How much money should early-stage climate tech startups spend on marketing? 💰
You won’t get a clear-cut answer anywhere. But here are some crucial considerations:
The conventional wisdom is for businesses to set aside between 5% to 10% of overall budget for marketing.
🛑 STOP for a minute, though . . . 🛑
Most marketing pros who work with early-stage startups recommend spending more.
To understand why, let’s first look at how much money established brands are spending on marketing.
Based on the latest “CMO Survey” — published by Deloitte, Duke University, and the American Marketing Association — the ~300 marketing leaders they surveyed are designating an average of 10.2% of their overall budget to marketing.
Two things to note here:
🤔 This is higher than the top of the range of the general rule of thumb. (So maybe the rule of thumb doesn’t mean much.)
But this is also what ESTABLISHED brands with mature marketing programs are setting aside.
New brands still trying to “get their name out there” and build a marketing program from scratch will have more ground to cover.
Here’s the advice on marketing spend from 3 marketing pros:
In an article for Entrepreneur Magazine, marketing agency Elevate My Brand suggests that companies that have been in business for one to five years set aside 12% to 20% percent of revenue or projected revenue on marketing.
Startup marketing agency grwth.co has noted that early-stage startups typically need to allocate 10% to 20% of their revenue to marketing.
Meanwhile, B2B SaaS startup marketing agency DataDab studied hundreds of startups and found they were spending 30%, 60%, or even 100%+ of revenue on marketing, even past the Series A stage.
The truth is . . . 👉 👉
Early-stage startups typically have to invest significantly more in marketing because this aligns with two crucial early company goals:
1️⃣ To build brand awareness
2️⃣ To acquire more customers quickly
For early-stage startups, marketing plays a critical role in accomplishing BOTH of these goals.
That means they’ll most likely want to designate more towards marketing than they will in future stages.
What’s your opinion — what’s the magic number for early-stage startups to set aside for marketing?