Marketing Budget Breakdown

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Gartner CMO survey found that publicly traded companies spend about 11% of total revenue on marketing, and as much as 75% of that marketing budget goes to digital. However, average marketing budget is influenced by industry, audience, cash flow and more.

Alas, there’s no magic marketing budget based on percentage of revenue or sales. But you have to start somewhere – and we’re glad you’re starting here. These recommendations are based on the Gartner survey mentioned, other research, and our digital marketing agency’s 20+ years of experience with clients of all industries and business sizes.

A Simple Marketing Budget Breakdown

If you’re looking for quick-and-dirty advice, the below guidelines should be a great starting point for your marketing budget plan. After you cruise past this list, you’ll see more in-depth recommendations based on your own business analytics.

  • Spend about 5 – 6% of your total budget on each of the following that applies to you:
    • Reputation and loyalty program management
    • Event marketing
    • Channel marketing, referral partnerships, etc.
    • Content writing and implementation
    • Traditional advertising (non-digital)
    • Surprise expenses + experimentation with new channels and strategies

Digital Marketing Budget Allocation Tips

1. Determine What to Spend on Digital vs. Traditional

When approaching marketing budget allocation for digital versus traditional efforts, don’t think about what most companies are doing. Think about your audience. Where are they consuming media the most? What ad mediums have performed well in the past? The answers to questions like this will guide your decision.

2. Look at ROI and CLV by Channel

B2C businesses spend more on marketing to succeed – especially service businesses. B2B businesses tend to find easier success through word-of-mouth and referrals. Which channels (e.g., organic search, referrals, paid media, social, email…) are most valuable to your business?

You surely know which channels produce the most conversions, like lead forms and calls. You likely know your usual lead-to-sale rate. The next step is determining ROI for each marketing channel. For example, check out how we calculate the ROI of our SEO services. These numbers will help you create your marketing budget with more confidence, plus get internal buy-in on the plan. It’s all about weighing cost versus benefit.

Finally, never ignore customer lifetime value (CLV) when determining digital marketing budget allocation.

3. Set a Maximum Budget, and Tweak as Needed

It’s better to overestimate than to underestimate marketing spend. If you set a maximum budget for digital marketing and traditional marketing, you can adjust spend based on performance. However, avoid being too reactive. Some tactics, such as SEO, pay for themselves after a seemingly slow start.

Setting a maximum budget is also helpful if you don’t have much historic marketing and sales data to work with.

Traditional Marketing Budget Allocation Tips

1. Give Traditional a Chance

In some industries, the consensus is that traditional media is dying. Even though our marketing agency is focused on digital, we don’t believe in leaving traditional marketing in the dust. As the Gartner report mentions, many companies are still finding good reason to allocate about 25% of their marketing budget to traditional media. If your unique audience is consuming specific media, it’s worth testing the waters there. 

2. Rely on Brand Awareness for ROI Signals

It’s difficult to measure the ROI of traditional marketing like radio, print and outdoor advertising because the initial brand impression is not always trackable. To counteract that problem as much as possible, use custom URLs in your print, radio and podcast ads to make attribution easier. In some cases, however, you’ll need to focus on signals of increased brand awareness to determine the value of traditional marketing. Check out our guide to measuring brand awareness.

If better brand awareness isn’t enough to make you confident in your traditional marketing budget, consider market research (e.g., surveys) to find out how often people are finding your brand through traditional media.

Including Vendors in Your Marketing Budget Plan

Before you finalize your marketing budget plan, assess your current marketing team’s structure. Do you have vendors supporting strategy and execution? If so, chat with them about any upcoming contract changes.

If you’re trying new marketing tactics this year – as you should! – it may be well worth hiring an agency or specialist. In fact, it may be more cost effective to hire a marketing agency than to hire a new employee.  

Consider Oneupweb

Now for the long-awaited, shameless plug. Oneupweb’s experts are ready to listen to your marketing goals and make them happen. If you want an experienced team that makes efficient use of your dollars and proves ROI, reach out to us online or call (231) 922-9977.

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