Don't Waste Your Money: Strategic Marketing Spend for New & Old Businesses

Hello and welcome. My name is Tavishima Aide. I'm focused on solving sales and marketing challenges through business education over here on the podcast. And I'm making today's recording at home. Everybody's around, it's a holiday, all the kids at home. So expect to hear some interruptions in the background. Now, if you're impressed with the podcast by the time you're done, please spread the word so that your friends and family members in Nigeria and abroad can benefit from the questions that we tackle.

They can do that by subscribing on Spotify, YouTube, Apple or any player of their choice. And if you in particular would like to connect with me, then call SMS or WhatsApp me on 08064662140. Now today on the podcast, we're going to look at how to decide how much money to spend on marketing. Again, the question we're going to look at is how do we decide how much money to spend on marketing for our businesses? Now, the reason why is because I've gotten a listener question and was a comment from Eden on Spotify.

Oh, by the way, Eden, I'm wondering, is your name short for Eden? You know, in that case, is your name Eden or is it Eden? You know, I'm not sure what the short form is, but you know how you know, in Nigeria, we can shorten our names? Like, you know, my full name is Tavi Shima, but lots of people in primary school just used to call me Tavi. And you know, some people call me Tav and then some people just say T, you know, so we keep making it short and short.

And then Eden, thank you very much for listening to the podcast and thank you very much for the question. Well, please, Eden, next time or anyone who has questions, it would be easier if you send me messages in WhatsApp and then we can chat that way and I can see your questions because Spotify has this problem. Whenever you guys comment on Spotify, it doesn't arrange things in the what's that word? It doesn't use recency.

Yeah, it doesn't use recency. So it's not the most recent comment. It's not the latest comment, which shows at the top. Now, if that were the case, I'll just open my Spotify and I would see that. Oh, OK, These last 10 comments, people that I've not seen before and I'd respond, but somehow Spotify has chosen to arrange all these things according to themes. So if the podcast episode is recent, then the comment will show up.

If the podcast episode was old, like let's say you made a comment on the podcast episode that I recorded maybe three years ago. Your comment is going to be buried down, down, down, down, down. So I have to be scrolling to find it. And because of this, to be honest, I'm sure that they're a bunch of you that I've missed out on your comments or your questions. You know, it's not as if I don't rate you. It's just that, you know, these tech giants, sometimes they give people unnecessary work.

So to get to your comments or questions, I have to be scrolling, scrolling. So thank you very much for the comments. I really appreciate it. But if you really have a question and you want an answer to it, that's the reason why I give my phone number at the beginning of the episode and at the at the end so they can reach out. And I guess your questions answered. So like I said, the reason why we're looking at this question today is because it's a listener question from Eden or a demo.

I want to be sure. And then this is the response that I gave her to the question. How do you decide how much money to spend on acting? I say acting on marketing for your business. So the exact words that I used on the Spotify review was this. So let me read. I'm reading from Spotify now. So this is what I responded to her. Unfortunately, there are no reliable rules for this. There's a very old marketing rule that corporations should be spent, should be setting aside 15% of their income for marketing and advertising every year.

But no one knows where and why that principle came from. For modern and online marketing, the idea is to put small money behind AB testing to see which advertising or marketing campaign works well. After that, then you put big money behind it. There's also some ideas about using organic content to determine your marketing. So that's what I put there. And of course, you know how to keep it like that because, you know, on the comment box, you know, there's a word count.

So I can't exceed the word count. So I put it and I sent it. But as I sent it, now I just looked, I was like, you know what? Depending on who is reading this thing, depending on their context, depending on their level of sophistication when it comes to marketing and stuff like that, they might either get what I'm trying to say or they might just miss the plot. So I forgot, let me ask about Make this episode. Eden has been making lots of comments, so the chances are that she's going to see this podcast anyway, so she'll get the answer.

So now what we're going to do is we're going to break it down. That paragraph that I put up there, that sounded very long and technical. Let me break it down. So I started off by saying that really when it comes to deciding how much money are you going to spend on your advertising, on your marketing, on your business promotions, there is no reliable rule. Because you can go to some disciplines like medicine, for instance, like antibiotics, they will say give so, so, so milligram power, so, so, so KG.

