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Issue: 6
"I use JH&A year after
year because the
advertising they design
works, they understand
our products and
customers, and hit the
target every time. I get
a solid return on the
money I invest in
them."
- 3M Client
August 2012
"How Much Should I Spend on Marketing?"
John Wilkinson, Business Communications Strategist
Even seasoned marketers routinely
wonder how their budget stacks up
against traditional averages and what
they should be spending. Our answer
is always the same: "It Depends!"
Featured Project:
Rebrand and
Marketing of Next
Generation
3M Classroom
Projectors
The first step in determining an
appropriate budget is a change in
mindset. Consistent, long-term
marketing is NOT an expense.
Rather, it is an essential investment that pays dividends in the form
of sales, income and market share. Marketing is a business asset
that drives revenue.
A fast, easy way to set your spend is to fund marketing as a
percentage of gross revenue. Start-ups and growth-oriented
companies, especially those in highly competitive or emerging
We all grew-up with
3M overhead
projectors in the
classroom. But over
the years, the firm lost
market share to a host
of competitors.
Determined to reverse
the trend, 3M's Mobile
Integrated Services
Division (MISD)
called JH&A.
READ MORE...
fields, must spend a higher percentage of their revenue to build
awareness, educate prospects and drive sales. Established brands
with known products and an existing customer base may get away
with lower, maintenance-level spending.
Business analyst firm IDC reports that early-stage companies
routinely spend 75-150 percent of their annual revenue on
marketing during the first 2-3 years in business. Established brands
spend 10-20 percent, while mature 'cash cows' can be milked
spending just 5 percent. Inc. Magazine reports that almost half of
the Inc. 500 spend between 10 and 20 percent of their gross
revenue on marketing. And online resource Marketing Profs states
that growth-oriented companies invest between 9 and 18 percent
annually.
A more sophisticated approach is to determine the marketing cost
of each sale multiplied by the desired number of sales for the year.
For example, if a widget costs $12 to market and your goal is to
move 1 million widgets this year, your marketing budget should be
approximately $12 x 1,000,000, or $12 million. This approach
requires insightful projections or an accurate analysis of historical
data to determine the cost of moving a widget. Shortchange the
required investment and sales will fall - exponentially.
These are just two of the more common strategies used to set a
marketing spend. Numerous variables affect this simplified
perspective, and you must identify and account for them all. It is
also critical to remember the important lesson the dot-com bust
taught overly optimistic investors: A company can outspend its
available resources for a very limited time before economic reality
sets in. Following these proven guidelines will help your marketing
spend become an indispensable investment that generates
demand and builds the bottom line.
Cline to Speak at Annual NI Week Event
JH&A Managing Partner Patrick
Cline has been tapped to speak
at National Instruments' "NI
Week 2012." Cline will partner
with Cal-Bay Systems' Vice
President of Sales and Marketing
Guy Nunnellee to discuss
"Winning Brand and Marketing
Strategies For Tech SMBs."
Cline has presented a variety of marketing and branding seminars to
leaders at The University of Texas at Austin, The Big 12 Conference,
Texas State University, The San Antonio Advertising Federation, The
Independent Welding Distributors Cooperative (IWDC) and Ms.
Bray's 3rd grade class at C.C. Mason Elementary School. Earlier in
his career, Cline was an adjunct instructor at Austin Community
College where he taught marketing, advertising and public relations.
When you need experienced, outside counsel
concerning your marketing priorities and budget,
turn to the professionals at JH&A. We've been
creating innovative marketing programs for over 25
years, and are eager to boost demand for you!
Visit us online at www.jhaadvertising.com
or email [email protected]
JH&A Advertising | 2312 Western Trails | Suite 303c
Austin | Texas | 78745 | 512.444.0716
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