Question

Topic: Strategy

Marketing Expenditures Benchmark

Posted by Anonymous on 6/3/2004 at 5:47 PM ET 250 Points
We are a high-tech startup. Any benchmarks out there for how much (as a % of revenues) a growing company like ours usually spends in marketing?
To continue reading this question and the solution, sign up ... it's free!
SUBSCRIBE
Or, SIGN IN

RESPONSES

  • Posted by Peter (henna gaijin) on 6/3/2004 at 5:53 PM Accepted
    That is a very broad question - not sure it is answerable with any meaningful numbers.

    If you are so startup that you atre just launching, the number is meaningless as you are spending a lot and don't have revenues to compare it against.

    In growth stage (where you are trying to corner the market), generally you spend about as much free cash as you have (and often money you don't have) on marketing, development, sales, etc.

    Generally, only once are profitable (or close to it) will you start settling in for a marketing percentage that might be meaningful.
  • Posted by Blaine Wilkerson on 6/3/2004 at 6:00 PM Member
    What is your company's name? How successful are you? What kind of "high-tech" do you produce? What kind of company is "like ours"?

    Please provide more info.

    Thanks!
  • Posted by SteveByrneMarketing on 6/3/2004 at 6:05 PM Accepted
    Peter is right it’s a broad question and by definition a tech start-up may not have revenue numbers to base a marketing budget on. I remember working with a software company that didn’t ship product for two years – yet they were marketing that whole time. The marketing money came from private investment and it was budgeted for in the business plan. Tech start-ups are gambles. Often the investors become involved in determining how much they should invest for beginning marketing initiatives. A common reason for start-up failure is an undercapitalized beginning. So the answer should be, invest as much as it takes to be successful, or don’t invest at all.

    Hope this helps.
  • Posted by Blaine Wilkerson on 6/3/2004 at 6:08 PM Member
    In other words...please provide more info.
  • Posted by Blaine Wilkerson on 6/3/2004 at 6:21 PM Member
    I'm lost on this one.. go figure. Did anybody really answer the question?
  • Posted by SRyan ;] on 6/3/2004 at 6:27 PM Member
    My tech company presented the same question to a savvy bunch of marketing experts in Austin about a year ago. Obviously there's no way of knowing whether their suggestions will apply neatly to YOUR company, but here goes:

    :: Scenario A ::
    Marketing budget = 5% of revenue goal
    Conversion result = 1% of target market

    :: Scenario B ::
    Marketing budget = 10% of revenue goal
    Conversion result = 6% of target market

    In each scenario, they roughly allocated the budget like this:

    40% for market segmentation, competitive analysis, positioning, messaging. Then PR, trade advertising, search engine optimization, keyword purchases. Touch each target 6 times.

    50% for direct marketing techniques such as direct mail, ezine publishing, excellent self-guided demo, exhibiting at trade shows and association conferences. Touch each contact 4 times.

    10% for reseller channel, reseller sales tools and training, telesales follow-up, emarketing follow-up, and promotional offers. Touch each prospect 4 times.

    I expect the KHE community will wisely caution you against swallowing these numbers without chewing. The firm who provided us the guidelines was reluctant (maybe even mortified) to do it, because as ANY subject matter expert knows... the answer is It Depends!

    But as every impatient and starving entrepreneur knows... ya just need a quick answer, durn it!

    Good luck, and I hope you post more details about your company here.

    - Shelley
  • Posted by Blaine Wilkerson on 6/3/2004 at 6:35 PM Member
    OK. now SRyan provided on hell of a response based on real tech experience.

    FYI-The next time you are looking for an "expert" response, you may wait longer than 40 minutes. The first to respond are not always the best...myself included.

    Good Luck!
  • Posted by Blaine Wilkerson on 6/3/2004 at 7:04 PM Member
    It helps. By leaving the question open, it remains in the "active" list and people in other time zones may have the answer you are looking for later on.

    For example, most of the top 25 are either asleep or on there way home from work at this time of day.

    I still have this question tracked if you want to provide specifics for Shelley, Amanda, Steve, Peter, and myself to respond to.

    A lot of times, I will post linksto sites or articles that have already answered the question in depth. Othertimes I will ask for specifics. Especially with questions of this nature. Like everyone pretty much stated -"It depends". Even then, it is hard to give a solid answer. It really takes some in-depth statistical analysis to get anywhere near realistic probability.

    Just let me know!
  • Posted by Blaine Wilkerson on 6/3/2004 at 7:07 PM Member
    As a matter of fact, if you used up all of your points, I'll repost it for you using my points. Perhaps we can provide more info this time so everyone can get a better idea.

    Again, just let me know.
  • Posted by SRyan ;] on 6/3/2004 at 7:41 PM Member
    If KHE ever conjures up a Good Samaritan Award, let me be the first to nominate Blaine (Jett). This is truly going the extra mile for someone... and all we have is his/her initials!

    - Shelley
  • Posted by Blaine Wilkerson on 6/3/2004 at 8:10 PM Member
    Shelley, you are going to make me blush...lol!!

    Thank you for the "props". (You should have received the points on this one).

    Oh well, there are many, many more!

    --Blaine


    .
  • Posted by Blaine Wilkerson on 6/4/2004 at 1:17 PM Member
    You are welcome!
BACK TO TOP

Post a Comment

Related Discussions

Community Info

Top 25 Experts
(Strategy)