Ah, the dog days of summer have arrived, making you feel a bit lazy, and perhaps suffering a bit from
seasonal procrastination. But the new year will arrive on schedule and with it looms deadlines, plans,
proposals and budgets. Now, while your competition is hopefully cat napping under a shady tree in the
employee parking lot, is your chance to secure the coveted rail position in the race for world
Most assuredly, while everyone at your company was out enjoying barbecue’s and family vacations,
your engineers where wringing their little hands together and whispering strange spells that have now
resulted in a variety of product prototypes that will be unveiled, most likely under duress, in your first
2019 marketing meeting. As you stare at the 3-D concepts that will create an undeniably insatiable
demand in your customer base, you are asked point blank by your obviously superior CEO, “What’s the
marketing budget?” He or she says pointing that archaic sliver of wood, known by earlier generations as
a pencil, directly at your head.
This is not a time for the deer in the headlights look as your brain quickly scrambles to come up with
some number from out of the cobwebs that have thickened in your frontal lobes since June. Whatever
babble you may release over the long conference table, will now be consecrated into corporate stone.
And that’s too bad, because as the gleeful engineers hand off their new babies to you, marketing
person, you better have fantastic intuition, a crystal ball, and a plan.
Now, let’s back this scenario up and try again. In a perfect, ethereal world of happy employees,
generous bosses and unlimited ice cream, you, as the company marketer would have knowledge of the
new products incubating in the dark hallways of Research and Development. You may have even had a
hand in researching the market it is intended for, its potential attributes all the way down to pricing. You
will also have meet with that outgoing, cheery CFO with the open-door policy, who is all to happy to
provide you with the company’s gross revenue in that product category or might help you develop
projected gross revenue on a new product stream. See? Isn’t math fun!
And it all comes down to the very old marketing budget rule of planning on spending anywhere between
6 to 20% of gross or projected revenue. If that CEO’s pencil is still stabbingly close to your head, tell him
or her, you’ll need 15% of the gross revenue and let them struggle with the silent math.
So, why such a big gap? Consider this, does your company have equity in its brand? Is it well known,
popular across broad spectrums of consumers? Does it have a long and storied history like Smith &
Wesson or did you and your team just create this company last Friday at the pool hall? The longer the
brand has been around, the less over all budget it needs to roll out or maintain its market share, so
figure 6% for maintenance and more likely 10% for a new product line or category.
But if the ink is not dry on your business cards and your website still has a construction image on it,
better dig deep. Face it, you have one chance (perhaps in hell) to make it, so don’t mince on your
marketing efforts, just make sure that you evaluate your pie and don’t put all your money in one slice,
such as advertising, or social media. Share the wealth! If you are a new company and can’t base your
proposed marketing budget on previous revenue, you’ll have to either base it on sales projections and
think closer to the 20% mark. And don’t forget to leverage your relationships within the industry and
media. You never know what you might get free!