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Marketing Budgets: 5 Easy Building Blocks Nobody Talks About

One of the most challenging things you can be tasked to do is define a firm’s marketing budget.

What’s the right marketing budget for a small architecture firm in Wayne, PA? What’s the right marketing budget for the largest construction firm in Michigan?

Try as you might to find a legitimate rule of thumb (5-13% of total revenue is a common one), there is no “apples-to-apples” comparison that answers, “how much should our firm spend on marketing?

But there are a few rarely mentioned building blocks you should consider before finalizing your marketing budget. When talking about marketing budgets, a lot of people just assume a percentage of total revenue is the only way to come up with a legitimate number.

But that’s not true.

In fact, there are some people who say, with a few building blocks, you can “math” your way to a multi-million-dollar business.

I’m going to explain how to do that. But first, let’s talk about some of those metrics and how they relate to your marketing budget.

Customer Acquisition Cost

The customer acquisition cost is how much it costs you to gain a new client. One way to get this number is to add up everything you spent to obtain new clients over the last five years. Then divide that by the number of new clients you gained in the last 5 years.

For the sake of this discussion, let’s say you determine that your cost of acquisition is $15,000 per client. With this information, you can surmise that it will cost you $75,000 to gain five new clients this year.

With this information alone, you can come up with a very simple budget number. Let’s say you spend $20,000 a year maintaining your current clients and want to add five new clients. Your budget would be $95,000.

But it gets even more interesting with the next few metrics.

Average Assignment Value

Average assignment value is pretty self-explanatory. What’s your average fee per assignment? An assignment can be a task order, contract, purchase, or project…whatever. Just be consistent with what you track.


Profit is simply what you make on an assignment after your costs. Another way to calculate it is the percent profit your firm records at the end of each year.

For this discussion, let’s say your average assignment value is $100,000 and your profit is 10%.

Here is where you can easily get tripped up.

“I’m making $10,000 in profit, but it costs me $15,000 to acquire that client? I’m losing money!”

Not necessarily. That’s where this next metric comes into play.

Average Customer Lifetime Value

The average customer lifetime value is the total fees you receive from the average client over the life of that relationship.

Let’s say the average lifetime value of your clients is $1M. Since your profit is 10%, you would earn a profit of $100,000 from each client.

In this scenario, your customer acquisition cost is just 1.5% of the profit you receive from each client.

So, you are actually not losing money when your customer acquisition cost is $15,000. In fact, you can spend far more than that and still turn a profit.

But The Numbers Might Be Even Better

Depending on your firm’s procedures, they might calculate profit after marketing expenses are already accounted for. So that cost of customer acquisition appears in the cost side of the equation, not the profit side.

In the scenario we discussed above, you could theoretically spend $15,000 to acquire a new client, do the first assignment for free, and still break even.

Customer Retention Costs

Just keep in mind that you should also consider customer retention costs, which are very common in service businesses.

“Math” Your Way To A Multi-Million-Dollar Business

Let’s say your average client relationship is five years. You would earn an average of $200,000 per year from each client (two assignments).

How would you get to a five million dollar per year business?

$200,000 x 25 clients = $5,000,000

Therefore, you would need 25 clients (and 50 assignments) per year to be at $5M.

Building Blocks To A Better Marketing Budget

Rules of thumb give you a general idea of the appropriate range for your marketing budget. And maybe that’s good enough. But with some historical information and a few building blocks, you can create a better marketing budget.

Let’s calculate a quick marketing budget, using the example above, to build a $5M/year business into a $7M/year business.

Let’s say your conservative estimate of revenues you expect from existing clients is $2M. You’ll need to generate $5M from new clients.

Remember from our example, you need 25 clients per year to generate $5M. We also know that our customer acquisition cost is $15,000.

25 x $15,000 = $375,000

Now, tag on your customer retention costs. Let’s say you did your research and figured out those are about $50,000 per year.

