If you are like most small business owners, you are unsure how much you should spend on marketing your business, products and services. Congrats, you have taken the first step! You have decided to start marketing and grow your business!
Marketing is an essential aspect of any business, especially for small local businesses looking to grow and expand their customer base. However, many business owners struggle with determining how much to spend on marketing.
In this post, we’ll discuss how much a small local business should spend on marketing and delve into specific marketing tactics that produce results without breaking the bank.
Minimum Spend on Marketing
Let’s cut to the chase, Small local businesses should allocate a minimum of 8-10% of their annual revenue to marketing. For instance, a business with an annual revenue of $500,000 should spend at least $40,000 to $50,000 on marketing. Similarly, a business with an annual revenue of $1,000,000 to $3,000,000 should spend at least $80,000 to $300,000 on marketing, and a business with an annual revenue of $3,000,000 or more should spend at least $240,000 or more on marketing.
With that said what is more important than how much to spend, is only spend if it’s working. If your efforts aren’t producing, readjust your strategy and focus only on what works. Be prepared to adjust and optimize strategies as needed. The world changes faster than ever before, and technology amplifies that, so always remember just because it worked once doesn’t mean it will work now or continue working forever. Algorithms change, technologies are released, consumer preferences change, the marketing world can be a wild ride!
While the minimum spend may vary depending on the business’s revenue, and industry. Small local businesses with competition in the market should allocate a minimum of $12,000 annually to invest in effective marketing tactics. If you have the luxury of not sharing your trading market with competitors you can spend quite a bit less.
Now that we have talked about how much, lets talk about how:
Pay-per-click (PPC) advertising is a highly effective marketing tactic for small local businesses. With PPC ads, businesses can target specific keywords and demographics and pay only when someone clicks on their ad.
The cost of PPC ads can vary widely, depending on factors such as the industry, the competition, and the target audience. However, small local businesses can typically expect to pay between $1 and $2 per click for their ads. For instance, a business with a $12,000 marketing budget could run a PPC campaign with a daily budget of $40 to $80, generating 30 to 60 clicks per day and potentially driving significant traffic and sales to their website.
Consistent Social Media Posting
Social media is an essential marketing channel for small local businesses, allowing them to connect with their audience and promote their products or services. However, to be effective, social media marketing requires consistent posting and engagement.
Social media marketing can be a cost-effective marketing tactic, with the main cost being the time and resources required to create and schedule content. However, businesses should consider investing in social media advertising to increase their reach and drive more traffic to their website.
Posting to your page is rarely enough to achieve any growth. Social Media Channels are businesses too and they want to make sure their users are happy and getting the most out of their time on Social Media. One way they ensure this happens is by using algorithms. These algorithms decide whether or not a post will be popular and users will engage with it. So your posts are shown to a fraction of your followers, if that section interacts with the post , the algorithm says of this is a good one and shows it to a slightly larger section of your followers and so on.
So with that said, businesses should consider investing in social media advertising to increase their reach and drive more traffic to their website.
Search engine optimization (SEO) is another essential marketing tactic for small local businesses, allowing them to rank higher in search engine results and increase their visibility to potential customers. SEO encompasses a range of techniques, including keyword research, on-page optimization, and link building.
The cost of SEO can vary widely, depending on factors such as the level of competition and the scope of services required. However, small local businesses can typically expect to pay between $500 and $2,500 per month for ongoing SEO services. Small local businesses should prioritize optimizing their website for local search terms, such as their city or neighborhood name, to ensure they appear in local search results.
Additionally, businesses can invest in creating content that targets specific keywords related to their industry and products or services. Creating a blog and publishing regular content can help improve a business’s SEO ranking and drive more organic traffic to their website.
Other Marketing Tactics
In addition to the marketing tactics discussed above, small local businesses can consider other tactics to promote their business effectively, such as:
- Email marketing: Email marketing is a highly effective way to reach and engage with customers, with an average return on investment of 42:1. Small local businesses can use email marketing to promote new products or services, offer exclusive deals and discounts, and keep customers informed about business updates.
- Influencer marketing: Influencer marketing involves partnering with influencers, such as bloggers or social media personalities, to promote a business’s products or services. While influencer marketing can be expensive, it can be a highly effective way to reach a larger audience and generate more sales.
- Events and promotions: Hosting events and promotions can be a highly effective way for small local businesses to promote their brand and attract new customers. Businesses can partner with other local businesses to host joint events or offer exclusive discounts to customers.
Using a Marketing Agency
While it is possible for small local businesses to handle their marketing efforts in-house, working with a marketing agency can provide a range of benefits. Marketing agencies have the expertise and resources to develop and execute effective marketing strategies, including identifying target audiences, creating compelling content, and managing social media accounts.
Small local businesses can benefit significantly from working with a marketing agency. Marketing agencies can help businesses develop and execute comprehensive marketing campaigns, including creating and implementing marketing strategies, designing and launching ads, analyzing and measuring results, and providing ongoing support.
Marketing agencies can also help businesses track and analyze the success of their marketing efforts, providing valuable insights into which tactics are driving the most traffic and sales. This information can help businesses make data-driven decisions and optimize their marketing strategies for maximum impact.
The cost of a marketing agency can vary widely, depending on factors such as the size of the agency, the scope of services provided, and the level of expertise required.
However, small local businesses can typically expect to pay between $500 and $10,000 per month for the services of a marketing agency. This is an effective investment that helps businesses achieve their marketing goals and grow their customer base much faster, while saving additional employee expenses, a massive time saver, and gives you the ability to focus on your business and your customers.
Determining how much to spend on marketing can be challenging for small local businesses, but it’s essential for driving growth and success. With a minimum spend of $12,000, small local businesses can invest in a range of effective marketing tactics, including using a marketing agency, running PPC ads, maintaining consistent social media posting, and optimizing their website for search engines.
It’s important for small local businesses to allocate their marketing budget strategically and consistently evaluate their ROI to ensure they are getting the most out of their investment. With the right approach, small local businesses can achieve their growth goals and compete effectively in their respective markets.
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