Determining how much to spend on marketing can be a tricky, but there are ways to do it logically. The following formulas will help you determine how much to spend on marketing and whether your efforts are turning a profit. First, there are a couple general guidelines and statistics may be helpful:

2009 Marketing Dollars Spent In the United States

• 33% of companies spend 3-5% of total revenue on marketing.
• 30% spend 1-3% of revenue.
• 21% spend 6-10% of revenue.
• 16% spend 11-20% of revenue.

For a start-up company, initial investment may be high and then come down as the company grows. Also, you will need to consider your profit margins. That is why a percentage works well for most companies. If you can set out a budget based on your company’s structure before the year starts, it will help you decide which items in your marketing mix you can afford. Here are the top 5 mediums for your marketing:

2009 Marketing Mix In The United States

• Email Marketing
• Thought Leadership
• Direct Mail
• Search Engine Marketing
• Mass Media

Last year, 25% of marketing dollars moved from direct mail, while about 15% moved from mass media to the Internet. Many businesses are choosing pay-per-click advertising and email marketing over Valpak ads and the yellow pages, because these results can be tracked and adjusted quickly. Thought leadership is quickly growing in all business marketing because of its affordability and results. Thought leadership is publishing newsletters, blogs, white papers, articles, or webinars to position your company as an expert in a certain area. It often has great results in search engine marketing and branding simultaneously. Choosing the right medium for your advertising is the key to turning profit.

Coming soon on this blog, we will discuss the formula for calculating your marketing profits.