How much should a company spend on marketing?

"How much should our company spend on marketing?" is a question that generates either silence or confusion in many companies. Sometimes both at the same time. "Don't spend a dime more than absolutely necessary," is the usual advice from some corner office. If it is necessary to err, then let it

Although not very direct or decisive, only one answer determines how much should be spent on marketing, "It all depends." And it does.

It all depends on what a company wants to accomplish - what marketing goals and objectives it seeks to achieve. If a company is launching a program or ready to impact in a new market, marketing costs should be significantly higher. If the company is maintaining a marketplace presence, expenses should be lower. A marketing budget is a reflection of what is to be accomplished.

Beyond these basic concepts are five guidelines for thinking through the goals and objectives and creating an effective marketing budget.

1. Plan the budget for a period of at least one year. "We don't really know what we want to spend. We'll see how it goes. If the program produces results, we'll spend more." If this is the way the business is run, marketing won't help. The only effective way to develop a marketing program is to make a commitment and that includes time - at least a one-year period. Marketing is not an instant fix. Successful marketing develops a cumulative effect in that the results increase over a period of time. Just like anything else that's of value, marketing takes time. Companies not allowing sufficient time cannot benefit from marketing.

2. Plan a budget that reflects the business. A successful New York TV production company asked a marketing agency to review its customer materials which included a brochure, presentation folder and assorted insert sheets and flyers. Even though the company's product - video programs - were in full color, its marketing information was one- and two-color. In addition, the average invoice submitted to its Fortune 1000-type customers came to about $25,000. Yet the principals were marketing their firm using inappropriate materials. Of course, color costs more. But the budget must reflect the business.

3. Don't commit the entire budget to one or two activities. Maximize the impact of a budget by creating programs that develop a synergistic relationship so that the whole becomes greater than the sum of the parts. This takes talent, skill and effort, but the results are rewarding. Spending the entire budget on a magnificent brochure is a waste of money, in most cases. Nothing is left to attract prospects so the brochure can be used! Committing the entire marketing budget to a series of ads is both easy and expensive. It is also far less effective than rolling out a program that includes a number of elements that will impact various markets and audiences in a series of ways.