If you have never had a measurable marketing strategy - that seemly magical unicorn of marketing that returns a quantifiable ROI - then chances are you probably also have never had a marketing budget. Creating a budget for your contracting company or any construction company doesn’t have to feel like a huge undertaking. If you are looking for a place to start, this article will help you figure out how much, how to create marketing allocations, and how to lead your budget with strategy first, not as an afterthought.
Your construction company marketing budget breakdown
The benchmark industry percentage of top-line revenue you should allocate for marketing is 7-10%. For example, if your company brings in 5 million dollars in revenue, your construction company’s marketing budget should be between $350,000 and 500,000 dollars. Your tactical marketing expenses include software and hard costs for printing and advertising. Your strategic expenses include your agency partner's retainer and internal personnel.
A common pitfall of most marketing budgets is jumping straight into the tactics before you have goals and an outline of your strategy for the upcoming year. Instead, your construction company’s marketing strategy should be determined before choosing your tactics. If you’re unsure where to start with budget allocation, a good guideline is the 70-20-10 rule. Using the 70-20-10 rule as a benchmark, your budget can follow the following distributions:
- 70% of your budget is allocated toward strategies you know work well
- 20% of your budget is allocated toward a new strategy aimed at helping you grow
- 10% of your budget is allocated toward experimental strategies
Foundational strategies that often work well for construction companies and others in the built environment include structural parts of communications such as:
- Written content (blogs, bid award announcements, news, project case studies)
- Strategic social media
- Foundational sales support (capabilities statements, project profiles, etc.)
- Foundational communication (newsletter, news announcements)
In addition to the above, strategies that often work well for construction material manufacturers and distributors:
- Email automation focused on consumer and trade/commercial partners
- Seasonal strategies focused on material use
Strategies that often work well for contractors, builders, developers, and professional services:
- Email automation focused on personas
- Seasonal strategies focused on project/product case studies
- A seasonal strategy focused on consumer “day in the life.”
Strategies all built environment companies can consider for growth:
- PR strategies, including trade publications and conferences
- Consumer-focused geo-targeted media campaigns
- Direct sales support strategies
Strategies to consider for growth:
- Audio (podcast)
- Other complimentary traditional media (print, billboard, radio)
- Direct mail
- Value-add strategies (branded items, add-ons)
- Thought-leadership strategies
- Emerging and new digital channels
There is no hard and fast rule for your budget allocation but being flexible and open to new strategies is an excellent opportunity to attract new customers and compare results to your traditional methods.
There are many strategies construction companies use to determine the “sweet spot” for their marketing budget. However, some budgeting strategies might be unique to how you calculate your marketing budget compared to other departments:
Revenue-based. One way to determine your marketing budget is to review your annual revenue sheets and set aside a percentage. Some businesses follow the 7-10% spend and break into the 70-20-10 rule. However, depending on your business lifecycle, the ratio may be higher, especially for newer business ventures. For example, Business News Daily says businesses under five should consider spending 10% to 12% on marketing.
Competition-matched. If your contracting business has a direct and clear competitor and your goal is to outperform them, then you need to match their marketing efforts. For example, do they have their branding on their trucks, or do they sponsor a local sports team or conference? Get in the arena and invest in outperforming in branding and business. Not only do you need to attempt to match spending, but your marketing and branding efforts must also resonate with your target audience to steal market share.
Top-down. Under this method, the senior management prepares a high-level budget based on the company’s objectives. The top management then allocates the amounts for the individual departments, which use those numbers to prepare their budget. This method keeps things simple for upper management but could result in inaccurate forecasting and limit your marketing effort’s performance. The business’s size and structure are usually the primary considerations in deciding whether to use a top-down budgeting method.
Goal-driven. With goal-driven marketing, management and decision-makers determine goals and then set a budget to achieve them. Goals based on your company’s past performance, market size constraints, and resources determine your marketing strategy. Then, you would assign a monetary value to each goal.
The right marketing channel depends on your oals
Digital advertising accounts for 11.2 percent of marketing budgets as recently as May 2021. A further 11.3 percent was devoted to social marketing, while SEO accounted for 10.5 percent of marketing budgets. Though this is generally static and not industry-specific, it gives you a baseline for where to allocate your marketing investment. The chart below illustrates the various channels Chief Marketing Officers in Statista divide their marketing shares. In planning your marketing strategy and identifying your buyer personas, select the appropriate channel to reach your target audience and make realistic and intentional investments to conduct, measure, and close a marketing contact.
Image Source: https://www.statista.com/statistics/1222784/marketing-budget-share-channel/
It's more than a budget spreadsheet
Completing a spreadsheet from an online template alone won’t effectively achieve a robust and sound budget for your built environment business. There are many moving parts and opportunities for missteps that can intimidate the savviest of planners. Working with an outside agency may take the guessing game out of putting your funds in the right “bucket.” However, the right tech stack to plan and report on your marketing is a significant first step, and Illumine8 can help you find the right tools to invest in so your team will have time for more meaningful tasks.
Get the most out of your marketing budget
Effective marketing is vital to your company’s success. Continuing to rely on inefficient solutions is no longer an option in today’s challenging market. Your marketing supports the heartbeat of your company - attract new customers and keep current ones returning for more. Creating a budget can push your spending toward the most successful channels – and save enough money available for all your other needs.
It may be tempting, especially during volatile times we experience in the building industry, to look at a marketing budget and consider reducing your spending. The same goes for good times; your lead pipeline may seem to materialize without effort, and advertising is an unnecessary expense. Resist the temptation to cut your marketing investment in your company. Like your retirement accounts - consistent investment is the only way to ensure a pipeline in both good times and bad.
Cutting back or not investing in your marketing initiatives reduces your growth potential for reaching new clients and closing deals with repeat customers. A sound marketing strategy developed from your business goals will guide where to allocate your marketing budget. Creating a marketing t in conjunction with your marketing strategy will help you measure, reflect on, and achieve your overall business goals for your contracting company.