How to Manage a Marketing Budget

A Marketing Budget is a plan that outlines the costs associated with marketing efforts over a specific period. A well-managed marketing budget is critical for any business wanting to grow and succeed. An effectively allocated budget allows you to maximise marketing dollars and get the best return on investment (ROI).

In its simplest form, a marketing budget covers the costs of:

• Advertising (online, TV, radio, print)
• Public relations
• Website development and maintenance
• Search engine optimisation
• Content creation
• Event marketing
• Email marketing
• Social media marketing
• Lead generation
• Market research
• Marketing staff salaries

When creating a marketing budget, aligning it with your overall business goals and objectives is essential. Your budget should help you execute your marketing strategy to reach target audiences, increase brand awareness, boost sales, etc. With careful planning and oversight, your marketing budget will act as an engine driving business growth.

This comprehensive guide covers everything you need to know about marketing budget management. From initial budget setting to allocation across activities to tracking results – we break it all down. Follow along to create a budget that fuels real business success.

Set Overall Marketing Budget

The first step in managing your marketing budget is determining how much you can allocate towards marketing efforts. Setting your overall budget guides the scope of marketing activities possible.

Base Budget on Business Goals

Tie your marketing budget directly to business goals and targets. Common goals that shape the budget include:

• Increasing sales by a certain percentage
• Reaching a specific number of new customers
• Growing brand awareness in target markets

Align spending to reach the outcomes that are most important for success. Know exactly how much marketing investment is required to achieve goals.

Consider Industry Benchmarks

Industry averages provide valuable benchmarks for gauging an appropriate budget:

• SaaS companies spend 18-24% of revenue on marketing
• B2C product companies spend 8-12% of revenue
• B2B service companies spend 6-15% of revenue

When deciding on a budget, compare your business to others in the same sector. Match or exceed competitor marketing investment.

Factor in the Business Stage

Your business growth stage also impacts the ideal marketing budget. Early-stage startups often invest more heavily in marketing to spur growth.

• Pre-revenue businesses allocate 20-35% of total budget to marketing
• Startups typically spend $18k-$30k per month
• Established businesses spend 1-10% of revenue

Consider where you are now – and where you want to go. Set a marketing budget to get you there.

Leave Room for Optimisation

As you gain marketing insights, you’ll optimise investment towards the highest-performing channels and campaigns. Leave about 20% of your budget unallocated upfront so you can shift dollars over the year.

Building in an optimisation room empowers you to double down on what’s working – and pull back in areas that aren’t delivering results. This flexibility helps generate the best ROI across marketing programs.

What Belongs in a Marketing Budget?

Advertising Expenses

This includes spending on ads across media platforms like:

• Search ads: Google, Bing, Amazon
• Display ads: Website banners, YouTube videos, mobile apps
• Social media ads: Facebook, Instagram, Twitter, LinkedIn
• TV and radio spots

Website Hosting and SEO Costs

• Web hosting fees
• Domain registrations
• SEO tools and software
• Outsourced SEO services

Content Creation and Management

• Blog, video, and social media post-creation
• Graphic design for online visuals
• Content distribution (PR services)

Events and Sponsorships

• Event booth fees and travel
• Event sponsorship packages
• Giveaways (shirts, pens, etc.)

Email Marketing Platform Costs

• Email service provider fees
• Email list purchases

Market Research Expenses

• Focus groups
• Surveys
• Data analysis

Marketing Staff Payroll

Salaries or agency fees for:

• Marketing Manager
• Content writers
• Graphic designers
• Social media managers
• PPC managers
• PR specialists
• Web developers

What Doesn’t Belong in a Marketing Budget?

While the above costs directly tie to marketing activities, other items do not belong in a marketing budget:

General Operational Expenses

• Rent
• Office Supplies
• Utilities
• Non-marketing staff payroll (HR, accounting, etc.)

Product Manufacturing and Fulfilment

• Facilities
• Equipment
• Inventory
• Shipping

Technical Issues

• Large-scale website redesigns
• New software systems

Sales Team Expenses

• Sales staff salaries
• Sales lead purchases
• Sales-specific events/sponsorships

Miscellaneous Company Finances

• Taxes
• Legal fees
• Insurance costs
• Interest paid on loans

While these items relate to overall business expenses, they do not directly tie to marketing outreach and should be accounted for separately.

Breakdown of Budget Across Activities

With your marketing budget defined, allocating funding across specific activities is the next step. Spreading your budget effectively maximises impact across lead generation, brand building, conversions, and other goals.

