Using published formulas for marketing investment levels is sort of like using online driving directions. They could work. But do they take into account variables like construction, weather conditions, accidents or commute hours? How often have you been jammed after using online driving advice?
Similarly, I'm warning against applying formulaic calculations for establishing marketing investments. You and your team have to figure it out yourselves. Regardless of what business you're in, every company, brand or organization most often has vastly differing business circumstances. “Average investment” becomes pretty meaningless. It may be a starting point of discussion for some companies. However, going with “average” risks (and almost ensures) entirely missing the right numbers for your particular marketing situation. Is your company in an “average business?” That sounds like a bad bet to me.
Of course, marketing must establish reasonable level of investment that will drives successful customer engagement, responses, and sales. That's always been the crux of the marketing leadership challenge. Understand, though, its not a number that can be arrived at generically.
You sure don't want to leave it up to the finance people. Published tips on investment levels from the Small Business Administration (SBA) are virtually irrelevant. Because basing a company's marketing spend on historic stats or data on averaged investment levels invites enormous planning errors because it fails to consider a particular company's market conditions.
Imagine if a military commander attempted to prepare for a battle that way. Consider how General Eisenhower prepared for success before the D-day invasion. Yes, it’s that important. Allied intelligence provided a pretty clear view of the evolving strategic requirements leading up to that day and afterward. They spent a lot on learning. Do you want to go just with “average” in your marketing planning?
Considering what's different
A few of the potential variables affecting marketing investment levels include:
- Are you in a new market or a well-established one?
- Are you competing locally, regionally, or internationally?
- How many and what size competitors are you facing in any of those geographic markets? (The same investment level globally likely makes zero sense.)
- What's your brand's reputation? Is it new and unknown, well-established, or somewhere in between in any given region? (Do you even know the answer to that with certainty?)
- Does your product require more or less training than competitors' offerings?
There are lots of others you could add to your list for your particular business.
To win, marketing leaders need to think more deeply about their company's particular marketing challenges, whether its advertising, public relations, trade shows, or any other facet of marketing. It’s definitely worth serious thought, without succumbing to “analysis paralysis.” That would be the opposite of what's being advocated.
Too much meets not enough
This idea won't sit well with the bean-counters. There's a highly applicable quote from my favorite marketing gurus, Al Ries and Jack Trout, who authored Positioning, The Battle For Your Mind. In another volume, titled The 22 Immutable Laws of Marketing, the final law states: "Without adequate funding, an idea won't get off the ground." Another saying in that vein is, “If you're gonna go, go big.”
To balance the above idea, also consider “Do less but do it well” as relevant. Spreading limited marketing investments among too many areas, particularly chasing an array of the latest digital platforms, is a fairly certain path toward failure.
Especially for high-tech companies, marketing is a battle for minds, not between products or services. Is your marketing effectively prepared and funded for that battle? Quoting the famous Chinese philosopher/general Lao Tsu from The Art of War, is “Know your enemy.” What's the appropriate amount to be spent learning that?