Should Government Contractors Invest in Marketing—and How Much?

Should GovCons Invest in Marketing?

The answer is it depends. The better questions are, When? Why? In what? and How much? Here is a summary of different marketing tools with a broad recommendation on what to use at different stages of the business lifecycle. Below is an explanation of why. In practice, every business has its own unique set of variables and constraints, but this should give you a benchmark.

Quick Links

1. Marketing for Govcon Start-Ups
2. Marketing for Government Contractors in Early Growth
3. Marketing for Established Government Contractors
4. Marketing to Accelerate Established Government Contractors with an Aggressive Growth Goal
5. How Much Should Government Contractors Invest in Marketing?

1. Marketing for Govcon Start-Ups

Let’s assume we are talking about a self-funded start-up where the primary limitation is typically cash flow (well-funded start-ups may behave more like an early-growth company).

Bootstrapping the early days means building the minimum viable marketing platform and adapting a “do-it-yourself” mentality. In this case, a well-organized website plus the incremental addition of content is the bare minimum. There are plenty of resources available for companies in DIY mode. We have compiled a handy list in this article: Sales and Marketing Resources for Start-Ups and Smaller Companies.

It is, however, worth investing in a marketing plan to help you get organized and build a clear roadmap for the next 12 months. Marketing is a great investment when it works—and a waste of money when it doesn’t!

Rookie mistake—don’t reinvent the wheel! Invest in help with your marketing plan and then execute using the free and low-cost resources.

How about Search Engine Optimization?
Probably not. SEO is a long-term investment that will look unattractive compared to the immediate demands on the business coffers.

The other tools on the list are dependent on individual circumstances. Typically in the start-up phase, each opportunity is evaluated on individual merit and guerrilla marketing tactics prevail. it is better to do a small number of things well than many things badly.

Rookie Mistake: Don’t reinvent the wheel! Invest in help with your marketing plan and then execute using the free and low-cost resources.

2. Marketing for Government Contractors in Early Growth

Depending on the contracts you win, growth can be very fast. In these circumstances, it is likely you will be focusing on resourcing the opportunity rather than marketing—which is the right decision.

As a minimum, keep your website looking professional—it is the first impression for teaming partners and prospective employees.

For companies trying to win more contracts, the approach varies.

• Strategy: Establish a marketing plan and develop a messaging strategy specifically. Learn More.
• Website: Build a well-structured website that is easy to navigate and gets visitors to relevant information quickly. Learn More.
• Content: Provide the information decision-makers need. Supplement with educational content. Include validation content such as past performance and case studies. Make sure the information is consistent between marketing and business development. Learn More.
• Search Engine Optimization: Consider SEO—it’s how you get found online—but make sure keyword research is thorough and phrases are those used by government researchers (and not the ones you think they use). Learn More.
• Advertising: Advertising is a broad term and can include pay-per-click, (for example Google Ads), social media advertising, as well as media advertising (TV, radio, billboards, etc.). Digital advertising drives traffic to your website and works well if there is a well-thought-through process for converting that traffic into a lead—typically through a website landing page. Otherwise, it can be a huge waste of money. Media advertising is typically outside of the budget of early growth companies, but that is also dependent on the size of the growth goals and available funding. There are higher priorities in most cases. Learn More.
• Email Marketing: Email is an effective marketing tool but does require skills and knowledge to execute effectively. Consider the following:
  • Clean database: Build an accurate list of contacts. Don’t spam people—they will unsubscribe or, worse, log a complaint.
  • Deliverability: Getting to their inbox is especially challenging for government email addresses.
  • Email open rates: Your subject line must be compelling. No marketing fluff. No trigger words that get you sent to their spam box.
  • Engagement: Getting people to click on a topic in your email to indicate interest—but there has to be solid content on offer to win a click-through.
  • Conversion: Campaigns must be designed to capture engagement information in a useful way.
  • Follow Up: You must have a follow-up plan (or the campaign is wasted)
  • Learn More.
• Social Media: LinkedIn is the primary tool for building a network—learn how to use it well. Facebook, Twitter, Instagram, etc. have a place, but, at this stage, are likely to be more of a distraction than an asset. Learn More.
• Public Relations (PR): PR is hard to justify at this stage—it is fairly expensive and hard to measure its impact. If you have a specific event, then it is worth telling the world (for example, a big name joins the company, you launch a compelling new product, or win an award). Sending a press release is a few hundred dollars—writing a good press release that will get picked up by the media is more challenging. Sending a few press releases is not the same as a sustained PR campaign.
• Events: Trade shows and conferences need to be evaluated on individual merit. Attending events (rather than exhibiting) can be an effective lower-cost approach to building a network.

