As a marketing consultant working for a number of small businesses I often find myself helping clients to set their marketing budgets and to establish a suitable return on investment figure.

Setting budgets can be a minefield, people’s opinions on budgets are vastly different and often become further confused by the amount of differing guides on the internet. In my opinion for a business to achieve steady growth they must be prepared to invest at least 5% of their turnover into marketing. For dramatic growth I would suggest raising the budget to 10-15%.

A consistent investment into marketing of between 5-10% will provide your marketing department or consultant with a budget that they can work with to achieve the companies ‘realistic’ objectives. Once the budget is set it is then up to your marketing team to create a marketing strategy, which consists of activities that will create a suitable return on investment.

What should you expect with regards to return on investment?

There are a number of complicated ways to work this out but in my opinion the best way is to ask the business owner…. If I gave you £10,000 worth (or another round figure that is related to the business) of new business what would you be prepared to pay for it? The answer they give is directly related to their business and provides a good place for negotiating a workable figure for both parties. It also help the business owner to understand what you are discussing and avoids confusing calculations on cost of sale, profit margins etc Its not scientific but it does work and if the ROI figure is a hard target it focuses the mind on dropping some of the fluffy forms of marketing in favour of results based marketing forms such as PPC.

Anyway these are only my thoughts… Below are some other resources that you may wish to consider.

Useful Resources re: Marketing Budgets and ROI

• http://www.marktheglobe.com/seo-budget-roi-calculator
• http://www.drewsmarketingminute.com/2007/10/how-much-should.html
• http://www.jimnovo.com/ROI.htm http://www.allbusiness.com/accounting/budget/508610-1.html

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