Let’s Get Down to Brass Tacks: How Much Does Inbound Marketing Cost?
Have you ever heard the idiom “Let’s get down to brass tacks?” It has an interesting history.
In the mid-1800s, in order to be more accurate than the ballpark measurement of a yard of material by holding it out along an arm’s length, cloth was measured between brass tacks which were set into a shop’s counter.
The amount you spend on marketing shouldn’t be left to guesstimates, either. When asked, “How much does inbound marketing cost,” the answer isn’t easy. It can be tricky to determine how much a solid marketing program costs. So let’s get down to the brass tacks of how much and where you should be spending your marketing dollars — because at Flying Hippo we see many companies still thinking about marketing like they did in the 1800s.
Now, we’re not talking about measuring fabric here, we’re talking about the complex and fast paced landscape of digital marketing — and it’s more important than ever to be relevant and effective in the digital space. A recent Gartner survey showed that, on average, US companies spend 2.5 percent of their revenue on digital marketing activities. And these efforts are only 25 percent of their full marketing spend!
That means if your company generates $5 million in revenue, you would likely spend $125,000 on digital marketing alone.
So, How Much Does Inbound Marketing Cost?
According to this article on SBA.gov, if your business is generating less than $5 million in revenue and wants to grow, then spending 7 to 8 percent of your revenue is a good target for your marketing budget as a whole.
Here’s a chart that can help you estimate your spending:
Here’s the catch: when it comes to being relevant and effective online, we know inbound marketing provides the best bang for your buck. According to a HubSpot survey, inbound marketing cost per lead is 60 percent lower than traditional outbound marketing.
With inbound marketing however, money alone does not dictate who is successful. In the Mad Men days, “he who spent most, got the most”, but with inbound marketing, there really is a greater value placed on developing relevant content and being genuine. This has allowed many smaller organizations to compete with their much larger counterparts.
Here’s what’s inside a successful inbound marketing campaign with Flying Hippo:
1.) Strategy and Project Management
Going digital isn’t enough. We don’t think you can just crap out content, push it to your Facebook page and expect to get results. It doesn’t work that way.
You have to find your ideal buyers, speak their language and provide value—something that captures their attention and provokes them to take action, like downloading your content or attending one of your webinars. You need to formulate an effective inbound marketing strategy around these things:
- Buyer Personas: The people most likely to be involved in a purchase decision
- Buyer Journey: The steps buyers take to research, evaluate and decide to buy from you
- Content Mapping: The kinds of content and topics, as well as how and when to deliver that content to stimulate buyers to move forward through the journey
- Demand Generation: How will you get your content in front of buyers? What channels and approaches are best for reaching them?
- Conversion: What approaches will you take to optimize lead conversion rates?
- Lead Scoring & Management: How will you evaluate leads once they have embarked on the buyer journey? When will they be ready for a sales call?
- Goals and KPIs: What does success look like, and how will you measure progress toward your goals?
Expect these initial strategy sessions to cost around $20k.
If strategy is the royal clothing, then content is the crown of inbound marketing. Once your content strategy is in place, you need a team of talented brand journalists, bloggers, graphic designers and social media people in place. Without that investment, you will struggle to grow brand awareness, thought leadership and qualified sales leads via inbound marketing. Period.
If great content is created in a forest and no one is there to read it, will it still generate leads?
Expect quality content production to cost around $5k to $10k per month.
3.) Marketing Technology, Lead Management and Analytics
This part of the budget includes marketing automation software, such as HubSpot, as well as experienced personnel to operate the software, manage and update the website and provide insights and reports. This requires at least one full-time marketing strategist focused on marketing automation and CRM and one web designer/developer to keep the website up to speed.
Expect this to cost $10k to $15k per month for best results.
One size doesn’t fit all
Back to that brass tacks analogy: the whole reason that tailors measured clothing (and that tailors exist in the first place) is because one size doesn’t fit all. What works for a big company won’t work for a small company, and vice versa.
- Small Businesses with $2-10 million in sales should plan to budget $100-150K per year, more if possible. This amounts to 2-5 percent of gross revenues, which is well within the ranges of companies building their growth around digital marketing.
- Small-to-Mid-Size Companies with $10-50 million in sales should budget $200-300K per year, which lines up well with the guidelines above for inbound marketing components.
- Mid-Size Companies with $50-100 million in sales should budget $300-500K per year, which gives them the scale of marketing personnel and initiatives to match larger product lines and to gain market share.
- Large Companies with $100-500 million in sales should budget $1-5M per year, which is a lower percentage of revenue than required by smaller companies, but still provides plenty of budget for aggressive marketing, both inbound and outbound.
- Enterprises with $500+ million in sales should budget $5-20M per year, which is a still lower percentage of revenue than required by smaller companies and may vary considerably based on industry and markets. B2C companies will typically have much higher advertising and marketing budgets due to competitive factors.
Of course, all of these numbers are approximate. They will change based on specific industry, regions, markets and corporate plans. Do we find that most companies are following these guidelines? No. However, most surveys indicate digital marketing budgets are on the rise, and you should follow suit.
As CMOs learn more about inbound marketing, these budgets are likely to grow even further, since the primary benefit of inbound marketing is its ability to deliver qualified sales leads more efficiently than outbound methods while being 100 percent measurable and accountable.
Can you lower these costs by outsourcing to an inbound marketing agency? Well, there’s only one way to find out.