So someone like me who's 130 kilos, they'll give me X amount for my kids who are like 50K, you know, 30K, you know, a certain amount for my wife who is, there's no way I'm going to say how heavy she is or else she's going to stab me in the neck. You know, she will receive a certain dose. So there's some disciplines where, you know, it's like that. And the same thing in construction. If you want to build double Decker and the double Decker building is going to have 55

bedrooms for every single square inch of so, so and so use this amount of cement, this amount of sharps and this amount of whatever. Now, fortunately for sales and marketing advertising, we don't have any reliable rules here for this particular one. So the honest truth is how much you spend, you decide to spend on marketing advertising, it depends on a whole bunch of stuff. It's very contextual. So it depends on who are you, It depends on what are you trying to build, what are you trying to achieve, and also depends on how much you know available you have to spend.

Because sometimes, you know, you might look at the whole situation and you assess it and you think man, you need like one M to do this thing. But to be honest, if you don't have one M, what you have is, you know, 560 K, then I don't know how for do you know, it's a prudential decision. You will discuss with your marketing people and you guys decide that well, what we need IS1M, but what I have is 560 K, you know, do we go or do we wait until I balance the remaining 400K?

So it is contextual. There is no reliable rule. However, there are a bunch of things that we should take note of, especially online marketing expenses, especially online, well, offline as well. Your marketing expense can either be brand or direct response. Now you can look at things in a much more sophisticated way, but for now, let's keep it simple, you know, Because like I say, if it's simple, it'll be easy to remember.

Easy to remember, easy to understand means easy to do. So everything you'll be putting out will be either brand or direct response. Now this is what brand means. Brand means when you're doing stuff for the visibility. Let people see me for the mindshare. Let them Remember Me for the awareness. Let them know who I am. Let them not forgive me. That is what branding is. You're not asking anybody for anything. You just want to be shy.

You want to be visible. Let them see me. Let them Remember Me. Let them know me. Let them feel me. Let them be aware of me. Let them not forget me. Let them know I'm here. All that is brand. So marketing expenses can be grouped into brand. So that's when you see Nike. Nike just do it. They didn't say come and buy shoe. They just say just do it. They put it on the Billboard or they advertise on the TV. Nike just do it.

They didn't say come and buy anything. That is branding. Let me be visible, let people feel me, let them be aware of me. Let them not forget me, let them know I'm here. That is branding. Then marketing expenses can also be direct response. Now, direct response means I want somebody to take a specific action. I want somebody to do a very specific something that is going to move my agenda forward. That is going to help me to get to the promised land.

That is going to help me to get money for school fees. That will help me to get money to buy my bra boss. That will help me to, you know, get money so I can fly my family abroad for, for holidays this Christmas. That is direct response marketing. I want somebody to do something very specific and by the time the person does nothing, it will either put money in my pocket or it will get them to take one step closer to putting money in my pocket.

That is direct response. So all these people who advertise on Instagram, end of July sales 20% off. Click on link below. That one is direct response because they want me to do something to click on the link and send them money. That is direct response. So direct response is usually click on this link, leave your contact details or click on this link to buy something or come to this venue. Buy something or come here, call this number, send this SMS,

click on this link to qualify for a prize. Click here to give feedback, Call this number for feedback. Call 080. Something, something, something for enquiries, Click to take advantage of discount. Click here to subscribe for Dirty design. You know, you get my point. Direct response wants you to do something so it's overtly simplified, Yes. And so marketing people who complain, yes, but I'm remember. I'm trying to keep things simple because easy to remember means easy to do.

So all your marketing or your advertising or whatever will either be brand or be direct response. You're either dropping money so that people will see me, let them feel me. Let them not forget me. Let them know I'm here. Let them know who I am. That's brand. But you're not asking for anything. Then there's direct response. You're asking for something concrete. Give me your e-mail address. Click on this to get 2525% off.

Go here to enter for this prize. Click here to give me feedback. Call in if you have enquiries. So those are the two classes of marketing that business people can do. Now, one thing to bear in mind, remember this question is how much money should I spend? And I've told you that, well, there is no reliable rule and there's no desire that will come and tell you how much you should spend. But before we even get to how much we spend this, this is one thing we need to consider.

If you are a new business and listen carefully because it's a mistake that I made and it's a mistake that everybody made that you're a brand new business and you're thinking brand, brand, brand. And then you now be everything you'll be doing be brand, brand, brand. So listen carefully you new business people that are shouting brand up and down, when you are a new business, what you need to be doing is more of direct response so that you can either get more customers or get online engagement that will help your customer base to grow in the future.

