Sometimes leaders should trust their intuition. But it’s never a good idea to make a decision from emotion.

Intuition comes from experience and good judgment. Emotion, on the other hand?

Emotion enters the picture before facts and experience. It’s not usually based on anything.

And when it comes to making a decision about your business, it’s almost always a bad play.

Setting a Marketing Budget Should Never Be an Emotional Thing

Making an emotional decision about marketing can lead to big mistakes. But you might be asking: why would marketing be any more emotional than any other area of my business? The answer is simple: Even if you’re a savvy business leader, you’re in the minority if you have any marketing experience. Most leaders do not.

This is especially true for founders of service-based businesses.

Leaders like you find something they’re good at and look for ways to offer it to the world by serving themselves up as the face of the company. In effect, they become their own greatest marketing asset. That works for some time, but sooner or later you’ll find yourself out of runway for organic growth.

Facing that crossroads can be emotional. Combine that with inexperience in marketing and it’s often a recipe for trouble. When your marketing budget is set too high or too low, it’s all too easy to end up struggling with growth even when the fundamentals of your business are sound.

So. If your zone of genius is anything other than marketing, take a step back.

There’s a proven, empirical approach to setting marketing budgets effectively.

Here’s How to Take the Mystery Out of Setting a Marketing Budget

It’s easier than it might look to set a marketing budget that works.

No matter where you are in your growth trajectory, your marketing budget should always be set by looking at an industry-standard percentage of gross sales.

Here are some examples:

If it is recommended that a business spend 5% of gross on marketing and advertising, that amounts to $10,000 per month, then 40% to 60% of that $10,000 per month should be allocated to digital marketing.

If the business grosses $2 million per year and targets 5% of that gross for marketing and advertising, the 40% to 60% of that 5% that should go to digital marketing works out to $60,000 per year – or $5,000 per month.

What’s the Right Marketing Budget Target for YOUR Industry?

Here’s where things can get a little bit tricky.

And it’s where a full-service marketing agency can really help.

The right marketing budget varies considerably based on your industry, location, size, and more.

That said, there is a rule of thumb:

• A conservative marketing budget works out to between 2% and 5% of gross.
• Whatever your budget is, 40% to 60% of it should be earmarked for digital.
• A budget over 5% should be considered for periods of aggressive growth.

These are good general guidelines – but your marketing budget should still be tailored to your specific situation. You don’t want to set the stage for an aggressive marketing budget if it’s likely new demand could surpass your team’s ability to service new clients. A finely calibrated marketing budget delivers the best results.

The straightforward way to identify that budget is to work with a full-service marketing agency whose consultants bring an executive leadership perspective to the table. When your marketing agency partner understands your position, needs, and challenges, it lays the foundation for a fruitful collaboration.

Marketing Is a Fuel Cost – We Can Help You Fill Your Tank the Right Way

Let’s face it: These numbers can be frightening for a business that’s never needed marketing-led growth.

Or for one that’s tried marketing – digital or otherwise – only to be disappointed in the outcome.

We get it.

Here’s the first step: Look at marketing as a fuel cost.

It’s what the engine – your business – needs to gain traction and move forward toward your goals.

When you understand marketing as a general operating cost, it’s easier to see it as a wise investment. And that investment can be predictable and accountable when it’s built on a strong foundation of experience. You need proven outcomes and rational judgment without the blame, guilt, or fear emotions can add to the equation.

New York Ave is the team for savvy business leaders who want to have a grown-up conversation about their business goals and how marketing can get them there. We take a strategic, holistic approach based on a full understanding of your business backed by dozens of successful engagements with companies like yours.

Contact us to find out more or get started with the team that takes marketing seriously.