What % Of Your Marketing Budget Should Go To Inbound Marketing?

What % of Your Marketing Budget Should Go to Inbound MarketingMarketing has always had something of a “luxury” reputation. That is, when times are tight, marketing is often the first department to go. Somehow, business owners seem to think they need everything else but can manage without the department that brings in the work. Go figure.

Your boss may be particularly resistant to spending money on marketing, especially the “new” concept of inbound marketing. Here are some facts and figures you can use to convince him (or her) to allocate appropriate funds to the task.

Overall Marketing Budget

Setting an overall marketing budget depends, like everything else, on the size of your home building company and its maturity in the marketplace. Start-ups typically spend more on marketing in the first few years, while established companies can get away with a bit less.

According to this article from the Small Business Administration (SBA), if your revenue is less than $5 million you should allocate between 7 percent and 8 percent of it to marketing.

Inbound Marketing Percentage

Marketing software company HubSpot published a report showing how companies are shifting towards inbound marketing, and that the difference between expenditure on inbound and outbound grew by 50 percent over the past two years. U.S. businesses typically allocate a quarter of their overall marketing budget to digital, most of which qualifies as inbound.

So if your company generates annual revenues of $4.5 million, you should be spending around $80,000 on digital/inbound marketing to keep up with the marketplace. ($4.5m @ 7% x 25%)

Typical ROI On Inbound Marketing

There are also some dramatic stats available about the success rate of inbound marketing tactics. A survey of 150 businesses showed that leads based on search engine optimization have a 14.6 percent chance of converting to business, compared with outbound marketing leads that have a close rate of 1.7 percent. Leads from inbound sources are five times more likely to close than leads from outbound sources.

Whether your inbound marketing strategy comprises content marketing, business blogging or social media marketing, returns are significantly higher than they are with traditional outbound marketing methods.

Try This Exercise

The last step in getting a decent budget allocation to use for your inbound marketing strategy is to prove it to the business owner. Draft a spreadsheet showing the marketing expenditure on outbound marketing, alongside the returns realized by your efforts. Then compile a budget based on these percentages in relation to last year’s revenues and highlight the returns the business could enjoy if the budget were implemented effectively.

Chances are good your boss will see the light. Sure, he may not give you $80,000 to spend right off, but he’ll likely be convinced enough to start testing the inbound waters a bit. The rest, as they say, is up to you!