Marketing Spend: How to plan and budget for your nano

Far too often a passionate brewer believes the exceptional quality of their product alone exceeds the need for a well thought-out marketing strategy, when nothing could be further from the truth. In a brandscape of more than 8,500 breweries in the United States alone, we must constantly remind ourselves that we are in the business of selling more than in the business of producing. In fact, the ability to influence and cultivate brand loyalty are in large part dependent on how our nanobrewery’s products are positioned, priced, and perceived in the marketplace. Developed properly, a marketing plan will be the roadmap to follow to get patrons in your seats and regulars returning. A big piece of that plan is the marketing budget.

A marketing budget documents how much your nanobrewery plans to spend on marketing over a specific period, like a year, quarter, or month. It helps you stay on track financially. We can’t measure what we don’t track, and in the absence of tracking, we tend to overspend without a plan in place to measure the effectiveness of our investment.

A marketing budget also helps you allocate funds aligned to your nano’s purpose. When you know how much you can spend, you can determine which strategies and tactics will work within your means. This includes deciding whether outside help is worth hiring to create content, schedule posts, execute campaigns, and shape your brand’s personality.

Most importantly, a marketing budget is an investment in your nanobrewery’s growth.

Having a well-defined budget helps you set benchmarks and goals. It allows you to set realistic expectations for various marketing channels, assign accountability for results, and better understand the revenue you need to bring in to make those marketing efforts worthwhile. It also helps you plan long-term by preventing you from having to deliberate over an additional spend halfway through the year or abruptly cease a campaign due to unforeseen circumstances. In other words, it greatly reduces your exposure to unexpected expenses while enhancing your ability to plan and execute for long-term success. A marketing budget enables you to create a more consistent and effective strategy because you’re constantly focused on the future picture. Most importantly, a marketing budget is an investment in your nanobrewery’s growth.

When budgeting for marketing, it helps to categorize planned expenses in three main areas:
Brand creation, which includes crafting your brand story and voice, logo design, choosing a color palette, and creating all aspects of package design. This includes label art and any custom glassware you choose to utilize in order to stand out in your patrons’ minds.
Brand support, which includes your website, sales sheets, point of sale (both for taproom sales and for e-commerce), brochures, hang tags, and even your own business cards.
Brand proliferation, which includes both traditional and online advertising, public relations releases, email blasts, newsletters, direct mailings, and all social media.

There are many resources that outline marketing budgets, but the consensus seems to be that startups should consider a range of 12–20% of gross revenue (or projected gross revenue), while established nanos should allocate 6–12%.

In setting up your brewery’s marketing budget, you want to make sure you establish and understand your nano’s sales funnel, the process your consumer goes through to become a paying customer. A typical sales funnel has four stages: Awareness (wow, am I thirsty!), consideration (where can I go to quench my thirst?), decision (which place is best for me to quench my thirst?), and action (I’ll go to XYZ Brewing!).

Understanding your nano’s sales funnel helps you see where you may need a digital marketing strategy to keep people from falling out of that funnel. For example, let’s say you notice that your nano’s funnel has a ton of people at the consideration stage, but very few make it to the decision stage. While some drop-off is natural, you notice that the decline is more significant than what you’d expect. As a result, you may find that you need to budget more money for strategies that will help get leads from the consideration stage to the decision stage. This could include featured Instagram posts, search engine optimization spend, or pay-per-click (PPC) ads. Knowing your sales cycle will help you anticipate strategies you need to invest in, which will help you budget for your marketing plan wisely.

As you prepare a marketing budget for the first time start by establishing your external costs and gaining a holistic view on your overall sales, general, and administrative (SG&A) spend. This includes operational costs, non-production labor, and general overhead such as utilities, rent, and insurance. Not only will that determine what you can invest in, but it will also help you set a baseline for your return on investment (ROI).
So, for example, let’s say it costs your nano $3 to produce your beer. You sell your beer for $6. As you contemplate which marketing methods to budget for, you have an idea of how much you want to spend and still profit off that beer.

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The next step is determining your nano’s sales and business goals. Is that an overall sales increase in dollars or barrels? By how much? By which package type and sales mix by style? Dollars sales per employee or per seat in the taproom? How should we work customer retention into the mix? Do we need to improve gross margin by a few percentage points? Do we want to pay ourselves at least “$X” in the upcoming year?

