In any business circle, entrepreneurs and marketers alike will be talking about cost-effectiveness and strategic value, but they rarely call a spade a spade. They rarely mention predetermined budgets, hidden costs, and just average spending in general.
So, for a fresh perspective, we’ve asked our marketing team to help us give you a better idea about the average advertising cost for a small business and equip you with all the answers in this article.
Table of Contents
- How Much Does Advertising Cost for a Small Business?
- Advertising Costs for Small Businesses: What To Take Into Account?
- Online Marketing Budgets for Small Businesses
- Offline Marketing Budgets for Small Businesses
- Factors That Determine Small Business Marketing Budgets
- Creating a Marketing Budget
- Small Business Advertising Costs: Finishing Thoughts
- Small Business Advertising FAQs
How Much Does Advertising Cost for a Small Business?
According to recent data, small businesses spend around 10,6% of their company budgets on marketing, which may vary from $10,000 to $50,000 a year.
Data also suggests that these numbers and percentages are growing. According to Deloitte, in 2023, small business advertising expenses have increased by around 4% compared to previous years, with advertising budgets making up around 13.6% of a company’s total budget in 2024.
The average marketing budget for SMBs (small- and medium-sized businesses) will vary widely by industry. Experts highlight that the consumer-packaged goods industry takes the first place in this respect, with businesses spending around 25,19% of their revenue on marketing in the US.
What do our experts say about this? Regarding small business advertising costs, some advise that small businesses should spend a reasonable minimum of at least $1,000 per month on marketing. Others recommend that SMBs shouldn’t spend more than 7-8% of their budget on marketing.
Based on these recommendations, a small business that generates around $1 million per year in revenue should have a marketing budget of around $80,000 to $100,000, which could be used to cover several expenses, such as:
- Public relations
- Advertising (pay-per-click and offline ads)
- SEO (search engine optimization)
- Content marketing
- Event marketing
- Social media marketing
These are only some of the marketing channels that you can use. The exact approaches you can implement will highly depend on your marketing goals and target audience.
Here are some additional tips to help you set up your marketing budget:
- Determine your marketing goals: What do you want to achieve with your efforts? When you know what you want to get out of your marketing efforts, developing an accommodating budget becomes easier.
- Thorough competitor and industry research: What your competitors are doing and the amount they are spending are both good indicators of your budget and strategies.
- Flexibility: Budgets aren’t set in stone. You may need to adjust your expenses as your goals change.
- Understand your results: Tracking your results is pivotal to assessing the efficacy of your marketing strategies and helps you see what you should concentrate on. Measuring results helps you make smarter decisions about how you should allocate your advertising budget for future campaigns.
Advertising Costs for Small Businesses: What To Take Into Account?
Typically, every business will have two different advertising and marketing budgets, which can be further subdivided into various channels based on several factors.
Online Advertising
Today, digital marketing is the definitive backbone of modern advertising, and it defines every marketing and advertising activity that happens on the internet. Google Ads helps you attract searchers with targeted keywords, social media helps with raising brand awareness, and SEO helps you build overall digital visibility.
Digital marketing, from email marketing through casual branded posts on Facebook to multi-channel digital sales funnels, has become a massive industry that is expected to reach a total market value of $667 billion by the end of 2024.
Offline Advertising
Offline marketing strategies remain important in 2024, as traditional mediums still garner quite some attention. From TV viewers to local newspapers, radio stations, and billboards, the offline marketing landscape also offers several advertising opportunities that can complement any digital marketing strategy, creating a comprehensive marketing approach.
Offline approaches such as business cards and trade publications can also be invaluable for reaching specific prospects and branding. Traditional advertising will always perfectly complement your digital marketing efforts and connect the virtual with the physical.
Online Marketing Budgets for Small Businesses
Last year, businesses in the US alone spent a total of $270 billion on digital marketing and experts believe that this number will reach $450 billion by 2028.
Let’s explore some of the most popular investments made in the space of digital marketing.
Digital Marketing
This involves several strategies and online channels to attract customers to your website and other online platforms where they can purchase from you or reach out. Small businesses often use content marketing, SEO, pay-per-click advertising, email marketing, or social media management to gather online momentum.
Google Ads
Google Ads is the most effective way to reach potential prospects via search engines. Its dedicated advertising tool requires researching and targeting keywords that align with your business goals and prospects’ search intent.
Social Media Marketing
Social media marketing involves different approaches, from increasing engagement with organic traffic through paid advertising to comprehensive community management. For years, social channels were mostly tools for raising brand awareness but now, they have become legitimate sales funnels.
One particularly exciting form of social advertising and marketing involves TikTok, which can be a highly effective platform for eCommerce success.
SEO
Search engine optimization involves optimizing your entire online presence from your website, the content on it, and your information in online directories, to improve your visibility on search engines.
