All businesses need marketing, therefore all businesses should have a marketing plan. In Part I: You Need Marketing, we acknowledged that marketing represents a sizeable expense for any company, and we emphasized that without a marketing plan, a company essentially leaves its ability to grow and prosper to chance. For companies unwilling or unable to commit resources to building in-house marketing infrastructure, a viable alternative is to outsource their marketing. It’s not as scary — or expensive — as one might think. To start, know what you’re dealing with.

Marketing Is a Process, Not a Result

Understanding that marketing is a process is critical to accepting that marketing is not merely an expense that hits the balance sheet. It’s necessary; NOT a necessary evil. As the marketing director of a large consumer products company, I was responsible for, among other things, the sales forecast, pricing, trade promotions, trade shows, new product development, market research, advertising, catalogs and other sales collateral, sample distribution/fulfillment, package design, and trade rebate/incentive programs. I was in charge of “The Brand,” and managing how all the components of the brand worked together to enable the company to achieve the forecast — the sales revenue projection.

A small company may not have all of the aforementioned components present, but it should at least have an annual sales revenue objective. It is the marketing plan that determines how the various marketing components in place will combine to enable the company to achieve the forecast. That requires research, modeling, estimating, and a little educated guesswork, and if done correctly, it is not work that can simply be relegated to whomever doesn’t have enough to do. Marketing professionals understand this. They understand that trying to go to market without a marketing plan is like trying to hit a pinata, or, in other words, like trying to hit a moving target in the dark.

Ask Around

If you don’t know whom to call, ask your peers and associates to recommend a marketing contractor, or contact your local chapter of the American Marketing Association (AMA). Before you contact any referrals, visit their websites to get a feel for what they do and how they do it, not to mention how they present themselves. Look for information that gives you an idea the company will be compatible with you and your team.

Interview prospective contractors similarly to how you would interview a prospective employee. What is their process? What are their expectations? Why would your company benefit from working with them? Explain succinctly what your needs are and be prepared to tell them — candidly — what your budget is. If they’re any good, they’ll be interviewing you for the same reasons. (I meet with prospective clients sometimes up to three times before I decide if they are right for us.)

When it comes to the cost of marketing, what many people fail to understand is that the revenue forecast drives the budget. Simply pulling a number out of thin air because that’s how much you are willing to spend on marketing is folly. Most marketing professionals are aware, for instance, that the smaller the company, the higher the percentage of revenue that is spent on marketing. A company doing less than $5 million in annual revenue will typically spend between 7%-8% of revenue, while a company doing in excess of $100 million will spend 1%-3%. That varies by industry and more importantly, what the company’s objectives are. If a company seeks rapid, substantial growth for instance, the percentage could be as high as 20%. If your company is at $5 million in annual revenue, are you spending between $350,000 and $400,000 on marketing? If you want to double your revenue in the next two years (40+% annual growth), are you prepared to spend $1 million this year and $1.4 million next year on marketing?

So, before you sit down with any prospective marketing services contractor, have in mind a realistic amount you can spend, then allow the contractor to detail what they can do for you for that amount, as well as whether they believe that amount is adequate to help you achieve your revenue objectives. It is also important to determine whether you want the contractor to simply develop a plan for you or also participate in execution of the plan vis-a-vis other services and deliverables.

Now that we’re at the point of reaching out to prospective contractors, let’s consider some of the variables that will affect the cost of the services the contractor will provide. Part III: What Do I Need vs. What Can I Afford? will help you build your wish list and give you an idea of what to expect for what you are able to spend.