We’ve all been there. You get an offer to place an ad or participate in an event that seems tailor-made for your brand or business, and at a great price and the ideal time in your sales cycle. The problem is you can’t act on it because you don’t have any budget left. Had you known about it a few months ago, before you’d allocated funds elsewhere, you could have properly planned and executed. The pangs of regret seep in, and you scramble to find dollars and someone, anyone, on your team that can execute. You vow to not be so thrifty with your marketing budget next year.
Now’s the time to remember that vow. Why? Because it’s annual planning season, a time for brands and businesses to identify where time and resources will be applied in the new fiscal year. Approach planning and budgeting with shark-like efficiency and a keen eye on maximum return on investment effort, and the seeds you sow now in the planning phase will reap rewards next year, which will be exciting for you, your team, and your P&L statement. Here’s a quick marketing budget primer for brands and businesses in the AV space.
More Secrets of Success from Katye: Be a Brand to Believe In
Whether you run an integration firm or work for a manufacturer, marketing is critical and a key area to ensure budget is allocated effectively. Most marketing budgets in our industry should include an allocation for print, digital, and social media advertising, brochures and collateral, content, events, giveaways, public relations, social media, sponsorships, and a fab website that differentiates you from your competition.
Okay, but how much are we talkin’ here? One benchmark comes from the U.S. Small Business Administration, which recommends businesses spend 7 to 8 percent of gross revenue on marketing if doing less than $5 million a year in sales and net profit margin (after all expenses) is in the 10 to 12 percent range. That might make you spit out your coffee, but it’s a good starting point from which you can whittle accordingly. In my experience, and based on recent queries in the AV space, integration firms who take time to do the math will typically allocate 2 to 4 percent of gross revenue to marketing. To put that into perspective using easy math, let’s say your gross revenue is $1MM a year. Two percent of that is $20K and four percent is $40K. Manufacturers will typically need to go much higher than this to support their partners well — 10 percent is reasonable. Of course, all of this depends on each company’s unique circumstances; these figures are here as examples only.
At first blush, $20–$40K might look like it will fund a lot, but those are small sums to grow a business of any sort, and a marketing budget can go quickly when you consider all the buckets that need to be funded. The reality is you may simply not be able to do all the things you’d like to do with the budget you currently have. That’s okay; don’t get hung up on what you can’t change. Instead, develop a highly focused plan that is tailored to your brand or business, your goals, and your market. The first thing most external resources will ask is, “What are your goals and how much do you have to spend?” so it’s best to prepare.
Extracting every drop out of every dollar also means being in very tight alignment with your partners. For example, brands (manufacturers, in this case) should be in communication and alignment with their integration partners to develop growth plans that help them reach or exceed sales goals. Sometimes it’s as easy as reminding them that you offer volume-based back-end programs like VIR (volume incentive rebates), MDF (market development funds), or Co-op (cooperative advertising funds), and then creating a plan for them to use those funds before they expire. The more often your business partners are reminded and encouraged they have funds to spend, the more likely they are to spend them and, in so doing, remain loyal to your brand. I’m always surprised at how many simply aren’t aware these programs exist and who suffer as a result.
More Secrets of Success from Katye: Managing Your Local Presence
I recommend taking a slightly more detailed approach that includes structured regular communication that shares not only what the available programs are and entail, but how the individual account is performing in relation. Formalize the conversation, but personalize the results so they know what they have to spend and are inspired to act. Make this information readily available through an online portal or monthly email. It might seem like a time-consuming process, but again, that ROI next year when your sales and marketing efforts are firing on all cylinders will more than make up for it.
Providing easy access to digital tools like marketing assets, photos, messaging, ad templates, brochures, collateral, corporate branding materials, and creative assistance, will make the job of selling your products easier, and your partners are more likely to be on-brand as they do.
On the other side of the coin, integrators need to be proactively engaging with manufacturers and suppliers about available MDF, Co-Op, VIR, or other back-end programs, working closely with account reps to reap every available reward. The more dialog there is about what’s possible, the more likely there is to be a collaborative effort. Integrators: Think you don’t have funds for an ad in your local marketplace? Ask a vendor you work closely with to share in the expense! You’ll be surprised what can happen when you present a plan.
The most important takeaway? Start NOW, stay focused, and be diligent. Do not let this task slip out of view! Get your plan in place — however you can make that happen — so you have the budget and resources available to carefully execute your marketing.
Not sure where to start? Worry not, my team is here to help! Give us a shout if you would like to discuss budgeting, planning, or establishing a path forward. Just, you know, do it soon while planning and budgeting season is in full effect. A PSA from your pal Katye…