How much should your startup spend on marketing?

I wrote an article not too long ago that discussed how to establish a marketing budget for your business. I figured I should drill down and explore this issue for startups in particular, because, hey, I’m in the startup industry. We’re not ones for subtlety, here.

The fact is, many new businesses see marketing as difficult to justify. Even many who do understand how essential it is seem to view it as a luxurious expense.

Perhaps nowhere is this more true than in startups, who by and large operate on shoestring budgets, assumptions, and prayers. Many see marketing only as a stop-gap method to communicate for short periods of time to meet finite goals.

The reality is that marketing is essential from the beginning. It’s not simply a finite advertising exercise; it’s a holistic practice that shapes the entire way your product or service is developed for the customer. It sets goals and shapes you into a tool for meeting them. Marketing has solid ROI. At a minimum, it creates value for your target market and, perhaps most importantly, it lets them know you exist and have something for them.

So the question is, “How much should my startup be spending on marketing (’cause we don’t have much capital)?”

The easy answer is, “More than nothing.”

My previous article discussed a method for culling a marketing budget based on revenue projections and rent expense. But what if you’re just starting out and you don’t have either? Then it depends on a number of other variables, including your current budget, your objectives, your market, and where you are in the growth cycle. (For the sake of this article, I’m assuming you already have your primary marketing tools, like your website and social media accounts, in place).

For early-stage startups with very limited resources, a reasonable budget might be $350 to $1,000/month. This establishes a foundation that can be expanded as growth occurs. It allows using platforms like Hootsuite and Tweetdeck, paid social media advertising, website optimization tools like Kissmetrics or SEOMoz, and email marketing. I don’t often recommend marketing anything on $350 a month — it’s bare bones, and there’s not enough ROI unless you’re willing to manage social media accounts and make connections until you hallucinate from sleep deprivation. In the upper levels, however, you can get a good marketing mix from the above-mentioned tools (and your own labor). It might also allow for some marketing consultation, PR services, or social media assistance, depending on the provider.

As growth occurs, your marketing budget might expand to $1,000 to $10,000/month This is when you might add a marketing service or hire someone to handle social media; public relations; create content like blogs, case studies, white papers, and press releases; and design marketing and sales collateral.

As your startup accelerates its growth and begins to drive brand and product awareness, it’s not out of the question to spend $10,000 to $25,000/month on marketing. At this stage, a startup has expanded its marketing team, it is aggressively using social media and content marketing, it’s sending people to conferences (possibly sponsoring events), and has solid PR relationships with bloggers and other media.

Sometimes, it’s hard for startups to justify spending money on marketing. However, it’s a necessary component of running a business. If your target market — your customers — don’t know you exist or understand what you do, it seriously undermines your ability to grow and succeed. Don’t scrimp on marketing — it’s not easy in the beginning, but in the end it’s all about growth, and you won’t get it unless the people know you’re there and like what they see.

Matthew Chabe

About Matthew Chabe

Matt Chabe is the President of Chapter Two Marketing & Public Relations, an integrated marketing agency based in Bangor, Maine that helps startups and businesses around the nation maximize growth. He is a seven-year veteran of the U.S. Navy, an active SCORE volunteer, and drives way too fast for his own good. Matt graduated from University of Maine with a BA in marketing and a minor in psychology.