How much marketing spend is enough?

We’re frequently asked by small business owners how much they should allot to postcard marketing. The truth of the matter is that it varies for every business, but we understand how helpful a few guidelines can be.

Today we’ll give you the numbers that’ll help you plan your budget for 2017!

First, consider the two types of marketing that you can spend on:
  1. Indirect marketing cannot be measured, such as advertising on billboards, outdoor signage, radio spots, and what are mostly called “traditional” advertising. Consider these to be expenses because unless someone tells you why they purchased, you can’t calculate your ROI.
  1. Direct marketing can be measured, and includes direct mail, pay-per-click ads, and email. Because you can track deliveries and responses, you can determine how much you earned as a result. This is an investment rather than an expense. Direct mail, for example, can net $27 for every $1 spent according to Hubspot.

When you’re planning out your marketing budget this year, lean heavily towards direct marketing. Sure, you can’t live without your signage, but isn’t it nice to know when and how you’re making your money back?

Make sense? Now let’s talk dollars.

How much budget should I allocate to overall marketing?

Your spend in marketing will vary depending on how competitive your market is an how aggressively you’re trying to grow. The U.S. Small Business Administration recommends spending 7-8% of your gross profits on marketing if you’re bringing in under $10 million each year. For a standard service or retail small business, that can range from $140,000 – $800,000. (Businesses with less competition or with a solid customer base may spend only 2-3%.)

Go ahead and work out what that number is for you.

Now, how do you determine how much to spend on each of your direct marketing channels? Quite simply, the spoils should always go to the victor. Whichever channels performs the best should receive the lion’s share of your investment.

We recommend an 80/20 rule where 80% of your marketing budget goes towards the top channel where you get the best ROI, and 20% to the rest, just to remain diversified.

Your 5 direct marketing options: 

  • Direct mail / postcard marketing
  • Blogging / SEO marketing
  • Social media marketing
  • Pay-per-click marketing
  • Email marketing

The top performing channel for most small business always ends up being direct mail marketing. U.S. companies spent $47 billion on it in 2016 and here’s why:

Direct mail deserves 80% of your budget because it offers: 

1.  Time savings

With all forms of digital marketing, the apparent ease of signing up masks the fact that you must do much of the work yourself. With emails and social marketing, you must learn new software, craft copy, schedule sends, track results, and repeat this several times a week.

With postcard marketing, on the other hand, you can set it all at once and forget it. Providers allow you to schedule sends months ahead of time and you can utilize templates to copy from the best marketers in the industry. A single campaign can take less than 20 minutes through our web-to-print platform and you always have a success manager to call for help.

(If you’re really in a time crunch, Opportunity Knocks can also just do it all for you, hands-free.)

2. Better targeting

Email and social may be cheap, but you often get what you pay for. It can take a long time to build a working email list or accumulate a sizable social following, and even then, the tools to segment and target particular parts of your audience can be expensive. While banner ads do a much better job of targeting, more than one quarter of all internet users now use ad-blockers and most exhibit banner blindness.

Direct mail, on the other hand, has the advantage that you can utilize data partners like Nielsen to simply choose people and companies by their characteristics and target them individually. You can, for example, simply select an area on a Google Map or you can choose from profiles of people who fit your ideal customer.

3. Higher quality customers

The customers who come from direct mail campaigns are, on the whole, more loyal and spend more than those acquired through digital channels.  67% of survey respondents felt that mail was more personal and led to a better relationship than digital outreach according to the U.S. Postal Service, and studies show that affluent households prefer it.

 

Does that help answer the budget question? Businesses hoping to grow should look to spend 7-8% of their gross revenue on marketing and if direct mail is your channel of choice (and by the numbers it should be), you should dedicate 80% of that budget towards it.

Ready to play catch up? Just log into the web-to-print platform and get started or call Opportunity Knocks at 1 (866) 319-7109 for a free marketing consultation and competitor review.