Hi! Our project is a crowdsourcing marketplace. We are now building our budget in order to estimate how much we should ask investors. We have a good estimation on the operative costs and IT development costs, but we have no clue on how much to spend in Marketing (Adwords + Social Media). Could somebody please help us to know how big this number should be? or at least the range.. 1K/10K/100K per month? Thanks!
That question can only be answered by taking your goals to a marketing company. As a web marketer we try to understand not just what the prospect is looking to achieve (leads, branding, increased profits, etc.), but by what means they feel is the best way to achieve those goals (social media, content messaging, SEO, etc.) It also helps to know how aggressive they want to tackle it. Most companies understand that despite wanting it all, their budget limitations might prohibit an all-out web market assault.
With these considerations we develop a proposal that we feel will produce a successful web marketing campaign, providing the best value within whatever limitations they set.
In terms of raw numbers, a web marketing campaign itself can be as low as $1000 per month (not very aggressive, even for a small, niche site) up to $10,000 per month, which ultimately may not be aggressive enough for even a large site.
There could be 2 approaches to it.
The first one - the perfectionist approach - is more suitable for already established companies (big, medium or small) that have been in business for more than a couple of years, & that have some market insights on their target customer segments, their needs, their consumption/spending patterns etc. + previous years' revenue figures & budgeted vs actual spending. This is where we need to understand your upcoming years' business objectives/goals which we translate in to your marketing objectives/goals which we further translate in to your marketing spending. Simply put, the more demanding your marketing goals, the bigger your marketing spending, & vice versa.
The second approach is quick-&-dirty, usually suitable for startups or greenfield projects. This is where we can build it bottom-up or through benchmarking vs other similar projects etc. As the name suggests, it's always going to be rough.
Net, considering your project is a startup, I'd use a rule-of-thumb for estimating marketing budget, i.e. it should be no less then 10% of your expected revenue for the year. & since you're budgeting to raise capital from investors, you should be a bit more aggressive in your estimates & plan about 15-20% of your expected revenue to be on the safe side. Doesn't mean you spend it all but you might need this cushion considering you're a startup & might need to invest a bit heavily in the beginning years while justifying your marketing ROI.
Can you access any industry benchmarks on marketing spending for comparable companies? It would help to know, at least, conversion rates and performance during the first year.
I answered a similar question some time ago and wrote the answer on my blog, including a template for the budget.
- (What is a Marketing Budget? http://j.mp/1L9CXaj)
I would be happy to help you with the marketing budget for your project.
- Book a call.
Seriously, start with assumption that you don't have any budget and come up with the best possible strategy with that limitation. You now have your MVP (minimum viable "product" or in this case approach).
Given a small budget I would never jump immediately into paid media. I've built two successful programs, one at IBM and another at HPE. Both with triple digits ROI. I never would advice with "start by buying ads".
I would start with what value can you provide your prospective customers through content? In other words, what can you teach your prospective customers that will help them do their jobs better and build trust.
Here are some tips that might help you:
1) Leverage freelancer networks like Upwork for a lot of your work. Everything from Wordpress theme customization to design to writing/editing content.
2) When available use solutions already out there. Don't hire an agency to build you a blog, get a template from a site like ThemeForest.net and have a freelancer help you customize.
3) Use GA (google analytics) -- no brainer
4) Use some of your budget on critical tools like marketing automation (Pardot, Marketo, etc), social media (BuzzSumo), etc.
5) Integrate your marketing automation with your CRM. This piece is critical as you want to be able to measure things from end-to-end and see what's working.
6) Don't just give media companies money instead growth hack. There are a lot of ways to generate attention and traffic without paying for it directly. You can reach out to some existing groups and communities and do partnerships. I can help with this or happy to share what I've done.
7) Spend a good chunk of your budget towards content creation both articles/blogs and long-form content (ebooks, reports, etc). Focus on inbound vs outbound.
8) Use the paid media budget to amplify content and offers that are already working. Don't put money on unproven content and/or landing pages.
9) Optimize like crazy. Test everything, make a bunch of mistakes quickly and be super scrappy but data driven.
I hope this helps, it's a lot easier to share more on a call but regardless I hope there's some value to you and others with the quick tips above.
BTW I'm brand new here but love the idea of helping others solve challenges. I'm currently managing a multi-million dollar marketing and content program with hundreds of freelancers and 10 employees for a Fortune 50 company.
Companies with smaller margins should allocate a percentage of their revenue or of their investment funds based on estimates of what competitors are spending. These investment levels will be out of the comfort zone for several businesses. Many businesses have failed because they were unwilling to properly budget for marketing activity. Companies can grow to a certain point via word of mouth, but after they hit a certain size threshold, they will stall without concerted marketing efforts.
You can read more here: https://www.frog-dog.com/magazine/how-much-should-companies-budget-for-marketing#:~:text=As%20a%20general%20rule%20of,percentage%E2%80%94usually%20around%2010%20percent.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath