How Do You Determine an Effective Marketing Budget?

Determining the right marketing budget is essential for your organization’s success. But how much should you invest? What’s a common percentage of revenue? And how do you set a budget that aligns with your goals? In this blog, we’ll cover key guidelines, best practices, and examples to help you create an effective marketing budget.

A marketing budget is the amount a company sets aside annually or quarterly for marketing activities. This includes expenses for online advertising, content marketing, events, marketing tools, and personnel.

Setting a solid marketing budget helps with:

• Targeted growth: Investing in the right marketing channels leads to better ROI.
• Efficiency: A clear budget prevents uncontrolled spending.
• Competitive advantage: Strategic marketing investments help maintain a lead over competitors.

How much should you spend on marketing?

One of the most frequently asked questions is: “What percentage of revenue should I allocate to marketing?” While there’s no universal answer, there are guidelines based on industry and business goals.

Average marketing budget as a percentage of revenue

Various studies show that marketing budgets typically range between 5% and 10% of revenue. The exact percentage depends on factors like industry, company size, and growth stage.

• B2B companies: Often between 2% and 7% of revenue
• B2C companies: Typically 5% to 12% of revenue, due to competitive consumer markets
• Startups or high-growth companies: Up to 20% of revenue to capture market share quickly

Step-by-Step guide to setting a marketing budget

1. Define your marketing goals

An effective marketing budget is based on clear objectives. Do you want to generate more leads? Increase brand awareness? Launch a new product? Your goals determine the required investment.

2. Analyze historical data

Look at past campaigns: Which investments delivered the highest return? Which channels performed best? Use these insights to optimize your budget.

3. Benchmark against your industry

Research what’s standard in your sector. This helps you assess whether you’re under- or overinvesting.

4. Choose a budget model

There are several methods for setting your marketing budget:

• Revenue percentage: A popular method where a fixed percentage of revenue is allocated to marketing.
• Goal-based: The budget is calculated based on the cost of achieving specific goals.
• Competitive-based: The budget is aligned with what competitors are spending.

5. Allocate your budget across the right channels

A balanced allocation is key. Depending on your strategy, your budget may be split across:

• Digital marketing (SEO, SEA, social media, email)
• Offline marketing (print, events, sponsorships)
• Marketing technology (CRM, automation, analytics tools)

Example allocation for a B2B company

Marketing channel Budget percentage Online advertising (Google Ads, LinkedIn Ads) 30% Content marketing (blogs, video, whitepapers) 25% Email marketing & automation 15% Events & webinars 15% Tools & technology (CRM, automation) 10% Other (print, sponsorships) 5%

Marketing Budget Example

Suppose a B2B company has an annual revenue of €5 million and allocates 5% to marketing. The total marketing budget is €250,000. Here’s how it could be distributed:

• €75,000 for online ads
• €62,500 for content marketing
• €37,500 for email marketing & automation
• €37,500 for events & webinars
• €25,000 for marketing tools
• €12,500 for other costs

Marketing Guys

Setting a marketing budget is not an exact science. It depends on your business goals, industry, and growth strategy. By taking a strategic approach and evaluating regularly, you ensure a better return on your marketing investments.

Want to learn more about how to effectively use your marketing budget? Contact us for a free consultation!

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