How To Budget For Marketing In Your First Year As A Startup

You’re new to the game. That business that had only been an idea is now a reality.

It’s time to penetrate the market and make a pile, but it’s a mixture of excitement and trepidation for you. 

You don’t have a lot of experience with marketing—you just know how to build things, but not how to sell them. Or maybe you do, but not enough to be able to tackle this task alone.

But where do you start—hire or outsource to a professional? How much should you budget for marketing? And how do you know if it’s working after you’ve spent all that money? You don’t want your company to burn through all its cash before it even gets off the ground!

It’s even intimidating when you look at startups like Zara, Krispy Kreme, Shein, and Costco that have been doing business for years; they all seem like rock stars. They know exactly where to direct their funds and efforts. 

You’re not alone. The same problem plagues many startups and even established companies who are looking for ways to increase sales and bring in more revenue.

In this article, I’ll show you what to consider before preparing a marketing budget as well as where to allocate and spend your marketing budget in your first year as a startup. 

See also: Why Content Marketing For Startups Is Totally Worth It

What factors should you consider before budgeting for marketing?

The following factors will impact your marketing budget in your first year of business. 

Your target audience

As a startup, you can’t afford to spend money on marketing without having a clear idea of the people you want to reach. You should know this with a high degree of certainty, as it will be important in setting up your marketing strategy.

Who are they? What do they look like? What is their behavior? Are they geographically close or far away from where you work? Do they live in the same time zone or across time zones?  

Once you know who your ideal customer is, there are a few questions that can help you determine the best way to market directly to them. What are their needs and wants? What do they find difficult or confusing when it comes to buying your product? How can you address these issues with your product or service?

See also: How to Get Started with Product-Led Content Marketing

Marketing channels 

After knowing who your target audience is, the obvious next course of action would be to find out how best to reach them.

Whether it’s through outbound marketing, email marketing, blogging, podcast advertising, social media, and so on, find out how they react to the marketing medium you wish to adopt. You could also consider data from other companies who have used similar channels before deciding on the best fit for your company’s needs.  

Also, remember that each channel has its own pros and cons. For example, organic search, according to 49% of businesses, has the best marketing ROI, while Twitter is used by more than 80% of B2B companies for both Twitter ads and organic social media marketing, so choose wisely based on your goals. 

Marketing goals

Before making any big decisions about how much you’ll spend on marketing, take some time to think about what results are important for your business. Do you want to grow your email list? Increase social media followers? Increase leads? or build up website traffic? It makes sense to focus on certain channels like social media and SEO more than others. 

Competition’s marketing strategy

Knowing what your competition is doing with regards to marketing does a lot to help you make better decisions concerning your own marketing efforts.

When you take a look at your competitors who are winning with marketing, you could easily take notes from them concerning where exactly to direct your marketing funds to succeed just like them or even have better results. 

For instance, if they are using social media heavily and focusing on influencer marketing, then maybe those tactics are going to work for your brand—but maybe there are other things that can be done to improve your results—email marketing, podcast advertising, etc.

Company’s financial strength

No matter how great your strategies are, or how well you know your target audience, it can be frustrating if you cannot afford the resources to execute your marketing plans. 

Some companies may have enough cash flow to spend in the first year, but even in these situations, there are still things that can be done to reduce costs while increasing revenue growth (e.g., hiring freelancers). Others might not have access to enough capital to invest in any additional marketing activities until their revenues increase more significantly. In both cases though, it is important that you use these funds carefully so they will continue working after they’re gone.

Marketing expertise and resources at your disposal

If you have the skills to do it yourself, then do it yourself. But if you don’t, then consider hiring someone who can help with the heavy lifting. If you don’t have the budget for this, then consider outsourcing some of your work to freelancers or digital marketing agencies such as Hera Marketing, or hire someone who can do some of the grunt work while you focus on strategy and planning to save money. 

Also, there are some cost-effective marketing tools you can adopt to ease your activities:

i. WooRank 

This tool is a website analysis and SEO audit tool that identifies keyword opportunities, helps you understand your website visitors and even helps discover technical issues that may be plaguing your website or overall online presence. 

ii. Mailshake

This tool is especially useful for your sales outreach and email marketing. Mailshake lets you automate the sending of cold emails in their numbers to however many prospects you wish to send these emails to. As a startup in your first year, this is a great alternative to Hubspot. 

iii. Drumup

This content marketing tool does all the heavy lifting when it comes to your social media management and helps you discover content topics relevant to your target audience’s needs and likes. It even helps expand your reach. This tool is a great alternative to the well-known Buffer and the likes. 

iv. Mention 

This particular tool is a comprehensive media monitoring software that helps track your brand’s most important conversations, competitors, and the overall industry online. This software makes it easy to collect all the mentions of your brand and analyze them to make better decisions concerning your users and your brand as a whole.  

v. Wordable

This particular tool lets you post documents from your Google docs to WordPress in one click. With Wordable, you are able to export publish-ready content very easily, taking out the numerous clicks and processes that were usually the case. It’s a great tool to optimize your content marketing, especially your blogging. 

See also: Why you should outsource content marketing (and how)

How to spend on marketing in your first year as a startup

Marketing is not an expense, so don’t treat it as such. Instead, treat it as an investment that will pay off over time. With that said, it’s easy to jump into spending all your money on marketing, but it’s also important to keep things in perspective.

According to the CEO of Elevate My Brand, Laurel Mintz, it’s a smart idea to invest 12–20% of your projected revenue toward marketing in your first year. This can be reduced or increased based on your marketing goals as your business grows.  

