Is There a Marketing Budget Rule of Thumb?

February 24, 2022

Guest post: Kristen Davis, CEO & Founder of Athenian Marketing.

Marketing is an investment in your business and is not an expense. So how much should an organization invest in marketing? Unfortunately, there isn’t a hard and fast number that every business should adhere to because each company is different, and every business is in a different marketing stage. But, if you need a “rule of thumb,” we recommend allocating 5-10% of your gross revenue to marketing. The range is in place because there are several factors to consider when determining a marketing budget, so a hard and fast number is a challenge. Let’s look at the factors that impact how much your business should allocate for marketing.

Foundational Elements

Foundational marketing elements include your brand, website, a marketing plan, literature & social media platforms. Think of foundational elements as the basis of your marketing plan. Without them, it will be hard for your marketing to be consistent and won’t provide your customers, or potential customers, with a focused view of your business.

If you do not have your foundational marketing elements in place, plan to allocate additional funds to marketing to establish those foundational elements.

Brand Awareness

Once your foundational elements are in place, take a look at your brand awareness with your target audience. Does your prospective customer know about your business? If your answer is no, or you aren’t sure, you’ll want to allocate a more significant percentage of funds to your marketing budget. Building up your brand awareness paves the way for new customers to recognize your brand and your business and make the conscious decision to buy from you.

Think about some of the specific brands you know. They didn’t get there by shying away from spending on their brand awareness. They got there by marketing their brand to their target audience. Focusing on brand awareness is essential regardless of business size. Remember that you don’t need everyone to know about your business. You need your target audience to know about your business. That is where the focus should be. Check out our “Whats Your Brand Identity?” post.

Events and Tradeshows

If events and tradeshows are part of your marketing budget, be aware that they can eat up a large chunk of your budget and may not provide the dividends needed to reach your goals. Think booth costs, team travel, team hotels, shipping materials, and more.

Now that we’ve outlined factors that can impact your budget, how do you decide how to divvy up the budget? That’s where your marketing goals come in. What are the marketing goals for the coming year? So before determining a budget, determine your goals. (If you need a little help, check out our Marketing Planning blog post!)

Once goals are determined, determine approaches to help your organization meet those goals, and then put numbers to the strategy. 

But what if you misallocated the budget? Not to worry. Since marketing is trackable, scalable, and can be layered. Thus, effective strategies can constantly be enhanced or modified to capture new or different audiences. Isn’t marketing great!

If you face the budget conversation in your business and need a bit of help wading through the details, give us a call. We’d be happy to talk through the details and give you a few pointers. 

This post is from Kristen Davis, CEO & Founder of Athenian Marketing.