This is something that you probably have to go through with your customers and prospects, so we are happy to do the same as part of our You Ask Us. We Answer. series.

A marketing budget will vary from business to business, but it should always make you feel like the money is being put to good use.

Here are three things you should consider when putting together your marketing budget:

How Much Money Should Be Allocated For Marketing?

As we said in our blog on pricing, 10% of last year’s revenue is a great starting point when determining this year’s marketing budget.

The more complicated answer is that the range could be anywhere from 8% to 12%, depending on how much you are looking to grow.

To keep the numbers easy to follow, this example will use a $1M company looking to get to $1.5M this year. This company will spend about $100,000 on marketing to achieve this moderate growth.

Notice that we said marketing. That $100,000 is the entirety of the budget—not how much an agency, Google, or any other entity should be looking to get.

“I don’t need your entire marketing budget,” says Mark Sherwin, President and Co-Founder of LeadsNearby. “Honestly, I don’t want it all. You won’t be successful if you don’t spread your resources around properly.”

A significant part of spreading it around is to take the $100,000 and spend it both in the real world and online.

How Should I Split My Marketing Budget Between Online And Offline Channels?

This will depend on how densely populated your service area is, as well as the ways that customers find you. In general, we suggest rural areas go with a 60/40 split.

Continuing with the same numbers from above, that would mean you are going to put about $60,000 into online marketing (Agency Costs, Ad Spend, SEO, Hosting, etc.) and the other $40,000 into the real world (Community involvement, TV/Radio, etc.).

“If you are in a city or a technologically forward area, you might change it to a 75/25 split. Make sure people are finding you both places.”

Can Anything Change The Recommended Marketing Budget?

Yes. There are a few factors that could cause the recommended percentage to go up or down.

For example, Mark says, “A $10 million company that’s been in a market for 25 years will not have to spend at the same level as a $1 million company that’s trying to break into a new area.”

The amount of money it takes to maintain a reputation should be less than it takes to establish it.

Conversely, even established companies introducing a new vertical should plan to spend more than the recommended percentage. It takes more impressions to solidify a new concept in customers’ minds, so be ready to allocate the necessary budget.

Pressure from a competitor or aggressive growth plans can also impact the amount of money you’re going to have to spend.

One thing that you should not expect is that a higher marketing budget means less work for your business.

“Sometimes people think that if they pay us more, we will do everything for them. They can forget about marketing for the right price. That’s not how it works,” says Mark.

“When you’re paying us more, we’re going to be talking to you more, doing more with you. There’s no amount you can spend with an agency to avoid working with the agency.”

If you are looking for a marketing partner who understands how to use your money without wasting it, reach out to LeadsNearby! We’ve been helping businesses in the home service industry since 2013. We can do the same for you.

Introducing Our New Referral Program » « Advanced Guide to Google Local Service Ads