Where to Allocate Your Small Business Marketing Dollars

How you spend your marketing budget can make or break your business.
Most successful small businesses have a clear marketing strategy that's creative and affordable. (Photo: Jacob Lund/Shutterstock)

Chances are you’re investing at least 4 percent of your revenue on marketing. And you need those marketing dollars to work as hard as possible for your business. But you do understand how best to spend the money?

There’s no one-size-fits-all answer. The ideal marketing plan will depend on factors such as the type and size of your business, how mature it is and your target market.

Since you can’t advertise everywhere, choosing the right channels, and spending appropriately on them, is key.

The case for spending smart vs. spending more

Bob Bentz, president of mobile marketing agency Purplegator, painted a picture that demonstrates why a one-size-fits-all marketing strategy doesn’t work.

Imagine a suburban one-location restaurant that grosses $1.2M per year. Since this restaurant has a trading area of just a few miles, traditional media that reach consumers across the larger metropolitan area is a waste. “Because of the power of the geo-location aspect that mobile/social advertising brings, I would allocate 50 percent of my budget to it. I would allocate 40 percent to local cable TV if it can target the local trading area only. The remaining 10 percent would be allocated to SMS text message marketing, which is incredibly inexpensive.”

Dean Levitt, founder of website analytics company Teacup Analytics, suggested this approach: Rank the advertising channels you’re interested in, considering factors like the estimated ROI and the time required to manage the marketing effort in that channel. Then allocate 80 percent or more to the channel that ranks the highest, saving a little bit of the budget to test ideas that might pop. “It doesn’t really matter which channel you choose first, as long as you’re confident you can invest both money and time fully to get the most out of that channel.”

What can you do for free?


“Before spending a single dollar on marketing, maximize free marketing possibilities.” – Ren Geers (Photo: Ren Geers)

Ren Geers, digital growth manager at HireKeep, advised, “Before spending a single dollar on marketing, maximize free marketing possibilities. First and foremost is crafting a strong social media presence. For example, Instagram has up to 50 times higher levels of engagement than Twitter and is a great place to start free advertising.

Diane Dye Hansen, business coach and marketing consultant at What Works Coaching, said, “Identify free, no cost, and cross-promotional opportunities. Use the free version of Hootsuite to manage and respond to social media, hashtagging Instagram photos with a local tag, getting customers to review on Google business, Yelp, Tripadvisor, and other review sites.”

There’s a lot more for free than just social media. Geers suggested finding ways to align your business with a cause, or do something newsworthy that gains you media coverage for free. A pizza shop in Philadelphia received a lot of press for giving customers the option to “pay it forward” and buy slices for the local homeless population.

Think mobile

As Bentz’s example illustrated, if you are in a metropolitan area, most of your customers are likely concentrated only a few miles around your store. “Why advertise in print or radio when the majority of your dollars will be wasted? With mobile, you can target just those people in your immediate geo-targeted area,” said Bentz.

Levitt agreed mobile is a smart place to put marketing dollars. “Invest in local search engine optimization. Make sure that you’re ranking for search terms relevant to local customers.” Specifically, be sure that you are optimized in Google My Business, and consider using a tool like Locu to make sure you rank in searches.

For mobile advertising, Bentz favors Facebook. “The added value is that you can go beyond geo-targeting; you can also target by interests and demographics so that you are only investing in reaching your very best prospects.”


Dean Levitt, founder of Teacup Analytics, suggests investing in local search engine optimization. (Photo: Dean Levitt)

Invest in your website

Your website doesn’t have to be gold plated, but you should have one that works. (Amazingly, about half of all small businesses don’t even have a website.)

“Work with a web designer who understands your audience,” advised Levitt. “That means a website that meets visitor intent. Restaurants should have their menu, address and reservation tool front and center. By taking reservations online, you can gauge the impact your site has on getting bums on seats in the restaurant.”

Think twice about AdWords

Experts are divided on the value of Google AdWords. Levitt is bearish, warning that it might not pay off if you don’t invest time and money in doing it right. “Don’t invest in Adwords unless you’re willing to spend the time managing the account or hire someone very skilled to manage the advertising for you.”

Paul Maplesden, a writer and small business owner, thinks there’s value if you approach it with respect. “If you use it well, AdWords is a great way to spend your marketing dollars; used badly, it’s a great way to waste your marketing dollars.”

AdWords can make it difficult to cater to customer search intent. “You’re very likely to pay for clicks that won’t convert to sales, and that’s an easy way to hemorrhage money,” explained Maplesden. If you don’t have time to learn the intricacies of AdWords, he recommended investing in an AdWords agency to hone your AdWords buy for you.

Succeed on social with paid posts

“Nothing makes Google bots happier than plenty of fresh, relevant content on your website,” said Jason Hall, president of MyLocalSEOs. “The more you can write about your business and what it provides, the higher up the SERPs (search engine results pages) you will climb.”

Unfortunately, creating content won’t get it noticed; be prepared to put dollars behind promoting it. Jayme Pretzloff, director of marketing at Wixon Jewelers, said, “Ever since Facebook changed their EdgeRank to allow only about 10 percent of your page’s followers to see your posts, using sponsored stories has become more and more important. We have seen huge spikes in engagement with our fans by using promoted posts.”

Is there a smart spending ratio for content creation versus promotion? Adarsh Thampy, CEO of LeadFerry, suggested 20/80. “Most businesses spend almost nothing for promoting their content. While this worked ten years ago, today, not paying for distribution essentially means no one will find you.”

Go direct

“For small retail POS businesses, the best place to spend marketing dollars is on the direct level,” said Anne Kleinman, marketing consulting at Ad Infinitum. She favors email lists, creating referral programs and using coupon programs that encourage people to bring in their friends. “This concept works whether you are a dress shop or a restaurant.”

Levitt underscored the value of email marketing (the marketing tool used most by small businesses today according to a survey from Wasp Barcode Technologies.) “Email marketing has a huge return on investment: it is way easier to get a happy customer to come back than it is to find new customers, and email newsletters are an impactful method of staying in touch with your customers. Be diligent in getting email addresses from customers and send a short, relevant, newsletter monthly.”

Of course, direct marketing goes beyond email newsletters. Kleinman said that some successful programs she has created for clients include producing calendars with coupons, postcards with loyalty key tags, and even sponsoring stadium cushions for local high school sports teams.

Track results before spending big

No matter where you spend your money, it’s important to allocate it in small increments and evaluate your results.

Levitt warned that conventional wisdom about social media might lead you astray. “Likes and favorites on social media seldom translate to real world impact. Test Facebook advertising tentatively.”

Also, don’t spend too much on any single initiative. Instead, Kleinman advised spending small amounts “to test different ideas to see what works best.”

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