It feels like crossing the finishing line. Finally, the investment your business has been waiting for has arrived. After years of hard work, months of pitching, days of due diligence, and hour upon hour of sleep lost, the process is complete.
But this is clearly not the end: It is just the beginning of another chapter in the life of your business. One that is totally different to the scrappy, make do and mend attitude that many start-ups default to.
One of the obvious next steps is marketing, which can facilitate awareness and demand for your product. With that decided the big questions are: how much to spend, where, on what, for how long and, crucially, for what purpose? Unfortunately, this is often where things go wrong.
Allocating a budget.
Your level of spend is as much a product of your business vision and ambition as any other aspect of policy, but with investment now secured, and the chance to supercharge growth, it may be time to up the investment. There is no rule of thumb. It can vary from 5 percent to 10 percent and above of revenue. However, if revenue is still a foreign word at this point, percentages go out the window.
This does not mean that you ought to spend blindly or all on one aspect of marketing. It takes careful consideration on where effectiveness and value will lie and how that matches with your business’ short and long term goals. It also means taking an intricate look at your biggest barrier to sales. If it is simply a case of not enough people seeing your product, then digital ad spend could be the way to go. If it is something more complicated, such as opening up a new market, PR and social could be the right approach.
Time to splash the cash?
Overspending on marketing is too easy – and too common. It also poses a major risk for a bourgeoning business, leading to either unnecessary and untargeted activities, or on the other side of the spectrum, more demand than supply which could frustrate potential customers and hinder scalability. Overspending on marketing does not lead to wild demand.
We have seen many businesses putting more resources into marketing when they are flush with cash - hiring the big name agency, bringing in a big name celebrity, advertising on TV and the Underground. But what impact will these decisions have? Do customers know or care who your agency is? Do consumers really base their purchasing decisions on how expensive your celeb ambassador was? Not these days.
Does anyone remember Phones4u’s campaign with David Beckham? Or up and comers Laundryheap’s partnership with Michael Fish? If you don’t, that’s because these big expensive names did not drive the results they were expected to.
The dangers of conservatism
On the other side of this coin is the option to play it safe and spent almost nothing. This can inherently feel like the right option, or the least bad. However, being conservative is also risky, especially for those businesses with ambitious growth goals and targets set by investors.
There are many ways to save money on marketing. Why do you need PR when most of your customers come from Google ads? What is the short-term benefit of having your business named in a few articles?
Have a serious conversation about what you need from marketing. What are the desired business results, how they can be measured and how they fit into your long-term strategy. Among these things are the softer elements: building trust, building brand understanding. Alongside are the more concrete ones: sales, lead generation, and a larger database of potential customers. Investment is the start of the journey that needs careful planning, and action is necessary to make your goals happen. Just be careful not to overdo it.
If you need help mapping out your marketing and communications budget, goals, and KPIs, contact Brazil info@agencybrazil.com