Marketing determines your competitiveness, your performance, and your sales. Therefore, it’s safe to say that in order to grow your enterprise, you need to increase your marketing investments. Now, proclaiming that you need to invest more in marketing is a statement that really doesn’t say much. 

• How much more? 
• What kind of marketing? 
• Which methods will you give priority to?

You see, marketing itself is an umbrella term and as such, you need to understand the complex layers and areas that it consists of. With that in mind and without further ado, here are five things you need to keep in mind when allocating your budget for branding and marketing.

1. Budget according to your industry

Depending on the competitiveness of your industry, your marketing budget can be anywhere between 10% and 50% of your average annual revenue. You see, in education, an average marketing budget is roughly 11% of your overall budget but in the consumer-packaged goods industry, the number goes as high as 24%.

The key thing is that you want to spend enough that you get a competitive edge but avoid overspending. Allocation of resources is important but being resourceful means predicting bottlenecks ahead of time and using the optimal number of resources to solve these problems. Overspending leaves, you short on the other end, and understanding the specifics of your industry can help you get a better idea of where you stand.

2. Focus on the ROI

It’s not just about the amount of money that you spend but the ROI. In other words, what you want is to know exactly how much you can hope to get back for every $1 that you invest. Finding methods that yield you the best ROI also means that the way in which you spend resources matters more than the amount that you spend.

You see, if you’re using a method with an ROI of 200%, this would mean that you’ll get $2 for every $1 you spend. However, what if there’s a method that yields an ROI of 300%. In this scenario, every $1 invested would give you a return of $3. In this scenario, going for the 200% ROI would also mark a 50% of opportunity loss.

To oversimplify, why spend $1 to make $2, when you could use it to make $3?

Now, there are different kinds of operational expenses that you’ll have to handle as an enterprise. When the budget is tight, you need to start assigning a priority to different expenses, and, make no mistake, marketing is your top priority. 

3. It’s a priority

Sure, paying salaries to your employees and covering operational expenses are mandatory but once you find yourself in a situation where you can’t afford a marketing campaign, you’re in a pretty bad spot. So, you need to find a way to provide the necessary funding.

There are a lot of scenarios in which you have the money on paper (account receivables) but the payments just haven’t arrived yet. In these scenarios, companies handle their marketing payments in different ways. Looking for affordable bridging loans is one of the methods. Selling invoices (factoring) is another thing worth considering. All in all, it’s a priority and if you don’t have enough money, you better find it.

4. Long-term planning

In one of the previous sections, we’ve discussed how you need to focus on the ROI. The problem is that there are some marketing methods that take time to unleash their full potential. In SEO for instance, the growth in traffic, rank, and even revenue, is gradual but exponential. In three months, you won’t see your traffic increase three times, the results are likely to be far more impressive.

This is why you need to be ready and willing to engage in some short-term methods that will result in great long-term gains. Branding, of any kind, also takes time to reach a certain critical mass. It takes time to establish brand recognition and for this recognition to grow into brand awareness. What this means is that (in terms of revenue increase) the growth will be moderate, early on, but sizable the longer these methods are active.

5. Justifying costs

One of the biggest challenges when it comes to allocating a budget for branding and marketing is the justification of these expenses. First of all, marketing presence is a resource, which means that by investing, you’re actually buying your share of the market. Without it, your business doesn’t have any influence in the field that you’re trying to compete in.

Second, you can always use data in order to justify your investments. Previously, we talked about the ROI, however, putting all of this on paper and presenting it through data will give you far more persuasion power. Remember to keep these reports short, to the point, and as descriptive as it gets. This is really the only way to achieve your respective goals.

In conclusion

In the end, money invested in marketing is money well-spent. John Wannamaker once said that even though half the marketing he invests in marketing is wasted, he can never know which half. Fortunately, in the era of digital marketing, this is no longer the case. Instead, you get to track every dollar in your marketing budget, follow all the latest trends, and get all your feedback in real-time. All of this gives you an extra incentive to look at your organization’s marketing spending from a completely new perspective.