When proposing potential ads on your startup, one of the first questions you may be faced with is, “How much would it cost?” If you’ve put together a killer startup marketing budget, you’ll be well equipped to help executives understand and buy into your vision.
A marketing budget should detail how much you will spend on paid advertising that fits within your budget. overall strategyand prove an eligible expense based on the revenue earned.
in a world where 82% of startups fail due to cash flow issuesThe stakes are high for these new businesses. Startups often face limited resources and small budgets, which makes it difficult to claim a marketing budget.
This post covers how to determine what your marketing budget should be and what it should include.
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marketing cost for startup
When your company is new, setting an initial marketing budget can be confusing. In some cases, budget decisions are top-down, motivated by competitors, or made by setting goals.
If this isn’t the case with your startup’s operations, first focus on what will generate the most revenue. Revenue determines what your marketing budget should be and where the money should be allocated.
startup marketing budget
A startup marketing budget outlines the money a new company intends to spend on marketing tasks. Startups generally factor in major expenses such as advertising, content marketing, technology and automation software in their budget.
The money from your gross revenue should fund your marketing budget. So, how much of your gross revenue will you need? The average marketing budget for startups should be 11.2% of total revenue. This percentage gives marketers enough resources to build brand awareness and attract leads.
If you’re starting your budget from scratch, consider using a marketing budget template To outline your Phase I marketing activities and costs.
Marketing budget as a percentage of revenue
Gross revenue is earned income before any deductions or wages. Projected revenue is the number of income you expect to earn over a given period of time. Typically startups should spend around 11% of their revenue on marketing.
To identify your gross revenue, calculate your total number of sales/advancements.
If you don’t have a gross revenue estimate yet, determine how much you’re projecting and use those numbers as a benchmark. Explore tools to help you estimate your gross revenue, Like this online calculator from the Small Business Association,
Now that you understand the first step of budgeting, explore your other possible needs.
Startup Marketing Budget Ideas
So, what do you need to include in your budget?
Once you have the money set aside, you can begin to break down the costs. Think about your natural day-to-day costs and the resources you’ll need to make your marketing a success.
You can put this information in a spreadsheet or template, Like these free marketing offers from HubSpot.There are no real rules with budget design, as long as it is understandable and detailed enough to be useful.
Remember to consider the following expenses, such as:
- technology. When you’re creating a campaign, consider the technology you’ll need to use, such as software to create a product page or manage a product drip program, There are lots of marketing tools out there at various price points (and even free software), so be sure to write down what software you’ll need to buy. check out this blog To determine which products fit your budget.
- research. If you haven’t discovered your target audience yet, you may need to invest in market research. Read the “How to Write a Startup Marketing Budget” section below for more information on market research.
- automation. Services that automate marketing processes can make your life a lot easier. They can also be beneficial for startups that don’t have the resources to spend money on extra hands to complete projects.
- Production. If you need content pieces, product or advertising videos, or images, you’ll want to budget for these items as well. Instead of paying for many different services, you could hire freelancers to fill these roles.
- paid advertising. Are you planning to run TV, radio, or online advertising? This is the category where you take those costs into account. It’s easy to add paid advertising, some startups cost as much 20% of their annual budget on advertising alone. Remember, you can estimate the cost of paid ads. take a look at our advertising guide Find out the prices for anything from PPC ads to social media ads.
- branding. The assets that make up the first impression directly affect your branding. This may include business cards, billboards, swag and signs.
- content marketing. Decide how much you are going to allocate to the deliverable. Consider automation services, such ashubspotOrSprout SocialAnd content ideas that you can create organically for free.
- traditional advertising. Make traditional advertising a line item, if applicable to your business. Paid advertising is usually online, but traditional advertising refers to advertisements such as print and billboards.
- New Employee. If you plan to grow your team with full-time or part-time employees, you’ll need to factor their costs into your marketing budget.
- unexpected cost. Expect the unexpected when figuring out your budget. Plan for equipment breakdowns or campaigns taking longer than you anticipated, generating higher costs.
Working from your business goals helps you make informed budgeting decisions. For example, if your company’s goal is to increase brand awareness, you’ll probably want to devote most of your budget to branding, content marketing, and paid advertising.
Remember that you can play around with most of these cost-free methods. For example, if you’re certain that automated software will help your startup, look for free trials or free services that you can use to determine if the cost is worth it.
Tips for Writing a Startup Marketing Budget
Before writing your startup marketing budget, consider the following tips.
1. Check that the investments are worthwhile.
Startups have limited resources and need quick wins. Your first goal should always be to convert leads into sales. Before spending, ask yourself, “How does this empower the sale?” If the answer is no, it’s probably not worth the money.
2. Do competitor research.
Check out the websites and blogs of your main competitors. What are they writing articles about? What keywords are they targeting? And finally, how can you improve their strategy?
Remember that SEO is a long game, and you won’t see instant wins. However, you must optimize your articles from the very beginning to build the right SEO foundation.
3. Know yourself Customer journey.
There is a reason why your customers choose you. Understanding their buyers journey is valuable information. This knowledge can help you determine which channels are effective and worth the budget.
4. Prepare to report on your ROI (Return on Investment).
You will be accountable for how your marketing budget is spent. Make sure you keep track of the leads you collect and the revenue that can be attributed to marketing.
When you need to report your ROI at the end of the year, you’ll already have the data at your fingertips.
5. Review your marketing budget annually.
Between inflation and economic changes, your budget will definitely need an annual review.
In fact, according to HubSpot research, 48% of marketers anticipate their budgets will increase in 2023. Whether your budget increases or decreases, you must be prepared to make adjustments.
How to Write a Startup Marketing Budget
As a marketing leader, you must set a budget and determine how the money will be spent. This step-by-step guide shares how you can write a clear, concise marketing budget for your startup.
1. Calculate your revenue, and set your budget.
Remember, startups generally need to allocate 11% of their revenue(before taxes) for marketing to grow. So setting your budget is as simple as setting 11 percent of your gross revenue, right?
Maybe, but your marketing budget requires executive approval. Plus, you’ll want to support your budgetary decisions with statistics and a solid plan.
Once you’ve identified your overall plan, you can get a ballpark budget estimate. As a guide, think about your business and campaign goals. From those goals, choose the areas in which you want to invest the most.
2. Do market research.
thoughtful Research This can determine which of your products have the best potential for paid marketing campaigns. You will also know which channels attract the most leads.
Remember: Doing market research can cost you money and require space in your budget. This is especially true if you need to encourage customers to participate with gift cards or promotions.
3. Work with Product and Sales to identify campaigns.
Your startup sales and product teams have valuable insight into which products need special marketing attention. Work closely with these teams to identify which campaigns you want to launch during the year.
4. Create a marketing calendar.
Assign marketing campaigns tentative dates and costs, spreading them throughout the year so you don’t use up your budget all at once. Once you’ve created a tentative calendar, it’s time to approve your startup marketing budget.
5. Get executive buy-in.
By this point, you should have a solid marketing budget outline. Your marketing budget will need to be convincing and have a persuasive argument.
Make sure you communicate the strategy behind each price. Finally, be sure to highlight exciting opportunities and how they play into your budgeting decisions.
A clear marketing budget can help you grow your startup business. By tracking expenses and allocating funds to essential needs, you can reach your campaign goals.
Having a marketing budget can also ensure that you have the freedom to make decisions without running past executives’ every idea.
Be sure to leverage your startup company’s passion for your product to make marketing a successful and exciting endeavor.
Editor’s note: This post was originally published in March 2020 and has been updated for comprehensiveness.