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A marketing budget outlines the specific amount of money a company allocates to its marketing activities.
It influences your marketing strategy by helping you understand how much you spend promoting your business.
Like most business operations, determining a marketing budget can be a challenge. In this article, we'll explore marketing budget examples you can model to get started on creating your budget.
How much should a company spend on marketing?
Marketing spend varies by industry, company size, and growth rate. You can often estimate your marketing spend based on a percentage of the revenue for your business. But before deciding on your marketing expenses, you should also factor in your overall business goals, business expenses, and your company's growth.
Here's a breakdown of marketing spend by a company's growth stage:
High growth (Startup)
As a high-growth company, a startup has to grow much faster or risk losing its market shares to competitors. Companies in this growth stage should budget 15%-30% of their projected revenue on marketing.
A VC-backed startup, for instance, should have a startup marketing budget of about 30%-50% of the funds raised—and a founder that expects to get $100K ARR should allocate $10K-$40K on marketing.
Moderate growth
A company with moderate growth should be willing to scale its marketing budget upwards to keep up with the competition in the industry. Though the budget depends on the particular sector, 10%-15% of total revenue is usually a safe bet to spend on marketing. Entrepreneur recommends that 12%-20% of projected revenue is an excellent start. For instance, a company with a revenue of $2 million should spend at least $400,000-$500,000 to scale up its growth.
Stable growth
Companies with sustainable growth, such as enterprises, usually have bigger budgets for marketing. At the same time, they collect data suggesting how to spend effectively on marketing, thereby reducing their marketing costs.
With the primary goal of maintaining their market positions, companies with stable growth should budget 2%-10% of their revenue towards marketing. And according to a Gartner report, these companies' marketing budgets have climbed from 6.4% to 9.5% in 2022.
Sample marketing budget breakdown
Usually, your marketing budget is shaped by your company's needs. Here's a sample of a marketing budget breakdown you can use as a guide:
Content marketing: 30-40%
Content marketing costs involve the creation and publication of content such as blog posts, ebooks, case studies, guides, videos, graphics, marketing automation, webinars, social media tools, or other materials your company needs.
Creating and distributing quality content that moves your business forward requires time, research, and effort by a team of content marketing professionals—all of which costs money. A digital marketing budget is known to bring in 3 times as many leads as traditional marketing, so it's worth dedicating funds to this area.
When budgeting for content operations, consider the amount of content to publish per month, the content creation formats to use, and how much promotion you want for each content you create. Then adjust your budget accordingly based on the expected return on investment.
Paid ads: 20-30%
Paid advertising is a great way to bring attention to your brand and traffic to your website. It gives you a step up in the market, especially for companies that want to establish their market presence or enter a new market segment.
With paid advertising, you pay for access to the channel's audience you are advertising on. This can be traditional ads, online ads, or a combination of both. Examples of paid ads to consider in your budget include:
Pay per click and social media advertising
SEO and display ads
Newspapers and magazines
TV and radio
Billboards and posters
Paid ads, especially digital marketing, give you an immediate measure of your ROI. This means you can know which advertisement brought in a certain number of conversions or revenue. Rather than missing out on the numerous benefits of successful virtual marketing, research the advertisement channels you want and budget how much you'll need for each channel.
Creative design and branding: 5-10%
Marketing expenses for branding and creativity include costs from printing, supplies, IT equipment, hiring freelancers or specialists, soft and hardware tools, etc. Design and creativity make your marketing look good and stand out. They are also fundamental for content marketing, so it's a critical budget element not to overlook.
Public relations and events: 5-10%
These are the range of activities needed to build your business presence. The costs vary depending on the type of events, such as awards, blogger events, or product launches. Even if your company doesn't host these events, it may still incur expenses from registration fees, travel expenses, or booth and display costs. Managing brand reputation takes a lot of effort, so it's wise to invest in public relations through agency and reputation management.
Analytics: 2-6%
Analytics offer the opportunity to make informed business decisions out of the data you generate from your business. To provide long-term growth, you must spend a considerable amount on analytics. The cost of investing in analytics would typically depend on the tools used, the human cost, or services if outsourcing to agencies.
Tools and software: 10%
Tools and software save you time, money, and resources by streamlining and automating essential tasks. They also help you assess the campaign performance and track key B2B SaaS marketing metrics to determine the success of your efforts.
Tools or software companies usually charge a monthly or yearly service fee. Here are some examples of types of tools to explore:
Content management system (CMS)
Email marketing platform
Customer relationship management tool
Social media management platform
Staff members: 10%
Staff costs come from salaries, training, bonuses, benefits, special events, parking privileges, etc. The budget also covers computers, technology, and other marketing needs. Though expensive, they are worth the investment as you build your employee knowledge, motivation, and morale.
