In 2012, Dollar Shave Club spent $4,500 on a 90-second YouTube video called “Our Blades Are F***ing Great.” Thanks to the rude tone, it went viral instantly. Forty-eight hours later, the company is left with millions of views and 12,000 new orders.
As a small business owner, you already know how powerful marketing can be. But what if you don’t have the cash you need to fund campaigns? The good news is that funding can help. Let’s explore how business loans can help boost your marketing when your finances are tight.
What is a marketing expense?
“Marketing expenses” simply means the expenses associated with your marketing efforts.
For example, running social media ads for your business might include the cost of producing the videos or images, the cost charged by the social media platform to run the ad, employee salary responsible for optimizing the conversion rate and the cost of creating new versions of the ad for future testing.
What is included in marketing spend?
Marketing expenses may include, but are not limited to:
- Digital marketing expenses for social media, display, search engine optimization (SEO) and other mediums
- Salaries for marketing employees, including branding consultants, SEO specialists, social media experts, PR firms, content marketing strategists, data analysts, etc.
- Travel and facility costs for in-person events
- Marketing materials, i.e. flyers, one-sheets, business cards
- Costs associated with video production, including scripting, filming, acting, etc.
- Viral marketing campaigns
- Email Marketing Automation Software
- Content writers for blogs, social media and web pages
- Community managers for online forums and Discord channels
Why is it important to know your marketing spend?
Knowing your marketing spend is essential as it helps you determine the effectiveness of your campaigns. For example, if it costs $1,000 to acquire a customer with a lifetime value of $500, you might decide to modify your campaign to see if you can lower your customer acquisition costs.
It’s also important because it helps you build your marketing plan better. For example, if you know your marketing budget for the quarter is limited to $10,000, you may be more likely to allocate those funds to high-converting activities rather than spending them casually.
The Benefits of Financing Your Marketing Spend
Benefit 1: Awareness
Now let’s look at some benefits of funding your marketing spend.
The first benefit is that it can help boost awareness of your business. Whether it’s a podcast sponsorship, social media campaign, or TV commercial, a well-executed branding strategy can bring new customers to flock to your website. It can also get your target audience talking about your business, which can lead to powerful word-of-mouth marketing.
Marketing funding for your brand can either help fund new campaigns or boost existing ones. Either way, the end result is that you’ll be able to reach a wider audience without taking cash out of your other operations.
Benefit 2: Increase revenue
Another benefit of financing your marketing expenses is that it can help increase your revenue.
This is particularly effective if you have optimized the conversion rates of your digital advertisements. In this scenario, applying additional funding provided by a business loan can allow you to instantly increase your audience size, increasing your revenue exponentially.
That said, it can also be effective if you’re still trying to figure out which ads get the best results. Getting funding can give you the funding you need to test several variations and find a winner. A high-converting design can be enough to boost your revenue.
Outside of the world of digital advertising, business loans can also fund other direct marketing efforts, like email campaigns, automation software that supports those campaigns, and even viral marketing strategies. Specific use cases include hiring an email copywriter, marketing automation specialist, and video producers.
Pro tip: Increasing your income can also open the door to new funding opportunities. This is because some lenders have a minimum income requirement when it comes to approving loans. You may want to discuss this with your accountant or financial manager during your planning process.
Benefit 3: Faster Marketing Results
A third benefit of funding your marketing spend is the ability to get results faster.
Good marketing involves analytical testing, and usually through more than one cycle. Whether it’s a digital ad, video campaign, or physical marketing materials, you usually have to try multiple versions until you find the ones that get the best metrics.
However, this requires cash and you may not have the luxury of waiting for funding. At times like these, funding can help you launch your campaigns faster and more effectively. Specific use cases include the ability to reach a wider audience, hire designers to create more variations, or test out more demographic subgroups.
Types of funding best suited for marketing spend
Business line of credit
Lines of credit can range from as little as $1,000 in financing to $250,000. They’re great for funding marketing expenses because of their flexible terms: use as much as you need, only pay interest on what you use. This means you have the freedom to decide not to use it if you realize you don’t need it later.
A trade-off is that they may come with higher interest rates.
Business credit card
Business credit cards give you access to funds without the stringent approval requirements that come with most loans. They’re a great option if you’re looking for quick, flexible capital, and many will earn you cash back on expenses you’re already paying for.
Nav is home to the largest personal and business credit card marketplace on the web. Create a free account to instantly compare the cards you’re most likely to get.
These loans typically range from $5,000 to $10 million and provide a lump sum cash upfront. Consider this option if you need to fund more expensive marketing campaigns. The term loan market offers a wide range of interest rates and repayment terms, so you have the flexibility to shop around and find the best deal for your needs.
Note that you will likely need good credit scores to qualify.
The Small Business Administration’s SBA 7(a) loan can provide up to $5 million in financing, while SBA microloans provide up to $50,000. These are good options if you are looking for a government loan with clear repayment terms and a long history of reliability.
Keep in mind that the approval process can take significantly longer than the other options.
business cash advance
Cash advances can range from $5,000 to $600,000. Only consider this option if you are in the process of rebuilding your credit profile and need financing quickly. Although you don’t need good credit to qualify, cash advances are usually very expensive and can come with daily repayment requirements.
One way to improve your credit is to create a free Nav account. Our platform shows small businesses how to establish business credit, and we’ll provide free credit report summaries, credit alerts, and one-on-one sessions with specialists.
Best Funding Options for Marketing Initiatives
The easiest way to find the right funding opportunity for your marketing spend is to join Navigation. Nav syncs with your business data to show you your best financing options, so you know which loans you’re most likely to get. You can also visit our Small Business Loans page, where we’ve compiled the best options on the market in an easy-to-read table.
In general, here are some small business loans we recommend:
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