Google and search for a supplier. Your brand will have already earned trust. They'll make a beeline straight to you.

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