Q: In Howard County, we are centralizing our marketing team to now be more of one-stop public information office. The marketing team is already creating flyers, signs, social media content, etc., but we are now making sure ALL marketing material and ALL press releases go through this group. The marketing staff has been paid out of our "Self-sustaining Fund" and will most likely be moved over to our "General Fund."
When marketing groups become centralized, how are other organizations paying their marketing staff and paying for marketing staff's costs, including the printed marketing pieces, giveaways, signs, etc.?
A: In the LERN financial model There are three key components, promotion, production, and operating margin. LERN's benchmarks are that marketing costs should be about 10% to 15% of income for self-sustaining programs. In this model, "marketing" is limited to the brochure, mailing costs and other promotional costs you may have. It does not include staff costs.
The second component of the LERN model is production costs. This includes the costs of actually providing the programs and services you offer--facilities costs, materials you pay for, and instructor compensation. This component should not require more than 35% to 40% of your generated revenue. Together, your promotion and production costs should be not more than 50 to 60% of total revenue generated.
The balance, ideally 50% of your income should then be available to allocate to staffing and other general and administrative expenses, which would include the staff you pay to market your programs as well as other program staff. In the absence of a model such as the one I describe, you would want to assess the financial status of your programs, and in particular, the operating margin of your program. If it is less than 40-50%, you are not going to be able to be self-sustaining.
Of course, that might not be your current charge, and if it is not, then it is still something you should work toward. Programs that receive public support are ripe to be cut when time are lean.
Regardless, you should look at a percentage of your operating margin as being a contribution to the general fund that is used to pay your marketing staff. Additional percentages of your operating margin, would, of course be allocated to the funds that pay the salaries of your other staff.