How Much Should a Startup Spend on Advertising and Marketing?

Every year, numerous startups are launched in the U.S. However, 90% of them fail. This is why it’s critical for a new business to devote time, energy, and money into a solid marketing campaign. But exactly how much should a startup spend on advertising?

The answers may surprise you.

How Much Should a Startup Spend on Advertising?

There is really no clear cut answer to this question. While many guidelines suggest that businesses should spend between six percent and eight percent of their total revenue on advertising, most only spend about one percent.

For most startups, it’s tough determining an advertising budget when they don’t know how much their revenue will be. Here are some things to consider when determining your marketing and advertising budget.

Growth Strategy Goals 

For all startup owners, it’s critical to know how fast their business can grow and how much capacity they have to handle new clients.

If you pour a lot of money into an extensive marketing budget that generates a lot of demand for your products or services, you will need to be able to fulfill that demand. If not, potential customers will go elsewhere.

The Price of Products

The price of a startup’s goods or services will also help to set its marketing budget. If your small business is selling its products at a premium price, you’ll be able to invest more in advertising because each sale you make could be worth thousands.

Understanding Cost Per Lead

In order to get the most out of your marketing strategies and to set a realistic budget, you’re going to have to know how many people your advertising efforts need to touch in order to convert them into customers.

How to Create an Advertising Budget

Now that you understand the factors that can determine an advertising budget, how can you create your own? Here are some tips for forming your startup’s marketing budget.

The first thing you’ll want to do is figure out an effective marketing strategy. This includes the overall goals you’d like to achieve. For example, do you want to build brand awareness or do you want to focus all of your efforts on sales? Having a strategy will help you set the right budget.

Now that you have a strategy in place, you’ll need to come up with a plan to achieve your goals. Your plan will include details about your target audience and your advertising tactics.

After your advertising plan is created, bring it to life. After your initial campaign is over, look at what tactics worked, and which ones didn’t. Refine and retune your plan as needed.

To have a successful marketing budget, you always need to have achievable goals and a strategic plan.

A Marketing Budget for Your Startup

How much should a startup spend on advertising? Whether you take out a business startup loan or use your revenue to fund your marketing budget, it’s important to invest in your advertising efforts.

To get the funding you need for your small business’s marketing budget, contact our team today.