How much should I budget for marketing?

Hands determining a marketing budget

Building the company budget often comes with many unknowns—and a lot of opinions from company leadership. Marketing can often be the most nebulous aspect of the business, so pinning down a specific number for the yearly budget might be a difficult task.

Like all budgeting tasks, it’s important to approach this one with discernment. Here are a few things to consider:

What do you need to consider when building a marketing budget?

Building a budget of any kind requires a lot of reflection. For example, if you are putting together your family’s transportation budget for the year, there are a number of things to consider:

  • How much will I need to spend on fuel each month to get to where we need to go?
  • Do I have any big trips planned that will require extra expenses?
  • Do I have any foreseeable vehicle repairs this year?
  • How much is a good “safety net” in the event of unforeseeable repairs?
  • Will I need to purchase a new vehicle?

Each of these factors are very different, but they all influence how much you should set aside for your total transportation budget for the year.

Building a marketing budget is similar. You will need to consider:

  • What are my growth goals for the year?
  • What segments of my audience am I hoping to attract the most?
  • Are there any aspects of my marketing (such as my brand, my website, etc.) that need significant attention this year?
  • Do I have any big launches or events this year that will need special promotion?

Having a vision in mind for the year ahead will give you clarity when budgeting for different marketing activities.

What activities should you budget for every year?

No matter where you are in your marketing lifecycle, there are certain annual activities that you will need to budget for.

Identity maintenance

The world changes from year to year, and your brand should adapt along with it. That being said, you shouldn’t be updating your logo and brand standards every year, but you should set aside some money for certain annual activities that keep your brand in good shape. These activities could include:

  • Producing updated videos about your company culture, mission, goals, etc.
  • Creating new branded materials for sales engagements and events
  • Revisiting your core brand message
  • Updating your branding or company website if necessary

Brand awareness

Even if you haven’t relied on marketing to get you noticed in the past, keeping your brand silent will eventually cause problems. Every business should contribute some of their marketing spend to activities that will grow their brand awareness. These activities aren’t for generating leads directly, they just remind the world that you exist. Brand awareness activities could include:

  • Sponsoring broadcasts or events
  • “Top-of-funnel” digital advertising campaigns like paid social or video ads
  • Traditional advertising like billboards or direct mail
  • Organic social media

Lead generation & promotion

Your marketing should make you money. For many companies, lead generation is the most important line item on their marketing budget. However, even if you aren’t in need of immediate leads, you will always have something to promote. You may need to advertise an event, encourage donations, or recruit employees. Promotional marketing activities can help with all of these things. They can include:

  • High-intent search advertising
  • Paid social media or programmatic advertising
  • Youtube or Connected TV advertisements
  • Landing page creation
  • Email marketing campaigns

Audience engagement and driving sales

One of your marketing department's most important functions is communicating with your audience of both prospective and existing customers. Your communications should be engaging and educational to guide your audience along their decision making journey. This aspect of your marketing budget is easy to overlook, but in reality, it is likely the most crucial area of focus for maintaining your reputation and closing deals. Audience engagement activities include:

  • Blog and content creation
  • Informational videos
  • Educational social media content
  • Email newsletters
  • Events and webinars

How much should you budget for each activity?

How much you budget for each marketing activity depends on your goals as a company. While every company’s position is unique, below are a few common scenarios and rough budget recommendations for each.

You are trying to breathe life into a neglected brand

  • Identity maintenance: 50% of your yearly budget
  • Brand awareness: 30% of your yearly budget
  • Lead generation/promotion: 10% of your yearly budget
  • Audience engagement: 10% of your yearly budget

You are trying to grow your authority in your market

  • Identity maintenance: 15% of your yearly budget
  • Brand awareness: 30% of your yearly budget
  • Lead generation/promotion: 15% of your yearly budget
  • Audience engagement: 40% of your yearly budget

You are trying to scale your company

  • Identity maintenance: 10% of your yearly budget
  • Brand awareness: 20% of your yearly budget
  • Lead generation/promotion: 50% of your yearly budget
  • Audience engagement: 20% of your yearly budget

How much should you budget for marketing in total?

Again, this number depends on your goals.

In short, smart companies typically budget between 5%-15% of their yearly revenue for marketing. If you are happy with the size of your company and are only hoping to retain customers rather than grow, then the low end of that range makes sense for you. However, if you are hoping to scale your business by 20% or more, you should be prepared to set aside an amount of money at or above the high end of that range.

Hopefully this helped you to approach the budgeting process with a little more peace of mind. If you have more questions about what wise marketing tactics to spend on, check out our digital marketing frequently asked questions.