By Carlee Driscoll

Day in, day out we are asked how much is enough to spend on marketing? As you might expect this is a little bit like asking how long is a piece of string. Without wishing to avoid the question, any self respecting marketer would have to respond with ‘it depends’. It depends on the industry, it depends on the business but more importantly it depends on what the business is trying to achieve.

The textbooks used to say for a maintenance type marketing budget companies should spend between 4% and 7% of revenue. For a launch, a new business or one with aggressive growth plans this rose to between 8% and 12% of revenue. These all-purpose figures don’t take into account the competitive or geographic environment in which you operate or the profit margins you are able to achieve on your products and services. And quite honestly, for new businesses who are yet to start generating revenue, 12% of nothing doesn’t get anyone very far.

Here at Chilli we help clients who often have never set marketing budgets or have no clear idea about how much they have spent on marketing in the past. Consequently we have to create a lot of marketing budgets from the bottom up. Put quite simply, the process to develop a bottom up marketing budget is this…

• • Set your goals and objectives for the year.
• • Work out what activity you realistically need to do to reach these goals.
• • Break this activity down into a task by task costed implementation plan across the year.
• • Add up the costs and, voila, you have an annual marketing budget, broken down by task and by month.
• • At this stage you may realise that your goals were too ambitious given the money in the coffers so typically you will revisit and play around with this budget.
• • This budget now gives you a tool you can use in subsequent years to tweak for future planning.

Without bottom up budgeting, too often businesses have marketing budgets that bear no relevance to their marketing goals. It is all too easy to bandy around generalist benchmark figures but one size does not fit all for business.

Carlee is the Strategic Marketing Planner for Chilli. If you’d like to see how Carlee and the Chilli team can help you grow your business call 5437 7788.