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How Much Should You Budget Toward Your Business’s Marketing Campaigns?

marketing budget

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Marketing is essential to get your products and services in front of your target audience. Unfortunately, marketing costs money, and many small business owners don’t know how much they should budget for their campaigns or how to define a successful marketing strategy. Most businesses should budget 5% of their revenue for marketing. How you split that up between campaigns depends on your goals and your marketing campaigns and tactics to attract website visitors or customers to your store. 

Of course, 5% of revenue isn’t a lot for small business owners, and many experts believe you should budget at least 7% on marketing to improve your chances of success. However, your particular budget depends on several factors, including your revenue, customer base, and how much marketing you need to do.

Spending More Upfront 

If you’ve never invested in marketing before, you may spend more than 5% for the first few years to ensure a basic foundation. For example, if you’re a local business without a website, you’ll need to create one. Meanwhile, if you have a website but poor sales, you’ll need to consider optimizing your processes using various tools and software. How much you spend when you start marketing depends on different factors, so you’ll need to analyze data about your business to find the right budget. 

Your marketing foundation should include the following: 

  • Website building and updating
  • Branding
  • Strategy (planning and implementation)

Without these three things, you won’t be able to begin marketing. For example, you can’t start social media advertising if you don’t have a website to attract visitors. Additionally, you won’t have any visuals to use if you haven’t invested in branding. Finally, of course, perhaps the most important of the three parts of the foundation is the strategy that helps you understand different tactics you can use and how much they’ll cost to spread the word about your business. 

Review Your Sales Performance

Your revenue determines how much you can spend on marketing, so you’ll need to clearly understand your sales performance data. You may have more to spend on marketing in some seasons or years. For example, if you get busier during the vacation season, you’ll have a larger budget to spend during the busiest times of the year to help you earn more sales. 

How to Decide How Much to Spend

Knowing how much to spend on each part of your marketing strategy will depend on which campaigns you want to use and your ROI. Unfortunately, there is no one-size-fits-all marketing approach. For example, a local business will need to use different tactics than an e-commerce business. 

Your Goals

Your marketing goals can also affect your budget because they’ll tell you what you want to accomplish and by when. It’s always best to use SMART goals in your marketing strategy to help measure your campaigns’ effectiveness. With your budget in mind, you can determine which marketing tactics are more important to you and test them before spending too much on them. 

From there, with new data, you can begin to formulate strategies for each marketing campaign to help you maximize your efforts. For example, if you do a trial Google Search Ads campaign and a trial TikTok ads campaign to find that TikTok ads bring in more sales for a lower cost, you’ll know to invest more of your money in TikTok ads or avoid Google Ads altogether to use that money for more effective campaigns. 

Type of Business

Your business type, including its location, industry, and target audience, will ultimately impact what types of campaigns are best for your business. You can use a mix of traditional and digital marketing and advertising or one or the other, depending on your goals. For example, if your target audience is within the same city as your business location, you can use anything from Google ads to print advertising to attract more customers

Your marketing strategy should consider every type of campaign you can use, potential results, and how much you’ll need to spend, so do your due diligence to ensure you know what’s available to you and how much it will cost. 

Allocating Spend

Your marketing strategy will tell you which campaigns you’ll use. For example, local businesses may use traditional marketing tactics like ads in local newspapers and digital campaigns like geo-targeted social media advertising. Of course, to understand how much you’ll spend, you’ll have to do your research. For example, if you want to advertise in local newspapers, you can talk to their advertising department to learn how much different ad sizes will cost. In some cases, you may also be able to download a media kit to give you a better idea. Understanding how much digital marketing efforts cost will take a little more time because they’re all different. However, advertising platforms, including social media and Google, will give you projections for what to expect, so you should have an idea of how much you’ll pay for each impression, click, conversion, and so on.

If you plan to use organic strategies, such as SEO and organic social media, you may need to hire an agency to handle this for you, especially since both can be confusing for small business owners who have never tried either strategy before. Organic marketing is a long-term strategy, so it won’t get you results immediately. Talk to several agencies to help you understand how much you can expect to pay to sit back and let them handle all the heavy lifting. 

What’s Included in a Marketing Budget?

The initial branding, strategizing, and website marketing foundation aren’t the only costs to consider regarding your budget. You’ll need different types of software and team members to take care of everything for you. Every budget is different, but they typically include the following: 

  • Software
  • In-house marketing team members
  • Freelancers/contractors
  • Agency services
  • Campaign expenses
  • Creative spend
  • Campaign Partners (i.e. influencers if applicable)

Adapt Your Strategy and Budget

Over time, you’ll need to change your strategy and budget to reach more people or pull back to save money on costs. After you start marketing, always measure your results to understand which campaigns get you the most returns. 

Megan Isola

Megan Isola holds a Bachelor of Science in Hospitality and a minor in Business Marketing from Cal State University Chico. She enjoys going to concerts, trying new restaurants, and hanging out with friends. 


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