Let me repeat, as a new business owner, especially those of us in SME space, in the beginning we are strapped for cash, as in we need cash, we need customers. You told your wife this is a good business idea. She said, my love, I support you, you can resign your job. She even now added 800K of family savings to the 2 million that you have so you can start this business. That is not the time to be doing brand, brand, brand.

That is the time for direct response because you need cash now. You need customers now. Any marketing that you're doing and that you're putting money behind should be direct response because you need customers now, you need cash now, or you need the kind of engagement online that will lead to customers or cash in the near future. Do not be putting your money on brand, brand, brand. That is for those of you who are new businesses now for those of you who are old an established or mature businesses, you can do more brand based marketing.

For instance, Nike, any small thing you see the Billboard, Nike just do it. They didn't ask for anything. Do what? No, nothing, just do it. Just see me. Just know me, that's what they're doing. Or Mercedes-Benz on the Billboard or online. You just see the car just driving by the edge of the Cliff, you think will now go and park somewhere, Mercedes-Benz E350 something, blah, blah, blah, blah, blah. You know Mercedes-Benz, you know, drive your throws away or drive your life or whatever.

When you say come and buy Benz, they just put it like that. Now, the reason we're old, excuse me, old established businesses, mature businesses can do it is because it's a different game. Excuse me. What they're trying to do is they're trying to maintain top of mind awareness than trying to not cede market share. They're in a mature industry. So there's Mercedes-Benz, there's BMW, there's what again, there's Range Rover, you know them plenty.

So they just want to be putting this campaign out so that you know, everywhere you go, just be seeing it, Benz, Benz, Benz. So one day when you arrive like me, when I become a big boy, when I have some serious chat in my pocket, I can say, you know what, let me try these Benz E350. That's because of branding campaigns that have been seen over the last two years, three years, five years, 1010 years. In fact, I heard one person say that the reason why Mercedes-Benz is making branding campaigns now is because they know that in 30 years time, a young man will say I've arrived,

let me buy Benz. You see that time frame, Mercedes-Benz is not dropping money today so that somebody will buy a car tomorrow. They're dropping money today on all these branding things because they hope that in 30 years, 40 years, a young man will say, you know what, I've arrived. Let me spoil myself a little. Let me give myself AG Wagon. And you guys should be praying for me so that when you meet me in the flesh, you will see me cruising on AG Wagon.

OK. No, G Wagon will drop too much fuel, let's say S Class. Yeah, Yeah. So you should be praying for me. So now you meet me in the flesh. You see me on S Class. So established businesses, mature businesses, they can be doing brand, brand, brand, brand, brand from today to tomorrow. Is is different than mature business. The game that they're trying to play is market awareness. So a mind awareness and market share. The time frames that these boys and girls, the big businesses are playing is a long term game.

They're thinking one to three years if he's short three to five, on average, 5 and beyond for most of them. So don't follow them. I'll be playing those games. And also the mistakes that I made when I was new in the game. I came in as wedding photographer. I was thinking brand, brand, brand, the wedding photographer who is already established, who has been doing the game for 10 years. Because you know, back then, some of you know, some of us just coming back from abroad,

you know, there's some people who have been doing it abroad for like 10 years. You really have some kind of reputation. And you know how we look at these people in Niger, they come back, You'd be looking at them on one. Can I they can be playing brand, brand, brand. The situation is different. You coming in new to the game, your own is, is direct response. It is cash, cash, cash, customer, customer, customer, not brand, brand.

Eventually we'll get to the stage of the big, big companies and then we can be doing brand, brand, brand. But in the beginning is Cash, Cash, cash, customer, customer, customer first. But of course, you know, branding is good. So if you're a new business and you don't have luxury of these timeframes, what you need now is money. What you need is customers. So whatever money you spend that you put behind your marketing direct response, that's more like it.

So this rule now that people say 15% of your income should be spent on advertising. This rule is decades old right from when Mumsy was in university because Mumsy's advanced degree was in, she has an MBA. So I have asked degree was in his MBA say communication based MBA is a public relations, I think. So that's our own MBA. So that's what they were teaching Mumsy them in school then 40 years ago and some people still say it today.

