What's your marketing budget for 2016?

“Without promotion, something terrible happens....Nothing!” --P. T. Barnum

In Barnum's day, advertising meant word of mouth and newspapers. Neither of these was very expensive at the time— unless you were Barnum. The American showman at one time had 26 journalists on his payroll. His belief was that advertising should not be done “sparingly and grudgingly,” and freely admitted that most of his success was due to the press.

Planning your marketing budget for the year is no easy task. You know that it “takes money to make money,” and may end up spending too much. Or you may decide that if you aren't making much profit, the marketing budget needs to be cut. Rather than going to either extreme, keep reading for some tips to help you create a good budget.

If you're very ambitious, there's an article outlining an exact formula for creating your marketing budget, calculating the lifetime value of your customer, average annual revenue per customer, etc. Experts say that established companies might want to use 6-12% of their gross revenue or projected revenue on marketing, while newer companies (one to five years old) should allocate 12-20%.

When it comes to allocating that budget, depending on your type of business, you may want a certain percentage to go towards digital promotion, and the remainder towards offline marketing. Digital marketing expenses include items like website design, content writing, social media management, email marketing, display advertising, video marketing, and pay-per-click advertising.

Offline marketing expenses are items such as business cards, brochures, flyers, print and radio advertising, direct mail, product giveaways, trade shows and events. Also included in your budget are marketing staff or consultants, if you have any.

• Regardless of how much money you've set aside for your marketing budget, there are ways to stretch it. Referrals, for example, cost very little. Get in the habit of asking your customers for referrals, or create a referral program rewarding customers with a free item or service.
• Cold calls (or cold emails) can be an inexpensive, yet effective marketing campaign.
• Partnering with another business can also help stretch those marketing dollars.
• One resource you might want to look into is Fiverr. For five dollars, you can hire someone to create a logo, write content for you or other services.

A good rule of thumb is to spend your marketing money on things you can't do well, things you don't have time to do yourself, and/or things that are practically guaranteed to bring in revenue. Take your website, for example. If you’re an online business, it's important for your site to be good-looking, and easy to navigate. If you don't personally have the skills to improve your website, it may be something you’ll want to outsource.

Barnum was right when he said, “There may possibly be occupations that do not require advertising, but I cannot well conceive what they are.” Keep that in mind when you plan your marketing budget, and you're bound to succeed.

For more information about some of P. T. Barnum's promotional schemes, (or “humbugs”) check out this link. Maybe you'll find something that could work for you!

I’d love to give you a free copy of P.T. Barnum’s book on business. He was one of the world’s greatest marketers. If you want to get the PDF, fill out our contact form and tell us why you want it!