Did you know that across industries marketing budgets can range from 4% to 24% of a company’s overall budget?
Are you still trying to get your marketing strategy up and running but don’t know how to budget for it?
Don’t worry. We’re here to break it down for you. Keep reading, and we’ll share how you can create a budget for marketing that will set you up for success.
Why You Need a Marketing Budget
If you want your company to succeed then you need a successful marketing strategy. Whether big or small, some portion of your companies budget needs to be allocated to marketing your product, service, or yourself.
Many companies mismanage their marketing budgets and spend it in the wrong places. Establishing your budget and the right places to spend it is essential to get your business to the next level.
Do you know how you’re going to develop a budget for your marketing plan?
Examples of Budget for Marketing
There are a couple of common ways to develop a budget for your marketing plan. The four common ways are a percentage of revenue, top-down, competition-matching, and goal-driven.
Percent of revenue is a method of calculating your marketing budget by simply picking a percentage of your revenue to spend on marketing efforts. Once you have that number, you choose your marketing projects and tools to fit within that budget. Some good baselines you can base your percent of revenue budget on are:
- Businesses less than 5 years old should budget for 12 to 20% of revenue
- Businesses older than 5 years should budget 6 to 12% of revenue
- B2B should budget 7 to 8% of revenue
- B2C should allocate 9% of revenue
The next method is to use a top-down strategy. Basically, your boss allocates how much you have to spend. This is a non-data or goals driven approach.
Another method is the competition-matching approach, which is essentially what it sounds like. For this approach, you have to take a good look at what your competition is executing in their marketing strategy, and you spend what you need to match their efforts.
Finally, you can use a goal-driven method that requires you to set your goals first. Once your goals are established, you shape your budget around what you need to make your goals a reality.
It’s Important to Know Your Sales and Costs
From operational costs to your sales, the numbers have to make sense to keep your business running, so why would that be any different when it comes to your marketing strategy?
First, you need to take a deep dive into your sales funnel. This is where you’ll track results from prospects to customers. If you use a marketing automation system or CRM, then you can easily access data like:
- Monthly site visitors
- Leads per month
- Lead conversions
- Cost per lead
- Cost per conversion
- The average value of a sale
If you need assistance with beefing up data and results like these or deciphering the insights, you can check out a qualified SEO company as a resource. When you understand the numbers coming in and out, you are set up to have a successful marketing budget and strategy.
Are You Ready to Set Your Budget for Marketing?
Now that you’re well-versed in the average marketing budget for companies, it’s time for you to set yours. Whether you’re a small business or a large corporation, you have the foundation to start building your budget for marketing.
Do you have more business questions? Find all the answers about marketing, budgets, and so much more here on our site.