This is a guest commentary from Brian Marks and John Young, partners at Marks and Young. They run a Philly-based firm that provides marketing capacity to growth-stage companies.
As a tech founder, you are destined to face the thorny decision of when and how to invest in marketing your company. Perhaps you already have.
When that time comes, each company must make a unique decision on how to proceed. Maybe there’s pressure from the board or investors. Maybe you read a blog post telling you about the “can’t miss growth hacks” you simply must start using. Or maybe you feel that magic product-market fit coming together: it’s just time.
After a relentless focus on building the right product – when growth is imperative – here are a few important questions to consider when beginning to market your company.
How much should I spend?
Our rule of thumb is 10% to 15% of gross revenue if you have a mature product, but it depends on category and company-specific factors. The average marketing budget across all industries was 9.1% of revenue in 2023 according to Gartner, and 10.9% according to the CMO Survey.
The CMO Survey also cites a tremendous range of marketing investments as a percent of the budget, from less than 4% for energy and manufacturing to 11.8% for tech software and platforms, to 25% for consumer packaged goods.
Consider your R&D investment. If most of your budget is allocated to building or enhancing products, you’ll have a lower percentage to invest in marketing than, for example, Unilever can allocate to marketing a static product like Dove soap.
If a startup doesn’t have enough revenue to estimate the right marketing spend, base your investment on projected revenue. After all, if you raise money and make other big decisions based on revenue projections, find the confidence to budget for marketing accordingly.
What about B2C companies versus B2B? People are hit with messages from a million places. So startups selling directly to consumers face more difficulty getting attention and managing channels. Across benchmarking sources, B2C marketing allocations outpace B2B for both products and services.
What am I investing in – and for how long?
Marketing is much more than branded pens and mugs. It also isn’t just an immediate or one-time event. Like all successful business initiatives, marketing must be structured and planned.
First, find the right message focused on real customer benefits addressing pain points, not merely functional benefits. A research study can help you uncover what your customers or prospects really want and what differentiates you. You’re likely too close to the situation, so an independent researcher can conduct in-depth interviews with prospects for qualitative guidance and/or field a simple web survey for a more quantitative view.
Next, plan to deliver that message to the right person at the right time in the right place. Find effective ways to gather prospect data, such as having them subscribe to content or through demographic ad targeting. You likely can’t do everything, so be focused on identifying the marketing channels most likely to bring you impact.
Plan to commit for at least six months to test, learn and benefit from frequent audience touchpoints. If you are looking for immediate growth, be prepared to invest much more. Resonating with audiences always takes more time than anticipated.
What’s the right model for managing marketing?
A focus on growth might mean that it’s time to build an in-house marketing team. For most startups, in-house marketers, for better or worse, are asked to wear many hats and perform tasks well beyond the assigned roles.
It can be difficult to find the right marketing role for your business. You want someone who can operate at the highest level and stay three steps ahead, yet you also need them in the weeds getting the work done.
Outsourcing your marketing needs to an agency can be difficult because many are too specialized. So depending on your range of needs, you may need to invest more in an agency with broader skillsets.
Another model that has seen growth in the past several years is the fractional chief marketing officer. The ideal fractional CMO brings skills and expertise in strategy and shouldn’t be afraid to handle a subset of deliverables. They usually come at a slice of the price of a full-time staff or agency. You won’t have them for 40 hours a week, but for startups and growing businesses, that is usually ok.
Marketing doesn’t have a one-size-fits-all diagram. What works today might not work tomorrow. Find people and partners you trust and who truly understand what you need to accomplish. When that light turns green, be ready to activate and enable what works best for your business.
