Marketing Budget

Cite this article as:"Marketing Budget," in The Business Professor, updated July 18, 2014, last accessed May 30, 2020,

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When calculating your marketing budget, make sure you start by aligning your marketing goals with your company’s strategic goals and vision for growth. If you plan to grow by 20%, but only want to invest enough in marketing to get new business cards for everyone in your company, you’re probably going to be disappointed with the results of your investment!

It’s important to develop a written marketing strategy that is agreed upon by the executive team, the sales team, and the marketing team. Make sure everyone is driving their activities in the same direction.

Setting Your Marketing Budget

Once you’ve aligned your company goals with your marketing goals, you’ll need to identify your marketing budget so you can develop a more detailed marketing plan to support your strategy.

  • Lean Plan: 1 – 2% of your top-line revenue. Engage and retain current customers with simple tools and strategies. This is ideal for companies that are looking to maintain their market position, and don’t have ambitious growth goals.
  • Target Plan: 3 – 4% of your top-line revenue. Attract new prospects and retain current customers with advanced tools and strategies. This is ideal for companies that are looking to increase their market share and have moderate growth goals (10 – 15% annual growth).
  • Stretch Plan: 5% or more of your top-line revenue.  Accelerate your results by applying more resources focused on driving leads, conversion, and sales. Use complex marketing strategies and cutting-edge tools. Ideal for companies who have ambitious plans to grow and increase market share (20% or more annual growth).

Allocating Your Marketing Budget Dollars

Armed with your goals and a budget, you can now get into the nitty-gritty of developing a tactical plan to transform your marketing dreams into reality! The complexity of your plan will depend on the marketing budget you have identified, but you should also consider including tactical plans related to SEO, Social Media, Paid Advertising, Content Offers, Blogging, Email Marketing, Lead Conversion and Nurturing, Integration with Sales Activities, Trade Shows, and Print/Traditional Advertising.

Determine how much of your marketing budget should be allocated to each aspect of your plan. The chart below is based on a 2011 survey of over 900 companies. It displays the percentage of their marketing budget that was allocated to each area of their marketing plan. You may decide to spend more or less based on what your direct competitors are spending, what industry you are in, and your specific goals.


Step 1

  • Create a list of the different segments of your marketing efforts. Include research, testing, creative production, communications and tracking.

Step 2

  • Estimate the costs involved in gathering market research. Market research includes efforts such as developing a customer profile and examining your competitors. Include administering surveys, buying research studies and hiring a consultant.

Step 3

  • Estimate the costs of testing different marketing strategies. Include product giveaways, focus groups, creating different versions of your product, selling new items in limited locations and follow-up surveys.

Step 4

  • Estimate the costs of a communications campaign. Include the costs of creative design for packaging, ads, websites and other collateral materials. Calculate the costs for your desired media buys, such as print ads, website banners and TV and radio commercials. Include expenses for direct mail, trade shows, public relations, contests, promotions and the cost of building and maintaining a website.

Step 5

  • Estimate the costs of tracking and monitoring your communications efforts. This might include the purchase of a website statistics package, visiting retailers who sell your product or conducting customer mail or telephone surveys.

Step 6

  • Add up the total estimated costs. Determine whether you can afford the total price of your marketing plan. If not, review each category to see where you can cut back.

Step 7

  • Create a spending formula that ties your marketing budget to a percentage of sales. If your marketing plan is working, then the more you sell with it, the more you should consider spending on your marketing efforts. If your sales drop, a spending plan tied to sales will put in a place a brake that will alert you to reexamine each aspect of your marketing plan.

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