However, a marketing stat by Agilie shows how marketing budgetary allocations vary according to industries:

But most startups may not have a lot of money when they are just starting out. 

I’m sure as a startup founder you must have heard this advice a million times: “Don’t spend money on marketing until you’ve got some revenue coming in!” This is sound advice, but it’s not always possible for startups to wait that long.

If you’re one of the startups that don’t have any revenue yet, startup growth consultant Baremetrics recommends spending no more than $1,000 per month on marketing until you have some money coming in. The good news is that, for the average business, 72% of the overall marketing budget goes towards digital marketing channels. You can do things like Facebook ads, or try out free services like Google Analytics or email marketing.

How to allocate your marketing budget

There’s no doubt that your business growth is tied around being seen by as many people as possible. But with so many marketing options and channels available, it can be hard to prioritize which marketing channel is most important for your brand’s visibility. 

Content marketing is your best bet when it comes to building brand exposure, customer trust, and audience education. The reach is unbeatable! 

According to a recent study by the Content Marketing Institute, social media, email, and blog are the top three organic content distribution channels employed by B2B marketers, whereas videos, blogs, images, and infographics are the top four formats marketers leverage in their content strategy. 

Let’s explore some of these content channels/formats in detail and see what potential they hold for you.

Blogs  

Blogs are one of the most effective content marketing channels. 78% of B2B companies have blogs on their websites and 70% of consumers say they prefer to use blogs for information about a product or service compared to traditional marketing. 

With blog articles, you can write about specific pain points of your target audience and how your product or service addresses them. It’s a great way to rank high in search engines and boost organic traffic to your website. 

The best blogs will also include testimonials, case studies, and other qualitative information that helps make your brand more credible and trustworthy.

Social media

With over 4.2 billion people on social media today, it has become a major source of traffic for businesses today. A huge majority of marketers—93%—use social media daily for business purposes. It’s easy to share content on social media channels like Facebook, Instagram, Twitter, and LinkedIn, which makes it an ideal marketing channel for small businesses looking to promote their products or services. LinkedIn is very effective for generating leads. It generates 277% more leads than Facebook and Twitter.

If you have a strong presence on social media platforms like Facebook, Instagram, Twitter, or Tiktok, then these networks are a great way to reach out to potential customers directly through your posts and conversations with them. Paid ads and sponsored posts also help you reach a larger audience.

Related: 5 Tools You Need to Thrive on Social Media

Video

86% of businesses see video content as the key to their marketing success, while 79% of consumers said seeing a video convinced them to buy or download software or an app.

Video is another great way to attract attention in today’s competitive environment. Video can be used as a standalone medium on channels like Youtube and Tiktok or integrated into your existing website with video widgets or embedded videos on other pages.

Emails

Email marketing has a long history of success, with more than 80% of all B2B marketers using it in some form. It is still one of the most effective, cost-effective and scalable ways to reach your customers. It’s also one of the most personal channels that marketers can use to connect with their audiences. 

When you create a custom-built email campaign, you can easily segment your recipients based on their behavior, interests, or buying patterns and deliver exactly what they want, when they want it.

You can also use email marketing to promote products and services that are relevant to your audience. You can even offer your readers exclusive discounts or other value-added benefits in exchange for their information.

Podcast

According to a study, 60% of podcast listeners who looked up a product did so because they had heard about it on a podcast, and 44% of content marketers consider podcast advertising very effective.  

Podcast advertising is another great way to reach your audience. You can advertise on podcasts that target people who want what you have to offer, such as entrepreneurs, freelancers, and small business owners. Podcast ads are also highly targeted because they appear alongside high quality content that’s relevant to the audience members listening to the show.

Related: How to improve your podcast advertising effectiveness

How you would measure your progress

When you track and measure your progress, it will be easier to know what exactly works and what doesn’t, ergo knowing where to focus your spending on and where not to. 

To measure your progress, it would make a lot of sense to add a realistic time frame to your marketing goals. For example, if you’re trying to increase sales by 20% over the next year, then it makes sense to set aside a budget for that purpose. However, if you are looking at a six-month sales target, it would be unlikely that the same level of effort could be applied and achieve the same results in such a short period of time. If you know what your goals are and how long they’ll take, then you can create an appropriate budget and start measuring results.

You can measure your progress by: 

• Tracking your conversion rates.
• Monitoring your website traffic with tools like Google Analytics.
• Tracking your social media engagement.
• How well your website ranks for specific keywords, among others.

Other helpful tips on budgeting for marketing as a startup in your first year

• Don’t overspend. You might think you already have this as your number one rule, but well, it is quite easy to overspend when you’re trying everything to get results. 

• Don’t rush. Startups are expected to grow faster than average businesses, yes, but that definitely doesn’t mean you should rush your processes. 

• Keep track of the new tools, trends, and opportunities in marketing that emerge daily and see which one would fit your business. 

• Decrease your expectations. Don’t aim for $1m at a go just because you’re a startup and you are expected to grow faster than other types of businesses. Aim for more realistic targets. 

Wrapping up

Hera marketing—a leading content marketing agency—knows first-hand the struggles of spending on marketing as a startup new to the scene. 
If you need help planning your marketing strategies and getting the ball rolling, we are here for you. Contact us today!

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We have worked with over 24 startups to drive conversions through increased community presence and relevant blog posts that we help distribute. To understand our process, book a 15 - 30 minutes meeting with us.