How Much Should You Spend On Marketing?

How much should you spend on marketing for your company? This is my proven step by step process that I use to evaluate how much to put into marketing spend at any given time and come out the other end confidently.

Hey guys what’s going on it’s gary wilson here and i’ve not made a video on the youtube channel for a while but i thought it would be a good time to start things off again and one of the questions that a lot of people have been asking me specifically as i’ve been involved more in the property business has been how much should you spend on marketing now it’s one of

These kind of topics that and i think a lot of people don’t have a lot of confidence when it comes to actually spending money in marketing and they worry about spending money and put money forward for marketing and they don’t know how to analyze their marketing properly so that they can figure out how much they can spend and how much they should be spending so in

This video what i’m going to do is i’m going to give you an illustration of how i comment any company or business or product anything that i’m putting marketing expense behind to try and get it working and i’m going to explain the kind of financial modeling that i go through and a step-by-step process so that you can replicate that for your own business and have

More confidence when you go to spend and ultimately you know with marketing if you have that confidence and you have that ability to analyze numbers properly you can scale to ridiculous numbers because all marketing is at the end of the day is being able to come in and spend a pound on something and make two pounds back and if you can do that on a replicatable basis

That’s where you can scale a business to extreme ridiculous high level numbers and you’re going to be able to get an incentive back from that spend so let me dive in here and just kind of show you some of the ways that i think about that okay so ultimately every business at the end of the day comes down to sales okay sales are the end figure the end um result

Of any marketing activity okay so the best way ultimately to analyze marketing is to spend you know 100 pounds of marketing and make 200 pounds back and you know the way you judge that is by looking at the amount you’re spending on the marketing and then looking at the ultimate sales okay now very often what happens is a lot of businesses don’t spend enough on

Marketing to actually judge the sales metrics possible and what you need to actually do is look at things in your business earlier on in the funnel to actually work out how much you should be spending on marketing so let me illustrate this out so sales is as i say the end result but before sales you probably have something like leads okay in your business that

See also  LTSE stock exchange founder on competing with the NYSE and NASDAQ

You acquire before you sell them things so whether you’re selling marketing services whether you’re selling um you know you’re you’re trying to keep people who are selling their property whether you’re trying to find investors for a company whatever it is most likely there’s going to be leads and there’s going to be sales and then before leads you’re probably going

To have like clicks what i would call clicks or like visits to your website okay and this is this is a really good example of doing online marketing if you’re not doing online marketing then you’re probably going to look at a different metric than clicks you’re going to maybe look at for example if you’re running a tv advert you might look at impressions so it’s

How many people see something and to get a result now effectively the best businesses know the relationships between each of these different things in their company very accurately and very effectively and this is how they can scale up okay and what i’m going to do is i’m going to give you an example of a real-life business that i’m working on right now which

Is a property sourcing company effectively what we do is we run advertisements online to try and look for people who are selling their property we try and help those people and ultimately if we if they sell their property with us we will make a sales fee at the end of that okay now from my working in the business so far every single sale in my business is worth

About 5 000 pounds okay so 5k i’m just going to put there this is the value the end value of a sale inside the business okay now all i need to do to work out how much i want to spend on marketing okay if you’re asking me okay how much how much you want to spend in marketing gary well if i one of my sales is worth five thousand pounds to me i’m going to spend up

To 5000 pounds to get a sale okay now that might all sound fine and well but for somebody who’s starting out and you know a property sourcing company they might not want to spend 5 000 pounds they might want to look at other metrics before a sale to judge basically the market is working because if you only looked at sales you know you would probably want to spend

A couple times the sale value of something to actually properly test if a marketing campaign is even working so i would recommend to get a 5 000 sale if you’re only looking at the sales metric to spend as much as 10 or 15 000 pounds just to test if that’s enough for one sale now if you take it back a step we’ll look at leads okay what you need to work out in your

Business and this is why i was saying the relationship between all these things are so important for the best companies the best companies will know how many leads convert into sales okay now for me right now i think that number for my business is about one percent okay one percent of all leads okay are sales okay so that means it takes me a hundred leads to get

