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Allocating a Marketing Budget for Designers

Investing in marketing can significantly grow your business. Targeted advertising campaigns can generate new leads and projects, helping to take your business to the next level.

Hope Dorman

AUGUST 25, 2020

With the multitude of marketing channels available, deciding what to spend and how best to allocate a budget can be overwhelming.

Perhaps for that reason, some renovation and design business owners have yet to invest in marketing - but they are in the minority. According to a survey by Deloitte and the American Marketing Association, 61% of B2C service providers across all industries spend on some form of paid marketing. With your competitors likely spending to promote their business, it’s important to get an advertising strategy underway so you don’t lose out on projects - and it’s equally important to spend your marketing dollars efficiently.

In this article, we’ll share guidelines to help you determine a marketing budget and ways you could effectively spend your advertising dollars across your marketing mix.

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Determining a Marketing Budget

How Much Should Your Budget Be?

There’s no one dollar amount that will serve as an accurate recommendation for every business, or even every design business. However, industry experts have recommendations that can help you determine what’s best based on your unique factors:

• The United States Small Business Administration recommends that the marketing budget should be 7-8% of a business’ gross revenue for companies under $5 million with a net profit margin in the 10-12% range.

• Other industry experts suggest that the budget depends on how long you have been in business; if you’ve been in business between one to five years, spend 12-20% of gross revenue on marketing. If you’ve been in business five or more years, spend 6-12%. The logic is that spending more when you’re getting started can help you fill your pipeline.

• Another take detailed in Forbes recommends factoring in your markup, average sale size, and overhead costs into your budget.

The key takeaway is to spend some time considering what your business can afford to dedicate and how it compares to these recommendations.

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How Much are Companies Actually Spending?

Naturally, the next thought may be: how much are other companies actually spending? If you’re just starting to invest in paid marketing, suddenly dedicating 10% of your gross revenue to a marketing budget may not be possible.

While data varies, a report from Entrepreneur Magazine found that the majority of small businesses spend 4% of their gross revenue a year on marketing. The Deloitte survey asked what percentage the marketing budget was of the respondents’ overall budgets and found that marketing made up an average of 10.4% of the respondents’ budgets.

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Allocating to Marketing Channels

Digital

In this age, digital marketing is the most prevalent marketing channel because of the ease of use, affordability, ability to target specific customer groups, and capabilities of tracking performance. Marketers tend to recommend that the majority of a company’s paid advertising budget go to campaigns on digital marketing channels. But what kind of return on investment can you expect from digital advertising? It depends on the specific digital avenue you use. Across all industries:

Hubspot cites that email marketing can generate $38 for every $1 spent.

• A study from Nielsen found that online ads generated $2.18 for every $1 spent.

Influencer marketing generated an average $5.20 earned media value for every $1 spent.

One way to improve your digital advertising spend ROI is to advertise on relevant websites. By spending ad dollars to promote yourself on a general website, the audience may be wider, but the percentage of people who see your ad that are in the market for a design professional will likely be lower. But, by advertising on Houzz with our enhanced exposure options, you’ll be getting your business in front of people using our industry-specific platform to research their renovation projects.

“Pro+ is our number one source of leads from clients searching online for a home staging company. As we’ve extended our business in different areas of the country, Houzz’s local marketing program has offered our business terrific rates and the leads begin generating within a few weeks. We have tried advertising with other internet-based businesses, and there is no comparison of the success rate, quality of leads and customer service we continue to receive from Houzz.” —PENNY BERGSTROM, DELICIOUS DECORS

Website

Your company’s website also falls under your marketing budget. A 2017 survey found that 71% of small businesses had a website, a percentage that grows each year. For those who don’t yet have a website, whether you go for a custom developed website or use a templated website builder, a website is essential to provide an online home for everything about your company.

A custom website can cost thousands in development, but fortunately, website builder services can serve the needs of most design businesses and are much more affordable. Our Houzz Pro offering includes a professional templated, mobile-friendly, and secure website that pulls content directly from your Houzz profile.

“Houzz Website Services is an awesome tool for pros. The format is very straightforward and easy to populate. The most difficult part for us was choosing a template because we liked them all! The fact that all sites are optimized for mobile was especially great for us, since our old site did not have that capability.” —PHIL LUCARA, EMORY PRODUCTS CO.

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Print

It can be challenging to target print ads to a relevant audience and track engagement, which is part of why print has fallen out of favor compared to digital marketing. Though print is not as prevalent as it once was, there are still elements of print that can generate a positive return on investment. For designers, being featured in a dedicated design publication can be meaningful for branding, whether you’re paying to advertise or getting your work published.

Outside of print advertising, print materials like brochures, truck signs, lawn project signs, and business cards can be a relatively inexpensive way to build name recognition. They may generate some new projects if you can use them to connect with clients who are more likely to engage with print materials than digital ads.

“We’ve had both good and mixed results with magazine advertising. It has been good for getting eyeballs on our business, and I’ve found that while it might not directly lead to customers in some cases it can still be an effective way to get your name out there. Because of the expense of print ads we’ve been trying to find the right balance between print and online in our marketing efforts. It’s best to do a lot of research about the print outlets you’re considering buying ad space in: make sure they have the right audience and distribution to get your company seen by the clients you want to be seen by. There’s also a lot of patience involved... which can be the toughest part!” —PAMELA MULLER, NOUVELLEVIEW

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Content

Content marketing, which in its essence is the creation and sharing of online materials, continues to grow as a meaningful method for businesses to connect with consumers. This content distribution can happen through your website, email, social media channels or print materials and helps consumers connect on a deeper level with the companies they patronize.

Here are some data points around the efficacy of content marketing:

• In a survey of 850 marketers, 20% said content marketing was the most effective digital marketing technique, the most popular response.

72% of marketers said one factor of increased success was higher quality and quantity of content.

• You’re engaging with content marketing as you read this!

Popular content marketing options include blogging, professional photography of your projects, or sharing videos of the project process or completed projects. Some of these efforts you can do yourself while others you may want to enlist a content marketer to create. Regardless of how you distribute it, content marketing is a powerful way to connect with your audience.

“Blogging once a week increased traffic to our website by four times our typical monthly reporting. That being said, we are going to increase it a little each month while we start collecting a mailing list.” —AARON B. DUKE, INTERIOR DESIGNER

Houzz Pro

We hope you’ve enjoyed this article’s overview of allocating a marketing budget. If you’re interested in getting started with a paid marketing campaign, Houzz Pro delivers a comprehensive business management platform with advertising options.

Houzz Pro comes with productivity tools which can help you speed up your workflows and become more profitable. It also gives you the option to get enhanced exposure on Houzz through Pro+ to help you brand your business and generate more inquiries. Plus, you’ll get access to premium features like Insights and Video Upload to your Houzz profile. With our new pricing structure, you can see how your competitors are spending in the markets you’d like to target so you can understand and control your market share.

“We love that Pro+ is easy to use and provides real results. The quality of leads is great and has generated dozens of clients for us. We got our first job from Houzz soon after uploading photos to the website. Our Client Success Manager is amazing and tailors our marketing campaigns to the areas we want to market to. We’re looking forward to continued success on Pro+!” —AUDREY MORRONE, MORRONE INTERIORS

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Hope Dorman is a Content Marketing Senior Associate based in Orange County, California. She loves timeless design, creative space solutions, and getting inspiration from Houzz to keep crafting her home.

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