June 27, 2018

Marketing Budget

Should you spend money on marketing in your startup?

Let’s face it, having a marketing budget is a luxury for any company. Especially for startups, chances are you have little to no money set aside for marketing. Even for larger companies that are profitable or growing at a rapid pace, often at times, they do not focus their spending on marketing but rather on sales or other objectives.

That is the wrong mindset.

If you’ve been running your startup without allocating a large budget for your marketing team, you are just running on luck and at some point, the growth will slow down. To scale operations and gain the traction for a startup to succeed, spending money on marketing is necessary.

Of course, it’s not healthy to spend all of your money on marketing, there’s a fine balance between spending too little and spending too much.

For startups, a healthy amount of $24,000 USD per year or $2,000 USD per month is ideal. This is a healthy amount as every month the $2,000 can be split up amongst different marketing campaigns, both on social media and on different channels and content. And at the same time, $2,000 is enough to provide valuable results in your marketing campaigns.

But each startup is different in size, so a great point of reference if you are a startup or a “new company” is to create your marketing budget relative to your annual gross revenue. Your annual marketing budget should be taking a larger chunk of your gross revenue to make sure that you can bring in new customers and leads as well as establish your brand in the industry. For example, if your annual gross revenue is $100,000, then your marketing budget should be around $20,000. Once your brand is established, then you can start bringing your marketing budget down.

To break it down further, let’s go back to using $24,000 per year. One strategy is to use all of the $2,000 towards social media such as Instagram, Facebook, and LinkedIn. Spending money on social media primarily revolve around creating ads, but these ads can lead to lead generation, call-to-action, and building a larger loyal followership by specifically targeting the customer personas you want to reach. If you’re doing social media ads right, you definitely won’t be using all $2,000 per month.


Another strategy is to split the $2,000 between social media and other digital marketing campaigns. This can come in the form of link building or sponsored articles on other blogs or websites. SEO nowadays is getting tougher and tougher, and startups should focus on keyword optimization as well as SEO. Having a blog on the website and creating meaningful content is great for organic reach, but paired with the opportunity to have guest blog posts and to have sponsored articles once in a while will elevate your startup to the next level.

Finally, videos and photos are the most appealing for users to consume as they are scanning through websites, social media, or ads. There should always be a long-term strategy to allocate some of the marketing budget to shoot a new video or organize a photoshoot to update website photos or to have a library of photos to be used on social media. This is harder to budget for but once in a while, a month’s budget of $2,000 can be used towards creating a video or organizing a photoshoot. If the video is done correctly, this will provide a great ROI as a video can be used native or on social media, and with a little bit of ad money sprinkled on, can reach an audience into the millions. If the content of the video is up-to-date, the video can be used not only on social media but on websites or other events as well.

Marketing is powerful in any company and if paired with a healthy amount of marketing budget, the growth is exponential. For startups, this is crucial because marketing can literally make or break a startup.