You Need A Marketing Budget: Here's Why And How To Create One
If you’re not getting your name out there, someone else will be getting that attention and leach your best leads away from you. In other words, it’s nearly impossible for businesses to survive without some form of marketing (whether organized or otherwise).
Let me underscore my point - digital health marketing is essential. In this highly competitive health environment with its ever-evolving regulations and policies, the survival of your health tech startup often depends on having better brand awareness than the next guy.
All that being said, I totally get it. Startups are under a lot of pressures that range from financial constraints to investors’ expectations.
Marketing pressures facing startups
To complicate matters, because startups often are not well-established in the health care industry yet, they don’t have a history of brand awareness to draw on. That means that, in comparison to companies who’ve been around for a while, you need a very aggressive marketing strategy so that customers can hear your voice above the other deeply rooted health tech companies.
But the problem still remains - most startups have limited funding and boards who want to see measurable ROI for expenses. This is why you need a marketing budget that includes deliverables, proving to stakeholders that your marketing efforts are multiplying your revenue. As a result, your marketing budget can then drive intentional brand awareness.
What is a marketing budget?
A marketing budget projects the amount of money that will be spent promoting the company’s product or services. These expenditures should be viewed as an investment because ideally they will lead to exponential increases in qualified leads and sales opportunities.
In addition, this financial plan should be driven by goals and vision for long term brand expansion. In other words, a marketing budget should prevent spray and pray tactics that often amount to little more than throwing money in a trash can.
Rather than constraining your health tech marketing, a budget allows your startup to be intentional with every dollar spent while also helping keep your marketing efforts accountable to company goals.
How much of your budget should be allocated to marketing efforts?
As a whole, startups typically need to invest a greater percentage of their revenue into marketing. This all goes back to the fact that new companies don’t have brand awareness to draw on and need to initially invest more money to gain traction within their industry. If you’re not getting your name out there, no one will know your health tech innovation exists and very few will buy.
Before you can decide how much to spend, you need to establish your annual gross revenue. Once you know that, you can designate funds to your marketing budget. On average, health tech companies spend nearly 10% of revenue on marketing. Startups, however, need to put anywhere from 12% to 20% of overall revenue into marketing until they get established.
For instance, if your company expects to bring in $1 million this year, you should plan to spend $120,000 to $200,000 on marketing. That being said, marketing budgets vary based on the unique needs of your company. However, these trends can give you a realistic perspective about marketing expenses and long term ROI.
What should be included?
We all like shortcuts, but unless these shortcuts can be validated, you may end up spending more money in the long run. Especially for startups with limited financial resources, it’s vital that you do your marketing right the first time to avoid wasting money and extra expenses in the future.
I also want to mention upfront that the budgeting recommendations below are meant to guide you as you delineate the breakdown of your budget. In other words, they aren’t supposed to be unbreakable rules. Since every company is different, every company will need variations of budget categories.
That being said, let’s jump right into building your customized marketing budget.
Step 1: Initial branding
Before establishing your marketing budget, you need to plan your initial branding. This step will likely consume anywhere from 5-15% of your overall yearly revenue and includes elements such as logo creation, website development, social media, brand messaging, and other promotional materials such as business cards.
Even with financial constraints, you don’t want to skip this step because your brand persona will serve as the guidepost and fodder for the rest of your content and marketing budget. This upfront expense will most likely save you time and money down the road.
Step 2: Establish your budget categories
There are several categories you will probably want to include in your budget in order to get the best ROI. For instance, on average digital marketing consumes just over 40% of most overall marketing budgets. This number is set to grow even more as marketing continues to move more online.
Inbound marketing: 20-25%
Most marketing strategies put an emphasis on providing helpful content to buyers that draws them further and further down the sales funnel. In the process, it helps to weed out unqualified leads so that sales and marketing teams can focus on the leads that will most likely convert. This is why many companies invest 20-25% of their marketing budget on inbound marketing.
SEO: Around 14%
SEO is an important part of many marketing budgets because with tools like Google Analytics you can measure and improve your website and individual page rankings.
Email marketing: 10-15%
To this day, email outreach stands as one of the best ROIs. That’s why many companies try to put a significant chunk of their marketing budget into this category.
Social media: Around 2%
Social media has great potential to expand your brand awareness even with limited investment. However, you want to choose your channels carefully. For instance, even though Facebook is still king and Instagram is rapidly growing, they may not give you the best ROI depending on where your market can be found. So consider where the majority of your target audience hangs out and learns online for best results.
Advertising: Around 10%
Ads give you a better chance of reaching people who’ve never heard of your company before. Plus, you can target specific demographics. The key is to test these ads for the best ROI. That being said, you will most likely want to invest in proven advertising strategies to enhance your digital health marketing.
Also, if you can track leads back to your ad outreach, you can also calculate your ROI for validation purposes. For instance, if you invested $1,000 in an ad campaign and that results in sales growth of $9,000, then your ROI is 900%.
Offline marketing: Around 10-15%
Even though marketing is moving towards online platforms, offline marketing is still effective. That’s why you’ll probably want to allocate around 10-15% of your marketing budget towards this initiative.
All this to say, your marketing budget should include diversity. For instance, you don’t want all your funds going to social media because then you’ll be missing out on significant opportunities to build brand awareness elsewhere.
Staffing or office space
Another consideration for your marketing budget is how much you’ll be spending on staff or office space for these additional team members. Often the salaries for a small, two person marketing team consisting of a Marketing Director and a designer can cost upwards of $120,000.
As a startup, it’s important to consider if in house or outsourced marketing teams are more cost-effective. Another option to consider is a hybrid model, blending the best of in house and outsourced for improved ROI.
For example, this is how the Mission Maven team operates. Our team often coordinates with one or two marketing team members within organizations to strategize and create compelling content while saving valuable time for staff and allowing companies to optimize their marketing budget. In other words, a hybrid model acts as an extension of your company with a inhouse marketing director and outsourced content strategist, social media strategist, SEO, demand gen, marketing project manager and content creators who act as an extension of your team for around the cost of 2-3 employees.
At the Mission Maven, at least, the lower cost of hybrid models doesn’t translate into marketing shortcuts. Your mission becomes our mission. Your goals, ours. The whole point is this - you need to consider how to budget for considerations such as staff and office space in the most cost-effective way. To do that it’s important to examine the marketing models at your exposure.
For starters, you need to evaluate what talent and resources already exist within your company. Here are some important questions to consider when weighing options for your marketing development:
Does our staff have the ability to write effective content?
Do we have the time to devote to content strategy and creation?
Are we capable of conducting analytical marketing?
Do we have the talent to design our graphics or imagery?
Does our staff have the capacity to develop our marketing strategy?
Does our team have the ability and/or time to manage our social media?
If we choose to do in house marketing, how will we handle project management?
By weighing considerations such as these, you can determine the best budget strategy, whether in house, outsourced, or hybrid teams - for your particular business model.
Ready to optimize your marketing budget? Sign up for our free Mission-Driven Marketing Training Series.
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WHO IS WHITNEY?
Whitney is a consultant, speaker, and writer on a mission to help life-saving, life-changing technology break through the noise and achieve mass user adoption. Learn more about her here.