Marginal at Best
My friends in the biz tell me that a typical "textbook" marketing budget for a business will be 10-15% of the total budget, and that an aggressive marketing campaign may go as high as 25%. Certainly there are instances where it goes even higher.
The last two theatres I've managed have had marketing budgets between 5-8% of the annual budget - about half of what is considered normal. And it's never been easy to argue for more, because you either divert it from staff and program expenditures, or you have to convince the board that spending more on marketing will increase revenues and provide at least a nominal ROI.
As much as I'd like to say a marginal increase in marketing dollars will have a corresponding increase in ROI, I haven't actually witnessed it firsthand. In fact, I've seen a marketing budget increase fourfold with no real gain in attendance or donations.
Herein lies the rub, methinks: the percentage increases in budgets - even fourfold multipliers are irrelevant unless compared to actual cost of advertising. Even 10% of a $300,000 budget isn't a lot of money for an annual marketing campaign. So if you increase your 7% to 8% - you're really talking about going from $21,000 to $24,000 - which isn't going to get you much traction in the marketplace.
Now, if you double your $21,000 to $42,000, you're talking some real strategic changes in the way you market and the ability to effectively open up new markets. So the question is: is there really a point to increasing your budget from $21,000 to $24,000; furthermore, what happens if you decrease it to $18,000? Will you actually see a significant drop in attendance if you eliminate marketing in media in which you can't maintain enough presence to have a significant effect? For example - is it effective to have five 30-second radio spots play run-of-schedule for three days? Or to have one 8 column-inch ad per week in a 5 section daily paper? Both of these can be costly relative to your small budget, and the ROI of each is dubious.
The best way to set your marketing budget is to be realistic about what media you can afford to be effective in, maximize the potential of those media at an appropriate cost, and cut away anything else. There are margins at which no ROI exists, and there are break-away points where significant increases in spending will create a tremendous effect.
A couple of side notes: there are good ways to maximize the smaller marketing budgets we usually have. Try some co-op advertising with local businesses who value your organization as an asset. Partnering with the local daily paper to exchange 2-for-1 column inches for a sponsorship is another - a colleague of mine did this and catapulted his 8% cash marketing budget into a 12% when the in-kind contribution from the paper was calculated.
The last two theatres I've managed have had marketing budgets between 5-8% of the annual budget - about half of what is considered normal. And it's never been easy to argue for more, because you either divert it from staff and program expenditures, or you have to convince the board that spending more on marketing will increase revenues and provide at least a nominal ROI.
As much as I'd like to say a marginal increase in marketing dollars will have a corresponding increase in ROI, I haven't actually witnessed it firsthand. In fact, I've seen a marketing budget increase fourfold with no real gain in attendance or donations.
Herein lies the rub, methinks: the percentage increases in budgets - even fourfold multipliers are irrelevant unless compared to actual cost of advertising. Even 10% of a $300,000 budget isn't a lot of money for an annual marketing campaign. So if you increase your 7% to 8% - you're really talking about going from $21,000 to $24,000 - which isn't going to get you much traction in the marketplace.
Now, if you double your $21,000 to $42,000, you're talking some real strategic changes in the way you market and the ability to effectively open up new markets. So the question is: is there really a point to increasing your budget from $21,000 to $24,000; furthermore, what happens if you decrease it to $18,000? Will you actually see a significant drop in attendance if you eliminate marketing in media in which you can't maintain enough presence to have a significant effect? For example - is it effective to have five 30-second radio spots play run-of-schedule for three days? Or to have one 8 column-inch ad per week in a 5 section daily paper? Both of these can be costly relative to your small budget, and the ROI of each is dubious.
The best way to set your marketing budget is to be realistic about what media you can afford to be effective in, maximize the potential of those media at an appropriate cost, and cut away anything else. There are margins at which no ROI exists, and there are break-away points where significant increases in spending will create a tremendous effect.
A couple of side notes: there are good ways to maximize the smaller marketing budgets we usually have. Try some co-op advertising with local businesses who value your organization as an asset. Partnering with the local daily paper to exchange 2-for-1 column inches for a sponsorship is another - a colleague of mine did this and catapulted his 8% cash marketing budget into a 12% when the in-kind contribution from the paper was calculated.
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