But if he has them 50%, why? I don't know where, I don't know who said it, I don't know. It's just the rule. So this 15%, now that is what applies to Coca-Cola, to Nike, to Mercedes-Benz or come down to Nigeria, to Cadbury, you know, people that make Choco, Milo, Bon Vita or whatnot, that is rule that applies to them. So if they make 15 billion, I'll be or 15% is what? If you make 100 billion this year, they're supposed to just put aside 15 I'll be.

How do you say it again? OK, they make 15,000,000 they're supposed to put aside. Let me not show my ignorance, OK? Yes, if they make 100 million this year, they're supposed to put aside 15,000,000 to budget for their marketing. So that rule applies to them, not you. Traditionally it applies to them, not you. That's also one of the reasons why I'm making this podcast, because lots of people who are in the business space, they're always talking about principles,

context, frameworks and things always apply to big, big boys. But not everybody is Facebook, not everybody's Nike, not everybody's Mercedes-Benz. So taking principles and rules and things that apply for established businesses, you now want to apply to young, young open comers. It's not a good idea. And that's the reason why some of us crashed, because you come in and you're thinking brand, brand, brand as a new, as a newcomer.

Meanwhile you're pressed for cash instead of thinking of cash, cash, cash, customer, customer, customer. So it applies to Nestle, Cadbury, Milo, all these fast moving consumer goods, people that make Indo Mie, people that make soap. You know, we're getting Dangote peaceful that sells cement. Yeah, just set aside 15% and every year just be advertising. So that's why you put on CNN and you see Dangote. That's why I don't go to advertisers on CNN.

Let him see me. Let him feel me. Let him not forget me. Let him know I'm here. He's not advertising. Buy my fuel, buy my spaghetti, buy my sugar. It's a mind share play. People abroad watching CNN, people in Nigeria watching CNN, people of a certain class, they should be seen every day when they turn on CNN. Dan, go to. That's the play. So even if you have all the money in the world, you're starting Business Today, your public can afford to put you on CNN.

It might not necessarily be the smartest move to just go ahead and buy for that, buy that CNN spot even though you guys have have money then now 15%, honestly, lots of people have said, and I agree, it just seems arbitrary because sometimes you want to spend more than 15%, sometimes more. You might have to spend less depending on what your business goals are or what the target you have for the year. So 1 moment, OK, just write a notification on my phone.

I wanted to be sure there was nothing that was time pressing. So now more modern ideas around marketing or guerrilla ideas around marketing. I was to say these days is AB testing. That is what I refer to over there. That has a much more modern thing to do. Now AB testing is supposed to answer this question. Can I put big money behind this thing? AB testing is supposed to de risk the situation. So what AB testing just means is you have two versions, version A, version B.

You want to advertise, you want to do marketing, you want to do whatever, you want to do it online. Come up with two different ideas. You design one picture, you design one copy, you design one call to action, you make two different advertisements. Then you now run them on Instagram or Facebook. What you do, you just put small money behind it. Small money depends on you. Maybe you put 5K behind the campaign, maybe you put 10K to boost it, or maybe you put 15K

to promote the something and then just wait and see. One is option A1 is option B. You give yourself a time frame, one month, one week, two weeks. You know, it depends. You now notice how are these things performing, which one is working well, which one is not working well. So if you do A&B, you run it like that and it looks like A is useless. Nobody is buying, nobody is engaging you. Now take B and that's OK, Good. B is our winner.

Some people take it a step further. They say, OK, you know what? Maybe if we change the picture in B, it can even work better. Or maybe if we change the words that we use, it can even work better. That is the process of refining it. And then that is how you even now have two versions of B1. Version will be the original option B that run and the other one will now be option you know B1 or B2. You run it. You now see again which one performs well.

If it is option B2 that performs well, that's it. You can now take that option B2 and say good, now let us spend 200K and promote this thing. Boost this thing or let's now spend 500K and promote this thing. The goal here is that you only want to spend big money on the advertisements or on the marketing campaigns or on the whatever the promotions that have the highest engagement or the highest conversions. Engagement just means people are interacting with this thing in a way that means they might become customers tomorrow.

