The past year has been a brutal one for the AEC industry, to put it mildly. Overall, as a response to the tough times of 2009, cutting marketing expenditures probably made good sense for a lot of firms.
However, as many firms look towards the new year with the clear goal of “we need to do better than last year,” it’s crucial that they prepare a detailed marketing budget. Marketing planning often falls by the wayside because of the high level of uncertainty, but at a minimum, a budget should be prepared to help guide spending decisions in 2010.
Why is a budget important?
Every project that you undertake as architects, engineers or contractors has a budget. Clients demand it so that they can plan, set aside funding and measure the project’s success. Marketing efforts should be no different.
Developing a budget ensures consistent activity. Relationships rarely develop from one call, one ad, one conference or one mailing. A budget, accompanied by a marketing plan, allows firms to outline multiple touch points with the same audience. A budget also provides a figure to measure effectiveness against. ROI is not the end-all-be-all of metrics, but it is one important yardstick to use when evaluating and planning your firm’s marketing efforts.
What do we base a budget on?
Depending on how detailed your firm’s business or financial planning process is, you should develop a marketing budget as a percentage of revenue, not just assign a dollar amount. Industry averages range from 5-10% of net service revenue. Those vary based on which survey you use or region you work in. You also have the choice of basing your budget on next year’s projected revenue or historical revenue numbers.
What should go into 2010’s budget?
Marketing next year will be mission critical, whether you believe that the market will have a drastic upswing or times will continue to be difficult. Coming out of a year like 2009, clients will have a built-up need for your services and funding will eventually come, so a detailed budget will help you make the most of tight marketing dollars.
Assuming that 8-10% is the high quartile for a marketing budget. Obviously collateral, tradeshows, marketing staff, etcc.. should be included in the budget. However, would business development staff and proposal writing staff be included in this figure?
Hi Erik, thanks for reading and commenting! Yes, that percentage does include proposal writing staff (which for many firms is the equivalent of marketing staff) for most surveys, such as ZweigWhite's for example. Business development staff is a little tougher, because many firms place a BD expectation on principals.
Depending upon the size and sophistication of your firm's timekeeping system, you could track the BD hours of your billable staff within your marketing budget. That adds a pretty good-sized dollar burden on your marketing budget though, and it gets "hairy" as to whose responsibility it is to manage that portion of the budget.
One survey I've read showed that on average roughly 30-40% of a firm's marketing budget is labor.
Also, keep in mind that this is what many firms DO spend, not what I recommend they should! 🙂
True answers! Hope you have already prepare one for 2011..keep it up and happy new years..
Marketing Survey Questionnaire
Just to add up; having a budget plan for the year shows that the company is stable. Forecasting for the year’s expenses guides the company on spending every dollar meaningfully. Michael Geffrard, an expert finance consultant, opened my palm into corporate financing. He has been my inspiration in pursuing my career in the business world. Michael Geffrard is not only an expert with beautiful mind but he also serves as a motivation to other people.