See also  CM Lecture 11 4c2 Unpaid Balance Method

One sale okay so if each sales worth five thousand pounds okay all i need to do is take five thousand pounds and divide it by a hundred okay and that’ll tell me how much i can spend per lead and in this example that would be fifty pounds okay and then again the relationships between everything your website is so important so you take leads back to clicks okay how

Many clicks on your website does it take to get a lead and in my case it’s about 10 clicks so you take the same 50 50 leads and you take it to clicks and that’s five okay so i can spend five pounds on a click okay based on these numbers i’ll put 10 in there sorry let me write that down so 10 okay so effectively it takes so every 10 clicks i get turns into a lead

And every 100 lead i get turns into a sale okay now these numbers i have not run this business long enough to make sure these numbers are accurate i probably need to go and spend hundreds of thousands of pounds of marketing to get these numbers accurate but every single month or every single week i’m modeling these numbers to actually figure out the relationship

Between them and when i get a really strong and confident idea on that that’s what i can spend highly in marketing because right now if these numbers are correct and i can scale and these numbers are accurate effectively every single 5 000 sale that i get okay i can spend five pounds per click on my online advertising to get that basically it’s under five pounds

It’ll be that it’ll be profitable marketing okay and this is where you can actually start to earlier on in the process analyze how much you can spend profitably okay now if you’ve got a business right now that’s running organically and you know all these numbers and you’re trying to come in and spend on paid advertising you can actually effectively by using this

Modeling process work out exactly how much money you can spend on your marketing and why is this modeling process even important well the reason it’s important is because confidence and ability to spend in marketing is the way you scale a business and the biggest problem is marketing can easily be as ineffective as effective and what you need to use is data to

Build that confidence and build that ability to run and be able to run profitable marketing campaigns so what you need to do is you need to be modeling your business in this kind of way all of the time because if you’re not tracking this stuff and you’re not modeling things in this way you’ll never be able to scale up because you don’t know how much you can spend

On anything okay you need to take your business pick it apart build a model for each stage of it and figure out the maximum amount you can spend for those kpis and when you know that number and when you know that number confidently you literally just need to keep spending money and you’ll have no problem spending the money you’ll spend an unlimited amount of

See also  With Liz Truss quitting, here are the possible UK PM contenders | Who will be the next British PM?

Money with borrowing money to spend it because ultimately you know you know that it will bring something back and i said massive companies like uber starbucks all these massive big companies that you know of take on so much funding is because they build a model for their business they understand their metrics and all they need to do once they have confidence in

That is pitch that to an investor get them to give them money so that they can double down on the marketing spend and grow the business even quicker because you will want to spend on marketing when you know the marketing works and the only way you know it works is from looking at cold hard facts and data in your own business that you have seen time and time again

To be able to have that confidence so the reality is you have to get going spend a level in marketing that is right for you right now start to model out your business and you know you want to be doing this slowly you don’t want to be coming in and spending tons and tons and tons of marketing to start because probably the campaigns that you do are not going to be

Good they’re going to be an effective they’re not going to work very well you’ll do these initial modeling and you’ll realize you’re spending six pounds in a click you’re spending the wrong amounts of money on different things and the leads that you’re getting aren’t really converting at one percent for example you’re going to get all this data back and all this

Feedback back in your business and you’re going to realize what’s working what’s not and what you can tweak and what you can optimize your systems to get these numbers higher you know if you put more staffing into your your leads to sales part of the business will that actually increase your conversion rate so you want to have a well-oiled business that’s been

Running for a while this had a lot of money spent on it enough for you know 50 100 200 sales to have gone through until you can actually model these numbers properly take these forwards and then that’s when you can double it in marketing so i hope this video was valuable and i hope it was useful to anyone out there who’s trying to spend marketing in their business

Right now this is how i run my companies this is the main thing i look at for anything i’m doing and it has worked for a long long time it’s made me very very successful in online marketing campaigns so i hope it was valuable and i look forward to seeing the next video bye

Transcribed from video
How Much Should You Spend On Marketing? By Gary Wilson