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How Much Should You Invest in Marketing?

Mark Twain was once quoted as saying, “Many a small thing has been made large by the right kind of advertising.” Twain was a traveling journalist, humorist, writer, and lecturer whose most famous novels are The Adventures of Tom Sawyer and The Adventures of Huckleberry Finn. You may be asking what this 19th and 20th-century writer knew or cared about advertising, or its more inclusive sibling marketing, but one could speculate that selling his stories to widely scattered readers required a significant amount of time and money. The fact is that making something big out of something small is as old as the advent of capitalism.

The art and science of marketing has advanced exponentially in both technique and technology over the past century, but present-day marketers continue to lament over just how much money should be spent getting products and services noticed by the best potential audience. The question of how much is enough continues to occupy the conversations of sellers of everything to everyone despite all the advances in media technology, and its answer remains elusive. The most universally accepted answer to “how much is enough?” is, it depends.

Total annual digital advertising spend has bumped up against $300 billion for the past two years, so the question is an important one, particularly at a time when controlling operating costs is so critical to every seller. The “depends” answer is not a frivolous example of spinning the truth, but one that is very accurate and to the point. The exact number is dependent on some very important factors like the industry, size of endeavor, age of the company, goals and objectives, and what investment methods best suit the individual firm’s objectives.

“It’s vital to possess a budget for your logo, website, and other commercial tools from the start. However, it’s equally crucial that you have an ongoing plan and sufficient funding available to execute that strategy. The smartest way of achieving this is by establishing a marketing scheme alongside setting up either monthly or yearly budgets so that all goes as intended. People are often willing to take on corporate identity projects without considering how they’ll implement them; like trying to build cars but having no money left over for fuel” says a spokesperson for Empire Creative Marketing.

A rule of thumb figure will be somewhere between 5 to 12 percent of revenue. Emerging businesses will need to be at the upper end of the range and in some cases as much as 15 percent. Large established organizations can expect to be at the lower end of the range. Subscription services (SOS) spend as much as 15 percent of revenue. Advertising and marketing spend should be thought of as an investment, not an expense. so return on investment (ROI) should be monitored and measured to lessen inefficiencies and overspending. A Duke University study revealed that an 11 percent investment in marketing created a more significant return on investment and resulted in a 2.5 percent revenue growth. Small emerging brands may need to spend $1000 per month until revenues rise to credible levels.

Typically, many believe the more investment in advertising and marketing the larger the return, but like so many things, more investment doesn’t always equate to more return. It is a quality-over-quantity game. Regardless of the amount spent, reaching the right audience with personal and authentic content will produce the best results. Every campaign should be monitored and analyzed to determine its effectiveness and adjusted to ensure future efforts produce the best level of ROI. “Never stop testing, and your advertising will never stop improving,” says David Ogilvy, considered by many to be the “Father of Advertising.”