What is an Average Marketing Budget for a Small Business with Breakdown?

A few decades ago, small business marketing included a sign on a store and advertising in a local newspaper. Now it is a website, content marketing, SEO, SMM, PPC, email, AR / VR and much more, as well as a sign on the store and advertising in the local newspaper. Of course, with the expansion of channels, marketing costs have grown. From the article you will learn how much they have grown: how much now a small business spends on average on marketing, disaggregated by the main channels of communication with customers.

The average size of the marketing budget of small enterprises

According to the Clutch and The Manifest polls, the majority of small businesses in the USA spend on average from 10 to 50 thousand dollars a year on advertising and marketing, and they all say that next year they plan to spend even more on promotion.

According to Sageworks analyst Libby Bierman, the 10-50 thousand dollars that small businesses spend on marketing is about 1% of their income. So, if a business earns 500 thousand dollars a year, then advertising will take 5 thousand dollars, if sales are 2 million dollars a year - 20 thousand dollars. Of course, in some industries, small enterprises spend significantly more than 1% (retail), and in others much less (production).

In addition, the size of the marketing budget of a small enterprise also largely depends on the age of the owner. So, millennials spend the most on advertising, who see it as one of the main tools for achieving their goals, while businessmen of generations X (Gen X'ers) and baby boomers feel “obligated” to invest in advertising, and therefore they do not plan to improve advertising strategies and spend “too much” on them.

Parting the marketing budget of small enterprises by channel

As various studies show, most small businesses willingly invest in digital marketing. At the same time, the majority of enterprises enter the market through the website (62%) and social networks (61%) and are ready to increase their spending on these channels next year by 41 and 21%, respectively.

And this is a general trend for all generations, that is, absolutely everyone sees in digital marketing the best tool to increase sales and increase brand awareness, and therefore are willing to spend more on it.

Let’s see how much a small business spends on each digital marketing channel.

Website Design Development

Estimated cost of creating a site - from 3,000 to 100,000 dollars. Your business needs a site to demonstrate a product or service, and also to convince potential buyers to choose you, not competitors. If the site does not perform both of these functions, it means that you need to redo it or create a new site from scratch. The cost of such a service depends on:

1. The number of pages you need.
2. Selected CMS (WordPress, Joomla, Shopify).
3. Whether you use a template or create a website from scratch.
4. Required functionality (for example, electronic commerce).
5. If you need integration with any databases.
6. Cost of content and SEO.
7. Other factors.

For example, if you create an online store from scratch, then it will cost you $5,000, if you use the CMS WordPress or Shopify web store template - from $ 100. If you want to make a website with responsive design, it’s another 500 to 5 thousand dollars, integration with databases will cost from 1 to 25 thousand dollars, and copywriting and SEO - from 60 to 1000 dollars.

These numbers can be either higher or lower depending on the developers from which country you hire. So, the average rate of web developers in the USA, Canada and Western Europe is at the level of 80-100 dollars per hour, Eastern Europe and Asia - 40-80 dollars per hour, Africa - 20-40 dollars per hour.

Mobile Application Development

Since most mobile users prefer to use web services through applications, you will most likely need to create one. If the application is relatively simple, then it is 3-10 thousand dollars and 2-3 months of development, if complex - 20-100 thousand dollars and 6-24 months. If your service already has a website with a backend, then the cost will be slightly lower.

A mobile application is not necessary if you can connect to a mobile service that your target audience is already using. For example, restaurants can use food delivery apps like GrubHub, Eat24, UberEATS, Foodpanda, and others. You can rent your property on Booking, Airbnb or OLX. You can sell products on OLX, Amazon, eBets or Etsy.

When connecting to someone else’s application, you need to take into account the cost of hiring a person to work with these services, as well as the cost of the subscription or commission that the service takes as payment for its services.

Content Search Engine Optimization (SEO)

Approximately from 600 to 5000 dollars a month. This price includes keyword research to create an SEO core, content optimization, link building, etc. - Everything that increases the ranking of your site in the search results of Google and other search engines. This is useful because the higher your search engine ranking, the more potential customers will see your business.

Estimated cost, since the network has many marketing agencies, each of which has its own way of determining the price of SEO services. Typically, the price of such services depends on several variables, including:

1. The number of pages and copies of the site (several languages).
2. The number of keywords (word forms) to be targeted.
3. Initial conditions and industry competitiveness.

In addition, cost also depends on the optimization approach. So, there are gray approaches when creating a link mass on "spam" low-quality sites, which is relatively inexpensive, but can lead to fines or a ban in search engines. And there are strategies for creating link mass using high-quality content, which may take several thousand dollars a month and from 3 to 6 months of real time.

Content − marketing (texts, photos, videos)

From 1,500 to 10,000 dollars a month. It includes researching the target audience, developing a content plan, creating content, distributing and promoting it, and creating links. The content can be text, photos, videos, images, infographics, graphics, gifs, memes and more. All this provides a constant influx of users through organic traffic, even without ads.