How to create a marketing budget
The secret to creating a marketing budget is to focus on your company's growth and choose the right marketing channels that benefit your company.
Let's look at it in detail:
1. Get your priorities straight (marketing strategy)
Take a look at your entire financial picture, including your basic operational and overhead costs, personnel, and equipment. This assessment, which is necessary for building a business financial system, will help you better understand your financial standing and give you a fair idea of what you can put toward marketing.
Next, be specific about your marketing objectives. What do you hope to achieve by the end of the quarter or year? Do you want to drive company sales? Increase leads? Maybe you want more subscribers and raise brand awareness?
A clear definition of your goals will help you build a marketing strategy that outlines the marketing channels and tactics you need to employ to achieve campaign goals. You can then analyze the costs and projected ROI to allocate your budget more effectively.
2. Know your current spend
Even without a marketing budget, you've likely been spending some money to attract clients. Most people refer to it as the "cost of doing business", but in a real sense, it's called marketing.
To know your current spend, you'll have to:
Figure out what you already spend each month on traditional advertising, PR, digital marketing, events, website development, and hosting.
Evaluate the effectiveness of your marketing initiatives by determining the ROI from these marketing activities.
Pause any negative ROI efforts and cut out excess and unnecessary costs.
3. Use a marketing budget template
With a marketing budget template, you can plan out your marketing budget in detail, no matter how big or small your campaign is.
This is because it guides you on your marketing, making your budgeting more effective. It structures your budget and outlines your marketing expenses so you can easily track your quarterly or annual progress as well.
Spendesk has a handy marketing budget template specially designed for growing businesses. It has a month-wise breakdown of the financial year, along with columns for the projected and actual spending.
4. Prepare your measurement and ROI analysis
As you set aside your digital marketing budget, you'll want to track the progress towards your goals to determine if the budget has helped you or not. Software like Google Analytics is excellent for measuring your return on investment (ROI) from different channels. ROI analysis enables you to limit wasted expenses, identify opportunities, and plan for the next budget round.
5. Distribute the budget
Start by determining the marketing methods and channels you intend to use and how they fit your goals. For instance, if your goal is to build brand awareness while boosting marketing efforts, you may focus on inbound marketing strategies like PPC advertising, content marketing, and social media outreach.
Next, determine the cost of each strategy, for example, the average cost per new lead or the average cost per ad impression. Calculate the spend, allocate the budget amount for each new lead or ad impression, and repeat the process for other channels. You can adjust your goals or try other marketing methods if the cost exceeds your budget.
5 marketing budget examples of well-known companies
These companies, though well-established, still invest in marketing. Here's an idea of their marketing spend:
1. Salesforce
Salesforce, a leading CRM platform for sales, services, and marketing, helps companies grow their business by strengthening customer relationships. It's a large company that invests a whopping 46% of revenue in sales and marketing. In return, they experience a 25% revenue growth year after year.
2. Tableau
Tableau is one of the fastest-growing companies in the business analytics field. It's a leading BI tool that helps companies see and understand their data. In 2018, they invested 51% of revenue in sales and marketing, experiencing a 32% revenue growth the year after. Their end-of-year financial statement shows a revenue increase from $412.6 million in 2014 to $1.16 billion in 2018.
3. Google
Google is one of the most established and well-known multinational companies. It's a stable growth company with much higher revenue. Google's parent company, Alphabet's, invested 8.9% of its revenue in 2021, amounting to $22.91 billion, up from $17.94 billion in the previous year. While they have the revenue, they're not looking for exposure like smaller companies, so they don't need to market aggressively. However, they still invest in marketing.
4. Microsoft
Like Google, Microsoft is another stable growth company that doesn't need aggressive marketing. In the fiscal year 2022, Microsoft Corporation invested $22 billion in sales and marketing. This is a gradual increase from their 16% revenue investment in 2018.
5. Mindbody
Mindbody is a cloud-based wellness experience platform for fitness, beauty, and health services with a revenue of $228.9 million (2018). They invested 39% of their revenue, resulting in a 31% growth rate year on year.
Get started with Spendesk’s marketing budget template for businesses of all sizes
Marketing is crucial to any company's success, regardless of size or growth stage. It's how you attract new customers and retain the old ones. While there are many marketing approaches, creating a budget directs your marketing spend towards the most successful ones.
Spendesk's well-planned budget breaks down your marketing expenses and investments, helping you focus on your marketing tasks while assuring you're building a solid foundation for your company's growth.
Interested? Schedule a free demo.
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