You need to know what you want to accomplish in order to set a budget that will allow you to achieve those goals. Be sure the goals are specific, realistic, and timebound. The more precise the goal, the more concrete the reference point when budgeting for marketing because you know how much you want to increase sales by and the timeline for achieving that increase versus just knowing that you want to increase overall sales.

You also need to know where you stack up in your current market against the competition. A good place to start is using social media monitoring tools such as SEMRush to keep track of how people find you online, what you’re known for, and what people say about you versus the other brewers in your area. This will help you determine which strategies you’ll want to use. A few of the more commonly used digital strategies I see as affordable to nanos include the following:

Search engine optimization (SEO): The process of boosting your website’s rankings in search results to help drive more relevant, organic traffic to your page.
PPC advertising: Paid ads that appear at the top of search results pages and on other web pages. These ads allow you to reach more leads that are ready to convert.
Social media marketing: Enables you to connect with your audience one-on-one and deliver informative content to them; allows you to build relationships and nurture them into customers (TikTok and Instagram).
Social media advertising: Compelling ad copy and imagery that appears seamlessly in your potential customer’s newsfeed, allowing you to build brand recognition (online publications such as Brewbound mastered this).
Email marketing: Tailored content that fits your customer’s interests (a monthly newsletter).
Content marketing: Sharing valuable information with your audience, whether blog posts or videos; establishes you as an authority in the beer industry (videos of tastings, collaborations, regional beer history, etc.).
Local SEO: Optimizing for local keywords to help drive more local traffic to your nano or employing geo-targeting.

Whether you’re going to run your campaigns on your own, hire a freelancer, or tap a digital marketing agency, evaluate how much each will cost and what the expected return should be. If you decide to keep marketing in-house, the cost will come in the form of salaries and materials you need to execute your campaigns.

You may still need to hire outside help or invest in tools that enable you to manage your campaigns. If you hire a freelancer, you’ll typically pay by the hour or on a per-project basis. The prices may be higher if the freelancer is more experienced or uses software, which they typically include in their rate. If you go with a digital marketing agency, you’ll get everything you need, from tools to people. Unless you’re doing a one-off project, you’ll pay per month to keep a digital marketing company on retainer.

How much do professional digital marketing services cost for a typical nanobrewer? Here’s a range for how much you could expect to pay, based on what I see in the market with my clients:

SEO: $500–$2,500+ per month
PPC: 5–20% of monthly ad spend
Content marketing: $500–$1,000 per month
Social media marketing: $250–$2,500 per month
Email marketing: $300–$500 per month

Keep in mind, however, that every nano is unique. It is crucial for you to consider your nano’s goals when creating your budget. You may opt to create a marketing plan budget that is higher or lower than the industry’s average based on these goals.

Whether you’re going to run your campaigns on your own, hire a freelancer, or tap a digital marketing agency, evaluate how much each will cost and what the expected return should be.

To create a goals-driven marketing budget, determine your target cost for acquiring a new customer or getting your current customer to return (the latter is typically much less expensive), as well as how many new customers you want to gain through your marketing campaign.

Then, multiply those two numbers and add in any fixed costs. For example, say your target cost-per-acquisition is $40 per customer, you want to acquire 200 new customers over the upcoming year, and your fixed costs add up to $3,000. In that scenario, you’d use the following formula:

(40 x 200) + 3,000 = 11,000

So, you’d need to allocate a total of $11,000 to marketing to achieve your customer acquisition goal.

As you run your marketing campaigns, you can track the number of new customers who walked in your door and your cost per acquisition to determine how well your campaigns are working and what you might want to tweak to improve results. Utilize your point-of-sale to see if the average guest tab or overall foot traffic has increased, as well as the hours of greatest activity. The point-of-sale is one of the nano’s most powerful tools as we are predominantly taproom focused.

Finally, be sure to analyze each digital campaign after its completion and measure the effectiveness or ROI of the spend. What worked? What didn’t? Why or why not? Utilize those lessons as you move forward with your next set of initiatives and don’t be afraid to shift tactics as new lessons are learned.

Issue: November 2021