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How Much Should Startups Spend on Marketing?

dollar sign(Note: New blog posts about startup marketing can be found on my ME Consulting Website.)

How much should startups spend on marketing?

It’s a difficult to answer question to answer because many startups think that anything spent on marketing is a challenge to justify, whether it’s $100/month for a digital tool or $25,000 for an extensive media and blogger outreach program.

The reality is most startups see marketing as a luxury or something that solves a point of pain, rather than a need-to-have or an exercise that has solid ROI. As a result, establishing a marketing budget can be a daunting exercise.

The easy answer is how much to spending on marketing is do more than nothing. Every part of a startup requires an investment in time, money and/or people, so spending on marketing is a no-brainer.

So how much makes sense?

This depends on a number of variables based on your budgets, objectives, target audiences and where your startups sits within the growth cycle.

For early-stage startups with limited resources, a reasonable budget could be $250 to $1,000/month. This would involve using a handful of free tools such as Tweetdeck and Hootsuite for social media monitoring and publishing, social media services (Facebook, Twitter, etc.) and Website optimization tools such as Kissmetrics, MixPanel or SEOMoz.

A budget of this size doesn’t involve having a part-time or full-time marketing person but it  provides ground cover and establishes a solid marketing foundation that can be built upon as growth accelerates and a marketing plans expand.

Over time, the marketing budget can expand to $1,000 to $10,000/month by adding  a part-time or full-time marketing person to handle social media and create content for blogs, case studies, white papers, press releases and marketing and sales collateral. This kind of budget lets a startup use premium services such as Hubspot or InfusionSoft. And it may accommodate having a PR agency on a project basis or on a small retainer, although I’m not a fan of early-stage startups having monthly retainers for PR.

As a startup accelerates it growth and begins to drive brand and product awareness, it is not unreasonable to be spending $10,000 to $25,000/month on marketing. At this stage, a startup has expanded its marketing team to two or three people, it is aggressively leveraging social media and content marketing, it’s sending people to conferences and perhaps sponsoring key events, and it has a solid media and blogger outreach program.

As much as spending money on marketing can be difficult for a startup to grasp and make happen, marketing is a key and necessary part of running a business. If customers don’t know you exist or understand what you do, it goes a long way to undermine the growth and success of your business.

For startups looking to jump-start their marketing, I provide strategic and tactical services – core messaging, brand positioning, marketing strategies and content creation. 

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  • saulcolt

    Most startups get lost in a pile of other startups because they don’t take marketing seriously or early enough. It has been said that you need a hacker and and hustler to start a company. Hacker being tech and Hustler being business/marketing. If this is the case (and i believe it is) then this isn’t a question of money but focus. Marketing needs to not only be paid attention to from the very beginning but also baked into the product and the design…and to do this you need to invest in marketing with people, time and financial resources.

    • http://www.markevans.ca/ Mark Evans

      You’re preaching to the choir! Far too often, startups see marketing as something to be bolted on later as opposed to part of its DNA. Not sure why other than startups see marketing as an expense while developers fall into product and sales into revenue buckets.

  • http://startupcfo.ca/ Mark MacLeod

    The only way to know how much to spend is to know the value of a customer. You then spend some portion of that to acquire them. In recurring revenue businesses, I recommend not spending more than 6 months’ revenue. You can go up to 1 year’s revenue when you are growth stage with tons of funding and proven churn numbers.

    These $ ranges you suggest above sound like experimentation for me. As soon as you have figured out per customer economics you just keep piling on the acquisition spend

    • http://www.markevans.ca/ Mark Evans

      Thanks for the insight, Mark. I think you’re right about the experimentation description.

  • Ron Davies

    We have passed through $1m in sales in 6 months in a disruption product startup, and have spent less than 0.5% on marketing. When done properly, marketing is inexpensive.

    • KIM

      Hi Ron,

      What marketing did you use to grow your business for such a low cost? And how can I follow you?

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