A marketing budget is how much your business intends to spend on all marketing-related projects and costs throughout the year. Your marketing spend can go towards things such as paid advertizing, sponsored web content, market research, conferences and trade shows, hiring specialist marketing staff or marketing software.
Put simply, your marketing budget is calculated by how much you can afford to spend and how to best use the funds, over a specific period of time. Considering your budget for marketing takes several factors into account, including the size of your business along with your company’s industry, target audience, marketing goals and total sales revenue.
What Percentage of Revenue for Marketing Spend?
It is critical to work out how much of your revenue should go towards the marketing of your business. Understanding some particular factors when deciding on the percentage of your revenue to spend will help you get it right.
Using a percentage figure rather than a dollar amount means you will keep results consistent. Marketing creates your future revenue and as your business grows, you will require more leads or sales to make a profit. So, by spending a percentage of your revenue that works will ensure you are always spending the right amount to hit your targets.
Surveys conducted by Deloitte and Gartner found that marketing budgets of around 10% of total company revenue is effective to grow a business, for the majority of industries. Deloitte found that B2B product companies spend 9.4% of their revenue on marketing, while B2C companies had a significantly higher spend of 14.2%. 1
Keep in mind this figure will vary for certain industries and you need to determine an accurate percentage that suits your business’ specific goals. By industry, consumer services has a higher spend of around 19%, with finance, consumer goods and healthcare around 9%, and construction and manufacturing at the lower end of 2-3%. 2
Consider some examples where the average percentage of revenue for marketing spend does not sit within the average:
A high-growth company will generate more sales and leads, to result in higher revenue, by investing heavily in productive marketing.
A company in a highly competitive industry is likely to spend more in order to succeed against its rivals.
A company going through a period of change, such as the launch of a new product or entering a new market, will need to spend more on marketing to support this.
A new business will often spend a higher percentage of their revenue on marketing to attract as much attention and revenue as possible.
Other things to research include the percentage spend that is common for your industry, all the potential costs involved with certain marketing activities and setting clear goals for your business. Regularly monitor your budget and progress so you can make changes when necessary to keep you on track.
How to Best Distribute Your Marketing Budget
You want your business’ marketing efforts to count, so once you have identified a marketing budget total, how you distribute your marketing spend across different marketing categories also needs serious contemplation.
Taking into account your business objectives and strategies, you can drill down into the spend. The budget split will be for both offline categories and digital marketing activities. Some potential marketing categories to allocate your budget to are:
Perhaps you want to promote a particular product or service by allocating some spend to this. This can work for new product lines, or to entice new or previous customers to make a purchase.
To have effective marketing campaigns, you must have high-quality content both on your own website and on other platforms. This includes text, images and video content and it is worth investing in this well.
Branding and Creative
To stand out and become recognizable, your business must have a high-quality brand. This is the foundation of any business and is your brand’s first impression, so allocating a budget towards this will definitely pay off.
Effective communication with the public will need good PR, to build and maintain a positive reputation and get results. Choose the methods that will work best for you and build relationships with a personal feel to engage customers.
Paid Digital Advertizing
Paid online advertizing campaigns such as Google Ads are an essential digital marketing strategy. Display ads and social media marketing are becoming more and more effective and done well can really improve your sales and results.
Software platforms are becoming more popular to help businesses achieve their marketing goals. To explore the options for your business, engage the services of digital marketing experts to have the guesswork taken out.
If conferences, trade shows and other events are important for the networking and growth of your business, ensure you have enough budget to promote and hold the events to the standard you need for success.
Powerful and worthwhile marketing is strategically thinking about how to improve the growth of a business, while adhering to a budget. It can be both daunting and time consuming. To create a marketing budget for your business, the skilled team at Web Force 5 is available to assist. Call to speak with a specialist consultant for a free no obligation chat to perfect your marketing spend.