Content Marketing
A crucial component of SEO, content marketing keeps playing an increasingly important role in digital marketing. As social media platforms, websites, and video-sharing platforms such as YouTube are becoming more and more advanced, enabling visitors to consume a wide variety of content formats, brands can generate significant revenue from organic content (like articles, videos, blogs, and social posts) when compared to paid advertising.
Email Marketing
Email marketing revolves around sending emails to a targeted audience to promote your brand, services, or products. Usually, a well-rounded strategy will include promotional offers, newsletters, announcements, and personal communication. Effective email marketing helps you market your products while building relationships with your audience.
Offline Marketing Budgets for Small Businesses
Traditional advertising aims to boost sales and raise brand awareness using approaches and strategies that aren’t internet-based. According to expert estimates, global non-digital advertising reached $306.8 billion in 2023.
Let’s explore the key offline mediums worth considering.
Local Newspapers
Small businesses may leverage the benefits of running ads in local papers. In addition to paid press advertising, local papers can be a highly effective way to increase brand awareness through PR campaigns and other written content formats, such as interviews or articles.
Trade Publications
These are specialized journals or magazines that focus on specific professions and industries. Publications can help you establish your brand as an industry expert, by regularly commenting on industry news, providing insights, and reacting to trends. Trade publications can expand your reach to an already highly targeted audience, which can be a great way to increase awareness when your funds are limited.
Radio and Television Ads
Running ads on a local radio station can help you broaden your reach within the local area while allowing you to engage with the community. Listeners can also take immediate action while creating the ad itself is a highly cost-effective process. Local TV ads also offer a wide local reach and can help you build more credibility within your local community.
Business Cards and Branded Goods
Print mediums can also help you increase brand awareness. Just think about sleek business card designs, or branded T-shirts and other goods that can increase your offline visibility.
Factors That Determine Small Business Marketing Budgets
The average small business marketing budget is around 8.7% of a company's revenue, and investing in marketing is a necessity in today’s overcrowded marketplace. However, marketing expenses can get out of hand if you don’t have a strategic approach. Several factors will affect how much you spend on marketing:
- Business goals: Do you want to generate more sales and leads or increase brand awareness? Knowing your objectives will help you pinpoint how much you will need to spend.
- Industry: Some industries will require a larger marketing budget than others, due to competitiveness and target audience preferences.
- Target market: Who are your potential customers and which marketing channels do they use? Having the right insights can help you increase campaign effectiveness and avoid overspending.
- Your budget: Be realistic when determining how much money you can spend on marketing. Set goals but be flexible enough to make adjustments if necessary.
- Competitors: How much are your direct competitors spending? Chances are that your budget will be very similar to theirs.
- Business size: The larger your business is, the more you will be able to spend on marketing to reach people.
- Stage of your company: If you’ve just established your business, you might need to spend a bit more on marketing to create some buzz, generate leads, and build awareness. Once you’re established and have a solid digital presence, you can decrease your marketing budget.
- State of the economy: External economic factors will also affect your marketing expenses. Inflation might mean that you will have to pay more for the same marketing services and if the economy is in recession, it can be a smart idea to scale back your marketing budget.
- Location: The cost of marketing services can vary based on your location. Marketing in rural areas usually costs less than in major cities.
Creating a Marketing Budget
Once you’ve considered these factors, you can start creating your marketing budget for your small business. Here are a few tips to help you get started:
- Start small and increase your budget with time: After the initial push to establish your brand, you can scale back your budget, but gradual increases as your business grows are always necessary to address growing needs.
- Focus on the most effective strategies: No two businesses are the same and not all marketing channels will yield equal results. Find out which are the strategies and channels that are the most effective for you. If you’re getting the most results from social media marketing, get a larger budget for content creation, invest in community management, or in paid social advertising.
- Get creative: Effective marketing doesn’t always mean expensive marketing. Creative ideas can often maximize your reach without spending too much money, or maximizing what you have.
Small Business Advertising Costs: Finishing Thoughts
You should never forget that your marketing and advertising budget is a business investment. Marketing is the most efficient way of reaching more people, generating more leads, closing more sales, and ultimately growing your business.
Overall, the best course of action is to partner with a seasoned marketing agency specializing in small business advertising that can help you create the right budget and lay down the foundation for effective strategies.
Small Business Advertising FAQs
How much should small businesses spend on advertising?
Experts recommend spending no more than 10% of your overall revenue. This can allow you to execute simple and more intricate marketing strategies and cast a wide net for your target audience.
Should small business owners focus only on digital marketing?
To cover the most ground, experts usually recommend using both. While digital marketing gets more attention today than traditional advertising channels, offline marketing can still be a great way to generate leads and raise brand awareness.
What are the most effective digital marketing strategies?
Investing in SEO, social media, and content marketing can be highly beneficial and cost-effective if done right. Later, small businesses may add paid advertising to boost their well-established online presence.
