Picture this: I give you a machine which spits out £1.10 every time you put £1 in.
Then, I tell you that the same machine will offer the same relative return if you put £10 in. And it’ll keep doing so, regardless of how much you pop through the slot.
You’d go and find some more cash, wouldn’t you?
So, why are you stalling on your advertising budget? You’ve created an in-demand offer that’s easy to sell, but you still can’t settle on a figure for marketing it.
The answer might surprise you.
You don’t actually need a budget.
Let me explain.
What is a good advertising budget for a small business?
Let’s think back to that Magic Money Machine. You’d find yourself reaching for increasingly larger sums of cash because you’re confident in the result; you KNOW that machine will pay you back more.
But what if the machine only returned a 50p token after putting your £1 into it?
You’re having second thoughts, aren’t you?
But, hang on. What if you waited for seven days and that 50p token became exchangeable for £10 in cash?
How many £1 coins would you put into that machine now?
It’s thought that the average small business owner in the UK will dedicate around 16% of their annual budget to marketing.
Would you apply the same stringent figure to your spend on that Magic Money Machine? No – of course you wouldn’t.
The average marketing budget for a small business: IT DOESN’T MATTER!
In the case of our Magic Money Machine, having any kind of budget simply doesn’t make sense. It’s designed to make you spend as much as you can, because you’re confident in the return.
What if your advertising ‘budget’ was the same? What if your customer base and your knowledge of it was just like the inner workings of that machine?
Last year, 87% of small businesses planned to increase their advertising spend. Sure, we’re living in tougher times now, but that level of confidence is something every market sorely needs to retain.
If you know the likely return from every pound spent on advertising, the word ‘spend’ quickly evaporates; it simply becomes investing.
But I need a marketing budget example!
No, you don’t. What you need is confidence (there’s that word again).
I’ve heard so many people ask the question, “what should my advertising budget be?”, and it’s such a naive one.
It reveals that they don’t know what the outcome of their marketing endeavours are likely to be.
How many things in life do you head into at a personal cost to yourself with zero idea of the outcome?
Running marketing campaigns on speculation alone is a sure-fire way to deplete your bank balance, fast. Instead, you need to have a method of advertising that provides a predictable outcome over time.
Let’s go back to that 50p voucher
So, that 50p voucher you get after spending £1. We’ve already identified that it becomes something far bigger if you’re prepared to wait.
Modern marketing is identical to this. It’s why that initial £1 spend isn’t ‘bad spending’ – it’s a smart investment in customer loyalty.
You see, if that 50p client decides to continue buying from you, their next step could see them spending £10. Then, maybe £30. And perhaps they’ll eventually sign up for something which commits them to you annually for far more.
What’s the moral of the story? Great marketing doesn’t have any form of budget – it simply has a solid, reliable strategy behind it, where you repeat what works.
How much are you going to spend this year on your advertising now?