3. Marketing for Established Government Contractors

For established GovCons, the decision to invest in marketing is based on the problems you are trying to solve.

Contracts are Secure

If you truly have all the contracts you need then back off on the marketing investment—but don’t stop entirely. Keep your website current and keep your brand image active. At some point, you will need to influence someone—a prospective employee, teaming partner, or new government buyer.

Also, look for ways to leverage your website to support your business development team. Are there common questions, objections, or statements they handle repeatedly? Address them on your website.

Bidding on New Contracts

For established government contractors, the next opportunity may well come from existing relations. In these cases, there is a tendency to assume marketing has little or no role to play.

However, until the contract is secure, there are numerous people to influence (the players at different layers) and the business development team could use some help.

Consider building a section on your website specifically for the contract under consideration. Including

• Differentiation statements (how you are better than the competition)
• Validation: past performance, case studies
• Useful information: key contacts and team strengths

By creating a focal point on your website you can control the narrative and provide a consistent message as a reference for your entire organization. Webpages are easy to modify and you can quickly respond to changes in the bid process.

In some cases, a targeted marketing campaign can be appropriate—including some of the tools listed in the table above. Which ones to use and how to integrate them is the output of your marketing strategy. In all cases, the goal is to route these tools back to your website landing pages—the environment that you control. Here, visitors can be educated, engaged, and ideally, their contact information captured—and the details provided to the business development team.

Key Take-Away: For established GovCons, the decision to invest in marketing is based on the problems you are trying to solve.

4. Marketing to Accelerate Established Government Contractors with an Aggressive Growth Goal

There are simply too many variables to make broad-brush statements in this scenario. The best advice is to build a marketing strategy and establish an action plan—overlaid with a clear messaging strategy.

The foundation of any digital marketing program is your website—all other marketing activities should drive traffic to your website.

Rookie mistake—don’t be tempted to direct traffic away from your website to other websites—including social media platforms. You don’t control these environments and you allow your audience to get distracted.

Your website will need to be flexible and change as business needs and marketing campaigns are implemented. Growth-driven design is a website design and development methodology that supports this approach.

5. How Much Should Government Contractors Invest in Marketing?

The rule of thumb is that companies should invest approximately 5% of their top-line revenue in marketing.

This would include both internal and external investments, as well as any advertising or media spend. It’s a reasonable starting point to include as a line time on the profit and loss (P&L) statement for planning purposes.

The actual level of investment varies depending on the company life cycle position and is inevitably adjusted where cash flow considerations prevail.

In all cases, an initial investment in a marketing strategy will establish a clear roadmap and should include a budget for your specific scenario.

1. Start-Ups

For start-ups with no revenue that calculation is clearly non-sensical, and cash flow is typically a bigger concern. Hire a website design and development company to get the foundations in place and then leverage the free resources for execution.

2. Early Growth

Again the 5% rule may not make sense based on existing revenue. Early-growth companies should consider a percentage of projected revenue or contract value.

3. Established Companies

If the contracts are secure for the foreseeable future (decades) then minimize marketing spend on sales promotion. However, bear in mind marketing is not only there to support sales. Keep your website up-to-date, maintain a consistent brand image, and hone your messaging while you have the time. You will still need to influence employees, new hires, teaming partners, and investors.

If you are competing for specific contracts then consider your marketing investment as a percentage of the contract value.

4. Established Companies with Accelerated Growth Goals

The 5% rule is a reasonable baseline, with an incremental adjustment of up to 10% for truly aggressive growth. Here are some examples.

Growth goals from $10M to 100M

• 5% of 10M = $500k
• 5% of 100M = $5M
• Conclusion: $500K is probably under-budgeted and $5M seems extreme. Consider a $2.5M budget as a benchmark and continuously monitor return on investment (ROI).

Learn about SWIM^® (Strategy With Implementation and Measurement^®) for tracking sales and marketing performance.

Growth goal $500M to 600M

• 5% of $500M = $25M
• Conclusions: $25M is realistic, however, you might also consider 10% of the growth goals (10% x $100M = $1M) and add to the existing marketing budget supporting the $500M.

Summary

Should govcons invest in marketing?

Deciding on the timing, tools and techniques, and how much to budget for marketing for your GovCon company can depend on a number of variables.

There are 4 basic phases for government contractor marketing, Start-Up, Early Growth, Established, and Accelerated Established Growth.

In practice, every business has unique goals, needs, challenges, and constraints, but having an understanding of a basic benchmark can help you invest wisely, at the right time.

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