In a criminal justice system, marketing budget offenses are considered especially heinous. These are their stories. Dum Dum.

Yeah, I watch a ridiculous amount of Law & Order.

Today’s episode explains how marketing staff cannot make up your entire marketing budget.

If you’re reading this in horror and astonishment, great! You’ve likely experienced a marketing budget that was balanced between people power and the tools needed to implement the marketing plan.

Believe it or not, many of us have experienced the opposite. I remember my jaw hitting the floor when I was once told that 90% of my marketing budget went to staff. Only $35,000 was left for everything else like events and digital advertising.

So what did I do? I took the $35K and did the best I could to allocate it over the course of a year. We grew nearly $1M, so I’ll say it was a success. But it was hard to not imagine what our growth could be if we took what was working and doubled down on it. Either way, when it came to budgeting for next year, I approached the plan very differently.

Why marketing is important for early stage startups

Do we really need this section? Do I have to go there? Okay, I’ll make it quick.

Several of my clients show me they understand marketing when they say things like:

• It’d be great if prospects were more educated about our solution before they talk to sales.

• I want us to look bigger than we are.

• I want people to see a lot of activity coming from us.

• When sales works leads generated by marketing, deals close quickly. I want more of that.

Marketing is the act of communicating a message about your product to the right people at the right time. Despite the hacks you’ll hear about on LinkedIn, the hustle of outbound sales via AI tools and registered domains for sending mass emails doesn’t get you far. People still want to see that you’re legit via a website and LinkedIN company page. People want to feel something when they use your product.

How to think about startup marketing budgets in 2024

10 years ago, you could maybe get away with investing more in people than in how they’d deploy a budget. But today? Absolutely not. I don’t care what AI tools you tell me make us leaner and meaner. You cannot get pro bono Meta ads. You cannot get a booth at a trade show without a purchasing the 10×10 space.

Venture backed early stage startups with less than $1M in revenue should allocate nearly 80% of revenue to sales and marketing. Some with deep venture backing may allocate up to 300% — especially e-commerce or DTC brands that need to spend heavily on paid ads to saturate the market quickly and take over mindshare to either knock out competition or prevent competition from creeping up.

Some of you are clicking on another tab now because you’re like woah, I don’t want to spend that.

Let’s be honest. How is someone going to buy your product if they’ve never heard of it? And how are you going to know what tactic gets you the best awareness and generates pipeline when you haven’t tried any tactic at all? When you’re early, and you don’t yet know what the best channel and GTM strategy is, you’re going to need to try a few on like sweaters. Those try-ons cost money, so be ready to spend AND be ready to pivot to what’s working and ditch what isn’t.

Allocating spend

Once you’ve identified the total budget, here’s how I advise today’s early stage startups on figuring out where to allocate that spend:

• Align your marketing strategy to your overall GTM strategy. This is the right time to assess how marketing and sales work together. Should marketing enable sales? Should marketing be generating a majority of the leads? All of this depends on what product you sell, its price point, and examples from analogous products or industries where you can infer what worked and what didn’t to apply to your growth plan.

• Determine what skill sets are needed to implement the marketing strategy. If you decide you need to market via field events, then consider what kind of field marketers you should hire and how to structure that team over the next 1-2 years.

• Identify what skills needed to be powered by people vs AI or partners or tools. With field events, those folks need venues to host meetups, travel-friendly technology, swag and giveaways. Start projecting out what that cost will be — and make sure you get input from those you hire. They will have good opinions!

• Develop a balanced budget that has people, spend, and experimentation in mind. Once you’ve identified people and marketing spend, allocate another 20% for experiments and being opportunistic. Something will pop up that you don’t expect — be it a trade show to attend or a new idea from you team — and you’ll want to allocate for that.

With this path, you’ll end up with just the right balance of people power and programs or tools needed for those people to do their jobs.

The Jury Is In

Marketing is often served leftovers. And not even the good ones. I’m talking about the soggy green bean casserole that should have been thrown away two days after Thanksgiving. But to be clear, most founders aren’t trying to be so lean.

• If you’re an early stage company with aggressive growth goals, think strategically about how to get your brand in front of potential customers and invest in marketing like you invest in your product.

• Look at competitors to see how they’re spending on marketing. And don’t forget to look backwards — a well-funded Series C competitor may have started with a smaller.

• People make up a percentage of your marketing budget, but they cannot be more than 80%.

• Allocate what you can to marketing and work with a seasoned marketer to determine what tactics to spend money on. The field of marketing has grown so much and without strong marketing advice from people who have been there a time or two, it’s really hard to know what direction to take. So if you have questions about how much to spend and on what, I’m here to help.