Advertising/PR - What is the rule of thumb for how much of your gross earnings should go to marketing? from Anonymous: MarketingProfs Question 549

Topic: Advertising/PR

What Is The Rule Of Thumb For How Much Of Your Gross Earnings Should Go To Marketing?

Posted by Anonymous on 3/10/2004 at 5:46 PM ET 250 Points

How much of the gross earnings of my internet company should I set aside for marketing?

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Posted by Pepper Blue on 3/10/2004 at 8:45 PM Accepted

A big mistake is to create a budget first and goals second.

Putting the budget before the goals can be a near sure-fire way to create a money-wasting marketing plan that doesn't work or return a positive ROI.

Wouldn't it be better to, among other things first:

1) Determine who the target of a marketing campaign(s) is going to be?

2) The message you will use to position yourself as the best solution to target customer problems.

3) What goals you want to achieve.

4) How you are going to measure results!

5) How you are going to test, execute, and improve these results.

6) What tools and mediums will work best for this, at least initially.

Businesses have a tendency to spend or budget big money on marketing without a clear plan for how it will generate additional revenues for the business, or how it will pay for the marketing expenses itself - ROI.
Posted by Pepper Blue on 3/11/2004 at 12:24 AM Member

Just to second, or give credit to DavidatHaley's suggestion. Excellent point.

The Lifetime Value of a Customer (LTV) is a huge determining factor in how much to spend on marketing.

I agree that you study up on this and understand the impact it can have.
Posted on 3/17/2004 at 6:45 AM Accepted

15% is the best solution for your company