What Should My Internet Marketing and Advertising Budget Be?

advertising and marketing budgetEvery day I meet clients who aren’t sure what they should be spending on SEO, Internet marketing or digital marketing. Some clients spend 20% of their gross while others think that 1% is a lot of money.   I recently met with a client who had an annual gross of $450,000 who claimed she was spending way too much on internet marketing and he couldn’t afford to update her site to be responsive (mobile friendly).   Yet this client spends less than $4,000 a year total on marketing. When I explained that other businesses with a similar gross spend over $20,000-$45,000 per year, the client was astounded.

The Rich Get Richer and the Poor Get Poorer

After 17 years in business, I’ve watched the rich get richer and the poor just get poorer, especially in tourism, hospitality and retail. I still remember the first time one of the small hotel owners drove to my house in her BMW and her attitude was, “whatever it costs, I want the best” …and the best is what she got. Every year her business flourished, and she is now retired and lives a posh life in Florida.

Sadly, the opposite is also true; the guy who came in and said, “I can’t afford much,” struggled each year and still struggles to date. Think of your business like a flower and marketing, advertising and upgrades like fertilizer and water. If you don’t invest in your marketing or your business, it will not grow.

So what is the rule of thumb?

Wondering what works for an online marketing budget? How much SHOULD you spend on your marketing, SEO, internet marketing and advertising? What are others doing?

  • Most businesses spend from 1%-30% on marketing
  • According to the CMO Survey 2012, the average marketing budget is 11.4% of gross revenue
  • We recommend to our tourism clients that they invest at least 5-10% of gross revenue
  • Large companies spend well over 10% of gross on marketing
  • Smaller businesses tend to spend less than 10%
  • If your current marketing works, then why not invest more and grow?

Not Looking To Grow?

There is always the exception to the rule… One lady came to me – she spends less than .5% of her gross on marketing, and she asked,”Do I need to spend more?” I asked her, “Are you still sold out all summer?”  “Yes,” she answered…. so I told her, “Well if you aren’t going to raise your rates, then I’d say you are doing just fine without more marketing.” So not everyone has to spend 5-10% of their marketing, but if you’re looking to grow, that is your best bet.

Internet Marketing Budget Calculator

If you want to invest 5% to 10% of your gross income on internet marketing, here is a formula to help you calculate what each of those budgets would be.

$Gross x .05 = Marketing Budget at 5%
$Gross x .10 = Marketing Budget at 10%

Digital marketing and internet marketing a should always be looked at as an investment, rather than an expenditure. How much are you willing to invest to help your company grow? Here’s some food for thought… if you plugged in your gross to the formula above for 10% and invested that amount in internet marketing… what would your business look like in a year?

About Sara Mannix

Sara Mannix founded Mannix in 1996 with a goal to get clients found on the web through organic search engine optimization (SEO). The company now serves over 1500 clients worldwide and employs a team of 30 specialists, operating under the tagline "Success Measured." The tagline reflects the company's focus on measurable results for every client. This multifaceted company is an industry leader, specializing in organic SEO, conversion rate optimization, SEO-friendly website design, paid advertising (PPC). Mannix Marketing has two divisions, one side is focused on lead generation for nationally competitive businesses. The other side is focused on local businesses. Mannix has one of the largest portfolios of tourism and city guides in Upstate New York. These guides, (Albany.com, Saratoga.com, LakeGeorge.com, and Adirondack.net etc), reach over 10 million visitors a year. Corresponding social media profiles for the region extend this reach to millions every month.