$375,000 + $50,000 = $425,000

Your total marketing budget is $425,000.

As a percentage, that’s 8.5% of last year’s $5M revenue. So, it’s in that 5-13% range (which is a good sanity check).

Using building blocks and historical data gives the advantage of being able to justify the logic of how you got to your marketing budget number.

Now It’s Your Turn

What have you found helpful when developing a marketing budget? Leave your response in the comments and help others build a better marketing budget.

AEC Marketing: 10 Steps to Success

Many years ago, in response to an article I wrote in Marketer magazine, I was emailed by someone who was starting out as an AEC Marketer for an electrical designer/contractor in the Midwest. (NOTE: we refer to marketers in the architecture, engineering, and construction industry as “AEC marketers”). He asked me how you gain the respect of engineers and get them to listen to your marketing ideas. He was trying to figure out “in essence, how does a 21-year-old convince a strong AEC firm that there are areas to be improved?”

What follows is a slightly-edited version of my light-hearted, yet frank, response to him. My “10 Steps to Making it BIG in the AEC Marketing World” still hold true today and can help just about any marketer.


First, congratulations for having the audacity to approach someone of my stature and accomplishment. As I stand here in my darkened office, peering at the dots scurrying around the city below, I often wonder to myself…”was I once one of them?”

You see Mike, after you have achieved a certain level of success in the AEC marketing world, it is hard to remember what it was like starting out. But I will do my best to recount how I became what I am today. Maybe you can learn from my journey.

So climb up here on my lap. Ok, this is a little story that I like to call “10 Steps to Making it BIG in the AEC Marketing World.”

1. Prove Yourself to the Technical Staff

As an AEC Marketer, (or Propostitute) or whatever you would like to call yourself, you are going to have to prove yourself to everybody.

How do you do that? First, you have to realize that your job is to support the people in your firm, not just in your marketing position…but as a member of the team. So, look for opportunities to do that.

You need to walk in their shoes and learn everything you can about what they do. For example, I served as the marketer for an AEC designer and would “tag along” to project sites to help them survey projects they were going to design renovations for. That’s the first time I stuck my head up in the drop ceiling. I was also always around to help out when a project was going out the door.

I would involve myself as much as possible. By doing so you learn what it is they are doing, meet their clients, and earn a little bit of their trust. For me, it would even get to the point where 6pm would come around and clients would call me asking, “Where are our drawings?” True story, one time I walked back to the engineers and I saw a project manager spot me and run out the door with drawings under his arm. I wasn’t his boss and had no control over him, but he knew that I was walking back there with the client’s interest in mind and took me seriously enough to respond accordingly.

2. Always Think in Terms of What You Can Do For Others to Help to Make Them Successful

Live your life with other people’s goals in mind. You will feel better about yourself than if you live a self-centered life. If you take actions to make others look good, they will know that you have their best interest at heart. That’s when they open up to you.

Once they know that you are truly looking out for them, they start taking your advice and looking to you if they have a problem. Don’t approach potential clients or coworkers looking for something from them. Be the guy that people come to when they need something. Go out of your way for people and always be 100% upfront and honest.

3. Read the Marketing Handbook for the Design and Construction Professional, then Read it Again

This marketing handbook is about $70 and I wish I bought it before I knew all the stuff in it. It would have saved me a hell of a lot of time. The book covers the basics of AEC marketing, and by reading it twice you will gain enough knowledge to sound like you know what you are talking about. Which brings us to #4.

(NOTE: That book was replaced with a set called Markendium a few years ago. You can get it at this link).

4. Fake It Until You Make It

This is important. Now that you have read my article, you know just about as much about the subject as I do. But what makes me seem more knowledgeable than you is that I wrote the article and you read it.

