How to set a PR budget
Creating an effective public relations (PR) budget is crucial for scaling businesses aiming to enhance their brand presence and credibility.
Thorough market research serves as a foundational element in developing effective PR campaigns and long-term success. But knowing where to start can be a challenge.
This guide outlines key considerations and strategies to help you allocate your comms resources effectively.
Allocating a specific percentage of your gross revenue to marketing and PR is a common approach.
The Chartered Institute of Marketing (CIM) recommends that companies spend between 5% to 10% of their gross revenue on marketing. But this is a ballpark figure.
The actual percentage you spend can and will vary on a lot of different factors. Are you B2B or B2C, what’s your sector? What’s the size of your business, and what are your business goals?
All of these things, and more, can have an impact on your marketing budgets. So it isn’t as simple a task as looking at the averages or the recommendations. It’s a decision that needs to be personalised to your wants, needs and goals.
To tailor your PR budget effectively, consider the following questions:
Target revenue for the next year: having a clear understanding of your financial goals helps set a proportional marketing budget.
Existing marketing budget: review current spending to identify areas for reallocation or enhancement.
ROI review: in line with reviewing existing or previous budgets, look at what’s working in your current plans, what isn’t and why.
Focus areas for the coming year: what do you want to achieve in the year to come? A strategic picture of these goals will help you implement tactics to achieve these goals.
Benchmarking against competitors: research industry standards to ensure your budget aligns with or surpasses your competition.
With clear objectives, targets and a strong understanding of what success looks like for you, it’s far easier to set a PR budget. Then you need to make a call on whether you can achieve this internally or if you need to bring in a third party.
Deciding between in-house and external PR resources depends on your company’s capabilities and objectives.
External PR agencies can offer specialised expertise and established media relationships, which can be priceless. The cost of bringing in an external agency can vary. Smaller UK agencies may charge between £1,500 – £5,000 per month, while larger firms’ retainers start from £5,000 per month.
Opting for an in-house solution may result in you maintaining more direct control. With an in-house PR, there is a complete, dedicated focus. But this comes with the challenges of hiring, retention, training, development and investment in standard tools, like media monitoring and journalist databases. These are tools which we, as an agency, invest in so you don’t have to.
Beyond in-house vs external, there are other industry-specific considerations that you need to factor in when allocating your budgets.
Marketing budget allocations can differ across industries. For example, consumer packaged goods companies in the UK allocate more than 20% of their budgets to marketing expenses, whereas the average budget in real estate is less than 10%
Understanding your industry’s standards can guide appropriate budget setting. Hubspot provides a helpful breakdown of sector budgets. But as an agency, as part of pre-briefing or the briefing process proper, we can give you our expertise and insights and help you put your spend in the most effective and appropriate places.
Then, you need to consider your relative size and scale.
It’s often said that scaling businesses need to dedicate more of their budgets to marketing than more established businesses. But this rationale does have its flaws.
Firstly, budgets are often referred to as a percentage of net revenue rather than a cash value. So, it can be easy to fall into the trap of thinking that a lower percentage means less investment. But that’s not the case; 20% of revenue for a start-up could be similar to 5% of an established business; it’s all relative.
Speaking of relativity.
There’s also the notion that just because you’ve reached a point of relative success, why would you slow down then? This is where having an agency partner can be very useful. Because we’ll have a certain degree of separation from your day-to-day, which often allows us to join dots and make connections which can be hard to see when you’re caught up in operations.
The reality of the situation is that if and when you reach a certain size or stature, there are going to be start-ups that are hungry and eager. They’re coming for your spot on the ladder.
Look at it this way: Microsoft still puts 10% of its $240 billion revenue into marketing.
How you divest and spread out your spending is, ultimately, down to your targets and goals.
But spending for spending’s sake should be discouraged.
Whether it’s paid campaigns through social media channels, content creation, SEO performance or media office fuelled by press releases. Whatever and wherever you’re spending, it needs to be driving value.
It’s important to recognise that value doesn’t always mean converted business leads. In the context of broader PR strategies, value has many meanings, from the quality of media coverage earned to engagement on your social media posts.
This is where it’s important to develop PR strategies with both breadth and depth. The array of expertise and specialisms within the AMBITIOUS team means we are especially well-placed to deliver this kind of approach.
Depending on your sector and relative size, as well as your goals, you’ll be implementing different tactics. So it’s difficult to say, in the space of a paragraph, how and where you should be spending without this wider context.
But broadly speaking, the following strategies can bolster your PR outreach.
Investing in PR is vital for building trust with your audience.
For this reason, setting a PR budget isn’t just about throwing money at different activities. It’s about making sound strategic investments in your brand’s future.
Your PR budget is more than just numbers on a spreadsheet, and spending for spending’s sake needs to be discouraged. Regardless of whether you’re a hungry start-up or an established business, your comms strategy needs to be as dynamic and purposeful as your business goals.
You can invest in all kinds of strategies and tactics. So much so that it can be dizzying. This is why having an expert in your corner helps, as they can help steer the overall direction of your PR outreach.
But whether you decide to build an in-house team or partner with an external agency, you need to achieve the same thing: create a communications approach that doesn’t just speak to your audience but genuinely connects with them.
Remember, investing in PR isn’t an expense; it’s your pathway to establishing credibility, supporting growth and securing long-term success and trust.
And trust is your most vital commodity.
AMBITIOUS by name and by nature, we are a PR led communications agency that delivers integrated strategic communications - online, offline and everywhere in-between. Proud to be crowned winners of The Drum Magazine's RAR Best PR Agency of the Year.
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