The cost of developing content depends on the complexity of the topic (industry), the amount of content needed, the format and level of expertise, as well as who creates it:

1. Marketing agencies. Outsourcing companies engaged in marketing at a professional level. Usually they provide comprehensive services and work on a long-term contractual basis. Quality is average or higher.
2. Internal team (or employee). A good option if you have a lot of regular work, and not very profitable if you need several texts or videos per week (month). Quality depends on the particular artist.
3. Individual artists to hire on sites such as Upwork, Fiverr, and Toptal. Usually the price of their hiring is the hourly rate or the cost of a typical project. The quality depends on the particular artist: it can be very good or very bad.

Social Media Marketing (SMM)

Approximately 200 to 10 thousand dollars. The price may include the creation of posts (texts, photos, videos), targeting, launching advertising campaigns, communication with customers and more. The price depends on the complexity and quantity of content, as well as on the social network: according to The Manifest, “Facebook (86%) is the most popular social media channel that small businesses use to advertise their business, followed by YouTube (51%), Instagram (47%) and Twitter (41%)”.

And according to a Criteo survey, users also point to Facebook as the main channel for searching for products and companies (49%), followed by Instagram (27%), Pinterest (22%), Twitter (14%) and Snapchat (12%). But, users prefer to make purchases outside of social networks: the: SUMO Heavy survey showed that only every fifth (18%) makes purchases directly through social networks.

As with content marketing, marketing agencies, employees of your company, or freelancers can engage in SMM. At the same time, small businesses prefer agencies, since there is no guarantee of quality, and this is economically feasible. Less often they hire freelancers who run several SMM projects, and almost no one hires an SMM box on staff.

Mobile Ads

Approximately from 500 to 10 thousand dollars. This is a relatively new channel of digital marketing, which already brings big profits (often more than traditional methods of monetization). At the same time, such advertising is not very annoying for people: according to the IAB report, mobile ad spending grew 40% year over year, while desktop spending is flat or down.

But the main advantage of advertising in mobile applications is that it cannot be disabled using ad blockers. Advertising will either turn off itself after the integration is completed or the user will be able to turn it off 5-10 seconds after the start of the show. In addition, advertising in a mobile application can be made interactive, which increases user engagement and, consequently, increases its conversion.

Pay-per-click advertising (PPC)

Approximately from 1 to 50 thousand dollars a month. It's about pay-per-click advertising on Google, Facebook, Amazon, and any other web platform. This is still the fastest and easiest way to increase traffic, the number of subscribers, views and sales. And such advertising can usually be targeted by a variety of socio-demographic parameters - from gender to location on a particular street.

The cost of a PPC campaign depends on the following factors:

1. How many keywords you want to target.
2. The cost of creating texts, banners, videos for advertising.
3. How much do you want to spend per month on an advertising campaign.
4. The number of platforms where you want to run ads.
5. Will you use Google Shopping Management.
6. Audience location and delivery time.
7. Niche competitiveness.

Partnership programs

Approximately from a few hundred dollars to 50% of income. An excellent marketing channel for small businesses, as it involves payment for the desired action, and not for showing or clicking (following the link). The specific cost depends on the calculation method:

1. Percentage of sale. For example, 10% of each purchase or 50% of the commission received from the client in a certain period (for example, six months) or for the entire time that he uses the service. Usually this method is used wherever the target action is the purchase and sale of goods, subscription or accompanying a financial transaction (for example, issuing a loan).
2. Paying a certain amount of money for a certain action. For example, $ 100 for each sale, $ 5 for each subscriber, or 10 cents for every like. Typically, this method of calculation is used where the target action cannot be measured financially, for example, following a link, opening a web page, viewing ads, etc.

AR / VR marketing

Approximately from 500 to 100 thousand dollars. Digital marketing of augmented reality (AR) and virtual reality (VR) uses advanced technologies that allow consumers to get closer to the product without leaving their office or sofa. Now AR / VR uses only 10% of small businesses, but polls say that in the coming years there will be 20% of such entrepreneurs, and until 2030 every second person will use new technologies.

Here are some examples of how to do this:

1. The VR IKEA app allows users to place furniture in their homes to size and see how it will look.
2. Derrick Bozkurt, a realtor from Colorado at House in Motion, uses VR to create сvirtual tours of the real estate he sells.
3. McDonald's uses AR to attract to their establishments in Japan, creating there "sports halls" of the game Pokemon Go.

Email Marketing

Approximately - for free or about 3 thousand dollars. The price includes strategy development, template design, copywriting, landing page creation and testing, as well as fees for using special programs and services to automate email marketing, for example, Pardot or HubSpot (pro version).

A small business email marketing strategy can be simple, for example, a monthly list of ads with information about discounts and new arrivals, or complex, like automated campaigns that respond to user actions on your site in real time.

The cost of email marketing depends on the following things:

1. The size of the subscriber base.
2. If you want to automate the process.
3. How often do you plan to do the newsletter.
4. If you want to segment subscribers into groups.
5. Type and quality of content in letters.