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One of the hardest questions to answer when it comes to marketing is how much you should spend – there is no definitive answer (sorry to disappoint you) but we do have some guidance that can help.

Firstly, the percentage of turnover that you should reinvest in marketing is different for every industry and business. Stay away from comparing marketing budgets with other businesses a general rule – it doesn’t indicate that you are under- or over-investing and unless you know the context of the other business’ finances and goals, their marketing budget is irrelevant.

If your business is margin driven, you will typically spend more on marketing. Why? Because expensive goods tend to need more time under consideration, so you need to take that into account. If you are volume-driven, you’re looking to create as many sales as possible to balance out low margins, and because you have smaller margins, you can’t afford to spend as much on your marketing.

At the very beginning of marketing your business you may have to invest upwards of 15% of your turnover on advertising as you build your brand strength. Because you’re just starting out, 15% of your turnover might not equate to all that much – over time, as your sales accelerate and your turnover rises, that 15% will become generous and you can decide whether you want to continue to be aggressive or be more conservative with your marketing.

Once a business is established most marketing budgets drop below 10% – and if you’re turning over less than $5million per year, you shouldn’t be spending any more than that. Remember – if you’re focussed on high margins, you’ll be closer to double figures in percentage of turnover. If you’re focussed on volume, you want to be around the 5%-7% mark.

ADhesive Communication are experts in creating marketing strategies, including budgets! If you need help, assistance, or just need to bounce a question off someone, get in touch on 4000 4724.