How To Allocate A Marketing Budget For A New Startup: 14 Expert Tips

Branding and marketing are essential to any business’s success. However, with so many potential avenues for getting the word out, it can be difficult for small businesses to determine where to invest their limited marketing resources. New startups, especially, may lack clarity on how much time and money to spend on their branding, advertising, public relations, social media planning and content strategy at the outset.

Below, 14 members of Forbes Agency Council provide expert insight to help founders zero in on their needs and develop a first-time marketing budget that will optimize their investments and achieve maximum results.

1. Pick One Method To Master First

My advice for startups is to pick one thing and do it really well. You can focus on building out the other options as you start to get more business. Focus all of your efforts and money on a single method, and use that to break through the noise and get more business. – Brian Meert, AdvertiseMint

2. Identify Measurable Outcomes

Find out what you want your measurable outcomes to be. For example: “I want to sell 200 products in our first month, with an average value of $350 per customer.” Provide this to a marketing company and get quotes on actions, not just marketing services. It will help them narrow down your options and provide recommendations on actual budget samples. – Darrell Keezer, Candybox Marketing

3. Focus Investments In A Few Targeted Areas

Just saying that 20% should go to marketing is not realistic, unless you know your dollars and cents. If you have a high margin (80% to 90%), you can invest more than if you have a lower margin (10% to 20%). A new startup needs to consider how much, say, $100,000 in sales is worth. Is it worth a $20,000 investment? Focus investments in a few targeted areas first, and then grow into others as traction is gained. – Bernard May, National Positions

4. Know Your Budget And Shop Around

The two most important things to remember during this process are to be resourceful and that there is no “right” answer. You’ll likely split A/B testing messages, visuals and audiences until you begin seeing momentum. So be conservative, build a good marketing funnel and increase your budget incrementally. – Chi Zhao, Hokku PR

5. Understand How Each Strategy Will Impact Your Business

Dedicating between 10% and 20% of gross revenue is a good starting point. But first, understand how each strategy is going to impact your business. Basics such as collateral shouldn’t go any higher than 5% of your gross revenue, unless your brand strategy calls for it. Advertising, PR, etc. are all similar. Which ones are going to help you achieve your business goals? Focus on what is going to help you succeed. – Christine Wetzler, Pietryla PR

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6. Develop A Scalable And Multi-Year Strategy

The most important thing is to have a scalable and multi-year investment strategy. In year one, you need a logo, a website and some basic branding elements. But more than anything, you need great content. As your company grows, you can spend more on advertising and promotions. You can scale your budget as your profits scale. – Randy Shattuck, The Shattuck Group

7. Categorize Budget Items By Projected ROI

This is something that’s very hard to quantify. You’ll first need to understand how much money it will take at your current investment round to capture a specific percentage of your total addressable market. Then, allocate that budget from the highest ROI to the lowest ROI. Let’s say you’re selling a B2C consumer product; you’d have to put a focus on paid media coupled with influencers and SEO. – Stefan Katanic, Veza Digital

8. Work Backward From What Customers Respond To

Find out where your customers are and if they respond to your product in that area. Not every company needs a social plan, but your brand does need to stand for something immediately. Focus on your brand awareness first, what resonates best with your customer, and then work backward. – Hunter Johnson, Xpedition

9. Know Your Customer Journey

Startups should first have a solid understanding of their customer journey. Run test ads on social media or Google to determine how much spend it takes to acquire a customer. Other efforts such as PR and branding, when done right, will help lower your ad spend and increase your conversions, giving you a better idea of how much to allocate to other marketing efforts. – Danielle Sabrina, Tribe Builder Media

10. Start With Organic Efforts

There’s no magic formula. Typically, startups do better starting with organic efforts, such as PR, SEO and content marketing, before diving into big ad spends. This has three benefits: It’s lower-cost when your budgets are lower, it can be increased incrementally based on what delivers ROI and what doesn’t, and it lets you find out what works by trial and error before investing big dollars in advertising. – Scott Baradell, Idea Grove

11. Invest In Content After Brand Identity And Messaging

While all categories are equally important, advertising, PR and social media all ladder up from content. Without good content, your money will be wasted in other areas. Focus your largest chunk of budget dollars on getting your brand identity and messaging right. Invest next in developing content and, finally, in promoting that content to your ideal audiences through paid and earned placements. – Mary Ann O’Brien, OBI Creative

12. Factor In These Three Data Points

Startups must factor in three data points—burn rate, funding and sales cycle—because one size does not fit all. The first stage of spending (name, logo, messaging, brand identity and website) can be done for between $30,000 and $50,000. Then, it is best to launch with PR, organic social, content and possibly some paid ads. Self-funded, slow-growth companies should begin at $7,000 per month. – Dean Trevelino, Trevelino/Keller

13. Look At Your Profit Margin And Break-Even Point

I always like to look at the profit margin first, and then at what the break-even point would be. By understanding this number, you can see what your baseline marketing budget could be. Next, I would do a direct competitor analysis and see where they are getting the most success. Once that is known, invest in that marketing vehicle first and keep the rest on your radar. – Christopher Tompkins, The Go! Agency

14. Forecast Your Share Of Voice Across Platforms

Forecasting the share of voice across major platforms is key to determining budget allocation. However, with any company just starting out, building brand awareness and credibility are crucial in gaining trust and, ultimately, clientele. – Larry Gurreri, Sosemo LLC

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Author: Expert Panel®, Forbes Councils Member