And then conversion just means somebody actually took the next step. So that is 1 modern idea AB testing. So even though we don't know how much we're supposed to go behind the campaign, we know one thing for sure. At least online we can test and see you know which one is working. When we now know and we have budgeted 1.2. We can also why you spend the 1.2 on this one? I'm not saying that's what you should do by the way, but that's just one modern idea.

Then there's also another modern idea behind marketing, which is that your your marketing should be organic LED. When I say organic, my wife will say who is organic? Yeah, I know we have very dressed as of you in my household. So organic, not organic. So your marketing idea should be organic. In other words, that means look at your Instagram, look at your website, listen to your podcast, look at your whatever and then see the content that you have.

See the ones that customers or the audiences are naturally interacting with. Those ones that people are naturally interacting with. That is the one that when you're ready to now do marketing to make marketing around those ideas. So if you put up there are 20 things on your website and 80% of the people who come to one particular article, you now know that OK, for best results, if I'm making a marketing campaign or some advertising thing, I

should make it like this thing that people are interacting with because you have some evidence to show that based on how people have been interacting with it, you know, they might like these kind of things. So for me, for example, the most popular content that I have on Spotify, it changes because on YouTube some kind of content is popular. I'm not, I can't check the other platforms because you know, I'm not a data guy like that.

So to be honest, I don't even know how to check on other platforms. So on YouTube, some kind of comments, some kind of content perform well. But then on Spotify, what I have here that is most popular, especially with people who are only youngish and you know, 18 to 30 something is content around networking and personal influence. So when I now have like 800 K that I want to spend behind promoting the podcast or behind promoting a particular business offer and I want to attract Nigerians you know 18 to 35 and I want to run some marketing campaigns or whatever.

I will now advertise based on or create content or create whatever or offers based on these ideas that have been seen. If people that I want to attract seem to be vibing around networking and personal influence and I want to create an online course, then I should be creating an online course around networking and personal influence because it looks as if my audience, that is what they are feeling. But remember, you know, the more data you have, the better.

You know, you can break things down on Spotify, it's mostly 18 to 30 something. Spotify is a very young platform, surprisingly because it's an old company. So I'm surprised, but they really, they've really cracked the code in Niger among Niger youth. They've they've, they've done well. They've done very well. So where was I anyway? So that is how organic content can lead or inform your marketing. So anyway, so that's it.

But the idea behind these modern ways, which is AB testing or organic LED, is you're trying to let the masses, you're trying to let the people show you what they're really interested in, show you, give you a hint about what would draw them into a conversation with you. And then you take your chances on that. So these are the ways that we can de risk the amount of money that we're putting in marketing. So it's not just how much money do I spend so that I'm not spending too much.

It's also for the budget that I have, whether I came up with this arbitrary 15% of my income or whether my marketing specialist, my marketing consultant told me or whether I sat down with my wife. And then two of us decided to rub mines together and come up with, with a number with an idea. We just want to make sure that we we don't waste money. So these are ways that we kind of do risk the whole thing. So anyway, like I said, Eden or Eden, I'm just guessing that is a demo because you know how many Nigerians name their children Eden?

So I'm assuming it's a demo. So, Eden, if you have more questions like this, then please don't leave them in the comments section or because I might miss it on Spotify or please, those of you who are living leaving comments on Spotify, thank you very much. These are the reasons why my podcast is getting really popular on Spotify because you guys just keep commenting saying that there's a wonderful podcast. Where have you been?

You know, practical advice. This, this is not that, you know, I love this part of my daily routine. These are the things that are making me my part has really blow up on Spotify and so far I have close to 2900 subscribers on Spotify. And I want to say thank you to every single one of you that have done the like thing that have shared and have commented. Thank you very much for the support. I do not take you guys for granted.

So yeah, you know what, maybe you can leave your question there. But also I give my phone number at the beginning at the end of every show. So send it to me over here as well so I can respond to you direct. And then if it's a nice quality question, so far, I haven't received any foolish questions. It's even nice quality question. I'll come share it over here as well so that people can benefit, like I say from the questions that we tackle.

So that's it. Call, SMS or WhatsApp for the best chance. So if you'd love to connect, please call SMS or WhatsApp me on 08064662140. Thank you very much for your time and attention. I'll catch you next time. Same place in your headphones or in your speakers. And before I go homework to you guys while listening to this now this podcast that I'm making you guys reason it, is it Brandon I'm doing or is it direct response?

Let me know what you think.