How Much Should You Spend On Marketing?

Someone recently asked the question.."what is the proper amount to spend on marketing in a design firm?" Most surveys report marketing costs as a percentage of net revenues. These reports will report marketing costs frequently in the range from 3-11%. How much is enough? How much is too much? And how much is too little?

The subject of marketing costs as a percentage of gross or net revenues is one of my favorite topics. It's been one of intense debate for years now. My advice now, as it's always been, is to be careful not to read too much into survey results. First of all, many of these survey conclusion are based on only a few hundred firms responding. And out of these few hundred firms, there may only be five or six, maybe less, that fit into your category, hardly a representative list. 

Remember that the results reported are simply RANGES of expenses and can vary widely depending on the type and size of firm you are as well as the growth strategy you are pursuing. For example, if you are a firm with a stable client base in mature markets your marketing costs might be as low as 3% while a firm on a growth push moving into new markets and new geographies might be spending 15% or more. An MEP firm that works mostly as a sub consultant to architects might spend only 1% while another MEP firm that works directly with end-user clients may spend over 6%. So when someone asks what the "right" percentage is, all you can say is...It all depends.. 

These survey results are useful for broad comparison purposes, not for precise measurement. Your marketing spending should be based on what it will take to achieve the results you want in terms of sales, revenues, profitability, win rates, growth, diversification, positioning, etc., not the other way around.


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