This real life question was answered by Patricia van den Akker, the Director of The Design Trust, and an award-winning creative business adviser, trainer and coach.
“A good question! But a difficult question to answer … how long is a piece of string?
Firstly I don’t think that marketing needs to cost that much. You can get good results with a) knowing what your marketing & financial goal is, and which marketing activities will get you there, and b) spending enough time to actually DO the marketing! Indeed, it is much more important that you invest time rather than money in clarifying your marketing goals, and then spend time on doing marketing and selling to achieve these goals.
But a marketing budget does help … so what should your budget be? Here are 8 questions to determine the right marketing budget for your creative business:
Q1: How much money can you afford?
Straight forward question – if your budgets are limited than you will not be able to spend as much obviously. But I would dare you to think about marketing not necessarily as a cost, but as an investment, which leads to the following:
Q2: What do you want the return on investment (ROI) to be?
You need to decide on the following:
- What do you want to achieve with your marketing? What is your marketing and financial goal for say the next 12 months, or for this project?
- How can you achieve that marketing goal? What are the specific marketing activities that you will need to do?
- How much would each of those marketing actions potentially cost you (min and max price)?
- And lastly how much will each potentially bring in in revenue?
You then can decide which one will be the most ‘profitable’.
For example trade fairs are very expensive, but can generate great publicity and access to potential trade buyers. Spending £2,000 on the right trade show for you, can generate a couple of thousands £ of income (in the medium term).
So check what your marketing and financial goals are, what the most effective ways are to achieve them, make a list of the costings and predict how much income they will generate (short and medium term).
Talk to other creatives to make sure that your predictions are realistic. For example many people invest heavily in a new website, but actually it is really difficult to generate enough traffic to come to your website, let alone that people buy from you. A website is NOT a quick fix solution. It takes time, effort and dedicated time to drive traffic to your website before you will get any online sales. Often it is better to have a fairly simple website to start with, and have an additional online presence through online shops and portfolio websites who already generate the kind of traffic and clients you are looking for.
Q3: How much did you spend last year?
Many people check how much they spend last year, and then spend more or less the same amount in this financial year. A very common way to decide on your marketing budget!
Q4: Where do you live?
Some marketing related fees differ hugely, depending on where you live. Those in London and the South East will often spend more on PR, photography and printing costs.
It might be really worthwhile to shop around and use a marketing expert, designer, photographer or developer from outside of the Capital.
Q5: How established are you?
It is normal that if you are a new creative that you will need to spend much more time and money on marketing than if you are a more established business. When you start out you will often need basics such as a brand, presentation material, good photography, a website or other online presence
On the other hand, if you are more established you might need to research in more detail what the competition is up to or what your ideal clients expect:
Q6: What does your competition spend on marketing?
This is not easy to find out exactly, but sometimes you will need to match your marketing effort with your direct competitors.
- How much are they spending roughly? Have a look at their website, social media or trade show stand and guess what they are spending.
- How glamorous is their brochure, website, packaging, private views, exhibition designs, canapees, …
- Have they got a PR agent, where do they advertise or which trade shows will they do?
Q7: What kind of market or clients are you aiming for?
The more luxurious your ideal clients the more likelihood it is too spend more on your marketing. Full colour brochures, gold lettered logos on black velvet packaging, flowers in your studio – they all create the atmosphere and brand you want, but it does cost money.
Especially if you have ambitions to grow your business, to become more known and raise your profile, then you often will need to spend accordingly. (Although creativity and your own hard work can do wonders to get noticed sometimes too!)
Q8: Last but not least: Percentage of turnover
If you have taken all of the above into account, then there is also a bit of a guidance from market research, which suggest that your marketing budget should be between 5 – 10% of your turnover on marketing. But note that if your turnover is low, this % should actually be higher.
top tips to save money on your marketing budget:
- Shop around! Get at least 3 quotes, do speak to various people and get recommendations. Make sure you get the right adviser or professional to help you.
- Set your own marketing budget, and then go with this maximum amount to various potential providers and see what they can deliver for that amount. This will make sure that you won’t go overboard or overspend.
- Don’t always go for the cheapest option, but see what they can potentially contribute to your business. Make sure you work with professionals, so that you don’t waste money or time unnecessary as you probably don’t have either.
- See if you can do a swap with somebody e.g. a photographer who wants a website can swap with a web designer.
How do you set your marketing budget? Feel free to share with comments below. If you liked this post, why don’t you share it with others?
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