You can market a startup on a shoestring budget by researching what each channel costs, focusing on the few activities with the best return, setting a firm budget per campaign and tracking every dollar against results. Low-cost channels like content, SEO, email and social media can carry most of the load.
Marketing costs are easy to underestimate, especially the hidden costs of digital work like design, development and ongoing social media. Below, we cover how to work out your costs, where to put the money, effective low-cost tactics and how to track spending.
Small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing, according to the U.S. Small Business Administration
What are marketing costs and how do you determine them
Marketing costs can be a daunting prospect for startups. Here’s how to work out what yours will be and keep them under control.
So what are marketing costs anyway? In short, they are the expenses incurred while marketing your product or service. This can include anything from advertising and PR to market research and trade shows. Determining the specific cost of each campaign can be tricky, as it depends on various factors such as budget, audience, and goals. However, there are some general rules of thumb that you can follow when estimating your marketing costs.
The first step is understanding the difference between fixed and variable costs. For example, printing flyers is a fixed cost: no matter how many you print, your cost per flyer remains the same. On the other hand, each time someone reads your flyer and signs up for your mailing list or downloads your app, there’s a variable expense created.
“The next step is to define the goal of your marketing campaign. The cost associated with each marketing activity depends on what you’re trying to achieve, so it’s important that you have a clear idea of what that is. For example, if you want more traffic to your website, you would need to spend more on SEO than email marketing. However, working with a B2B email marketing agency can help you effectively grow and engage your mailing list, ensuring higher conversions through targeted campaigns.
Ecommerce brands spend 10-24% of their budget on SEO, according to Marketing Sherpa.
Once you’ve established these two factors, it’s time to start thinking about how much budget and funds you have available. If the cost of your marketing campaign is going to be more than half of what you’re expecting in revenue, it might be worth rethinking.
Where to allocate those funds
Where should you put your marketing funds? Should you go all-in on an extensive ad campaign or try a series of smaller initiatives? What’s the right balance for your business?
Here are some things to keep in mind when budgeting for marketing:
- Do your research. Make sure you have a realistic idea of what each type of marketing costs. Don’t just take industry averages at face value – understand what specific campaigns will entail and what’s the best way to reach your target audience.
- Be choosy. Not every initiative needs to be expensive or high-budget. There are many ways to get creative and promote your company without breaking the bank. Start by focusing on the activities with a greater return on investment.
- Know your limits. For every campaign you undertake, know your budget and stick to it! In startup marketing, there is no shortage of ideas or opportunities—only a lack of time and money. Choose the activities that maximize your efficiency and prioritize your initiatives.
- Keep it personal. Marketing is about building relationships with your customers and potential clients—not pushing out ads on social media or TV. So, make sure you choose activities that will help you communicate with your audience more personally.
What are some effective ways to market your startup
There are various ways to market your startup on a shoestring budget. One way is to utilize free or low-cost marketing channels. For example, you can post about your company on social media, create a website or blog, or distribute flyers and brochures. You can also take advantage of online marketing tools such as email marketing, search engine optimization, and pay-per-click advertising.
A total of 88% of marketing influencers agree that email marketing effectiveness is increasing to some extent, with nearly half of those (40%) describing the increase as significant. Only 12% say email marketing effectiveness is decreasing, according to Ascend2.
Another way to keep costs down is to work with a startup marketing agency or company. These organizations often have experience creating and executing successful marketing campaigns and can help you get the most for your money. Compare quotes from several agencies and ask for references before making a decision.
First, you should research different types of marketing. This can help you determine what channels your startup will need to use in order to reach the right audience. For example, if you create new technology or medical devices—like emr software used in healthcare—you may want to target industry groups on LinkedIn or via email Or maybe you want to get more creative and create an online video or mobile app.
Second, you should know how much you currently spend on marketing and advertising. This includes everything from online ads to traditional campaigns such as TV commercials and magazine print ads.
All other measures have also increased among people who notice print ads. For starters, close attention to print ads has more than doubled since 2009/10, from 23% to 49% in 2020. Also, ad recall for print news brands has increased by an impressive 67% between 2009/10 and 2019/2020, and emotional reaction to print ads is now 37% in 2020 compared to 22% five years ago. According to Newsworks, 2020
It also includes your website hosting fees, consulting fees for SEO work, and even the cost of business cards and samples that you give out in meetings with potential investors. Partnering with a B2B SEO solutions provider can help maximize your SEO investment by optimizing your website for better visibility and lead generation. Then, you can base your startup marketing budget on a percentage of these expenses. For example, if you currently spend $100,000 per year on marketing and advertising, you can allocate 10% of that to your next marketing campaign.
How can startups track marketing spending and measure the success of their campaigns?
Marketing is all about communicating the value of a product or service to potential customers. However, it can be challenging to determine whether or not a marketing campaign was successful. Many factors, such as the number of leads generated, the number of conversions, and the ROI, must be considered when measuring the success of a campaign.
To measure the success of your marketing campaign, you need to set some objectives and goals beforehand. You should also track your progress along the way so that you can make adjustments if necessary. And finally, don’t forget to evaluate the campaign after it’s over.
Always track your expenses and results. This way, you can ensure that your campaign is effective and that you’re not wasting any money. There are a few different ways to track your marketing expenses and results.
One way is to use a marketing dashboard. A marketing dashboard can help you track your website traffic, social media followers, leads generated, and more. This way, you can see how your campaigns impact your business overall.
Another way to track your marketing expenses and results is through Google Analytics. Google Analytics can help you track website traffic, goals achieved, pages visited, and more. This data can help you see which campaigns are most successful and which type of content is most engaging with your readers.
Do you want to track everything in just one place? It would help if you tried the marketing dashboard and Google Analytics combo. This way, you can track your marketing data in one spot and be more effective.
How do you know if you’re spending too much or not enough on marketing
How much is too much, and how much is not enough on marketing? Unfortunately, there is no definite answer to this question. Every business is different, and each has unique marketing needs. However, there are a few things you can do to help determine if you’re spending too much or not enough on marketing:
- Compare your marketing budget to those of your competitors. You may be overspending if you’re spending significantly more than they are.
- Evaluate the results of your campaigns. You may need to adjust your budget if you do not see any return on investment.
- Track the number of leads and customers generated from your marketing efforts. If the cost of generating a lead is high, you may need to adjust your budget.
- Evaluate the cost of acquiring a customer. You may be overspending if each customer costs more than it’s worth.
- Track how many customers come from referrals and repeat sales/purchases. If these two numbers are low, you may be under-spending.
Set Your Budget Before You Spend
Campaigns often cost more than planned, so set your budget before you start and build in a buffer. Crunchbase’s guide on how startups can keep these costs under control is a useful companion.
Track spending against a few KPIs, like cost per lead, customer acquisition cost and conversion rate, for every campaign. Review them monthly, cut what doesn’t pay back and move that money to what does. That’s how you judge the effectiveness of your marketing strategy on a lean budget.
If you want help getting the most from a small budget, contact us.
Sources
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U.S. Small Business Administration: How to Set a Marketing Budget that Fits Your Business Goals and Provides a High Return on Investment.
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Marketing Sherpa: eCommerce Benchmark Study.
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Ascend2: How effectiveness is changing email marketing.
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FinancesOnline: Benefits of Print Marketing.