It’s important to know what you know and what you don’t know. But it’s more important to say just enough to sound like you know what you are talking about. For example, your boss might ask “how much do we spend on our marketing efforts this year?” Having completed #3, you may say, “Well, typically the larger firms spend around 9% of their total gross revenue on marketing and business development, but a firm our size should spend around 11%. 14% would probably be the point where we know we are spending too much.” Where did you get that information? “It’s based on a survey of AEC firms done in 2000. I can get more recent numbers if you want, but my gut tells me the numbers are relatively the same.”

Don’t talk about stuff you know nothing about. Go search out just enough accurate information to make you sound credible.

5. Don’t Make Contacts, Make Friends

The long and short of this item is that you don’t want to be the guy with the huge business card collection and no recollection of who these people are. Contacts are powerful, especially in the AEC industry.

Let me give you an example. When I was starting out, my boss took me to a local engineers meeting and said, “You are not leaving here without at least one business card.”


So, I searched out the friendliest face amongst a sea of grumpy old engineers and awkwardly went up to introduce myself. He was very pleasant and I got the card. Job complete and I got to leave that night.

What my boss should have said is, “see that guy over there… he is going to get you your next marketing job and tell you how to win your future wife’s heart.” Because, believe it or not, that’s exactly what happened. The first guy I ever got a card from had gotten a hold of my resume years later and handed it the person who hired me for my current job.

He also told me the secret spot to take my now wife to on our first date. Needless to say she was impressed. That’s the power of developing relationships and helping other people towards success. In the AEC industry, 20 solid relationships will get you farther than 1,000 contacts.

6. Dress Slightly Better than the Boss.

As the marketer you need to portray a professional image. But that varies from office to office. So dress slightly better than the boss. If the boss comes in with a tuxedo, you come in with a tuxedo and top hat. If he wears khakis and a polo shirt, you come in with dress pants and a polo shirt. If he wears a dress shirt but no tie, you wear a dress shirt and tie. Dress like the person you want to be seen as, not the person you are.

(Note: Most AEC marketers are female. And of course the same concept applies with all genders. I’m sure you’ll figure out what to wear.)

7. Be Productive

I highly suggest you get the book “Getting Things Done” by David Allen and use that as your bible for how you manage all the requests of your time. Your time in the business world is finite. You only have so much of it. However, people’s demands on you are infinite (especially if you are in marketing). So you’ll need training on how to be productive.

Not many people do this. But if you live this book, you will be worlds more productive than everybody else. People will know you as the person who can move a project from start to finish.

8. Forget About Company Loyalty

Sounds like you work for a great company, but the odds are that you won’t be working there in 5 years. The AEC industry is often changing and is very incestuous. People move around from job to job. It’s basically how you get substantial raises.

In addition, the AEC industry has its highs and lows. Industry recessions come and go. As soon as you need to be cut from the accounting books, you will be. Most likely they hired you for this position because they didn’t want to spend the money for someone with tons of marketing experience. Use this opportunity to the greatest extent possible, but keep your eyes towards your professional future.

In short, you need to market yourself as Mike X, not as Mike X from ABC Engineering.

9. Beg for Forgiveness Rather than Asking for Permission

If you have an idea, run with it and record the results. Always use common sense, but don’t go running everything up the flagpole.

Most great ideas get stuck up in the flag pole. Just take the ball and run with it. If you can show it was successful then you are a hero. If you fall on your face, then beg forgiveness and hopefully you don’t get fired, if they even realize you did it in the first place.

Don’t be afraid to take some risks.

10. Keep Your Eye on the Prize

As a marketer, the song you will hear most is “What Have You Done For Me Lately?” Concentrate your marketing actions on those that will help bring business into the door. The number one thing you can do to earn your keep is bring business in and actively track what business you bring in. At the end of the day, that’s what you need to show…the business that you have brought in.

There is plenty of work out there, you just have to find it. Most bosses won’t argue with proven success.

I hope this information has been useful to you and your AEC Marketing Career. Sounds like you have a lot to learn, but I think I outlined how to get 90% of that knowledge.

What did you think of my advice to that young man? Leave your thoughts in the comments.

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