Prioritise Based on Business Objectives

Rank your business objectives and tie the budget directly to priorities:

1. Demand generation: Campaigns that increase leads and pipeline – like paid ads or content offers
2. Brand awareness: Building brand recognition and reach – like PR or events
3. Customer retention: Reducing churn and cultivating loyalty – like email or community

Higher priority areas warrant more budget. Allow your goals to shape optimal activity-based allocation.

Balance Short-Term and Long-Term Efforts

Seek balance between short-term lead gen campaigns and longer-term brand equity investments:

• Demand efforts directly generate pipeline – like PPC or free trials
• Brand efforts indirectly build future revenue – like SEO or video

Shoot for 60/40 or 70/30 allocation between the two for healthy budget distribution.

Compare Channel Cost and Conversion Rates

Factor in cost and conversion rates to optimise funding across channels:

Adjust channel budgets based on cost efficiency and sales conversion power. Maximise high-ROI channel potential within budget constraints.

Allow for Regular Adjustments

Plan to revisit allocation quarterly or bi-annually. Assess the latest channel efficiencies and shift the budget from poor to high performers. Allow 2-4 adjustments annually to keep budgets tightly aligned with strategy.

Building in agility lets you respond quickly to changes in market dynamics or audience behaviours. Don’t allow outdated budget breakdowns to drag performance.

Define Expense Categories

With the total budget set and activity allocation defined, break things down into specific expense categories. Categorising costs clarifies tracking.

Common marketing expense buckets include:

• Advertising spend
• Payroll costs
• Software, tools, & analytics
• Production & design
• Professional services

Group external agency fees, web hosting, event travel, etc., into appropriate categories.

Create custom categories that align with your unique marketing efforts and structure mix. Set up categories that ease ongoing management.

Advertising Spend

Typical ad expenses include:

• Pay-per-click (PPC) campaigns
• Social media promotions
• Display or banner ad placements
• Print or direct mail ads
• TV, streaming, or radio spots

Factor in direct media buys costs and costs for creative development when estimating ad budgets.

Payroll Costs

Consider internal marketing staff payroll and overhead expenses. This may include:

• Salaries for marketing employees
• Benefits packages
• Employment taxes
• Healthcare costs
• Internal office space

Factor about 25-40% on top of base salaries to account for total payroll overhead.

Software, Tools & Analytics

Marketing relies on a technology stack including:

• CRM & sales automation
• Email marketing
• Social media & ad management
• Analytics & reporting
• Design & Creative

Factor current tool costs along with allowance for upgrades and additions.

Production & Design

Content production and design encompasses expenses like:

• Videography
• Photography
• Writing and Editing
• Graphic design
• Audio editing
• Product Rendering

Account for both in-house and outsourced resource costs in this category.

Professional Services

Standard external expert fees include:

• Marketing agencies
• PR firms
• Research providers
• Legal fees
• Training and conferences

Factor any outside experts you plan to engage related to marketing initiatives and programs.

Setup Marketing Budget in the System

With your categories established and funding allocated across activities, incorporate the marketing budget into your broader company financial system. This connects strategic plans with actual spending and ensures the availability of budget information when needed.

Input Budget into Accounting System

Work with finance to add the strategic marketing budget into your accounting system (Quickbooks, Netsuite, etc). Add categories and constraints that align with output from the budgeting process.

Integrate with Project Management Systems

Link budget details into systems for managing marketing projects and workflows. Provide real-time visibility into the budget by initiatives as money gets tracked. Popular tools like Asana, Jira and Trello help here.

Connect Analytics for Full Visibility

Import categorised budget data into analytics systems like Google Analytics, Tableau or Looker. Build dashboards aligning spend and activities with engagement rates, conversions, and other impacts over time.

Connecting systems provide transparency from planned budgets through expenditures and business outcomes. Enable data-driven decisions around optimal activity mix and investments.

Carefully Manage Marketing Spend

Managing ongoing spending is equally important, with your marketing budget structured and tracked across systems. Proactively control costs and continuously align dollars with a strategy for efficiency.

Maintain Budget Visibility

Create real-time reporting on marketing budget consumption. Establish logic and controls that immediately flag when spending gets ahead of plan. Maintain line of sight to limit surprise cost overruns.

Enforce Approval Workflows

Approved purchase orders are required against budgeted funds for any marketing expenses. Ensure critical review of activity alignment and spending reasonability via defined workflows before money moves.

Pay Close Attention to Payroll

Set calendar reminders to reassess headcount and payroll expenses vs. plan every quarter. As the activity mix evolves, shift investments from people to programs judiciously. Keep staff costs aligned with the overall budget and revenue.

Require Post-Spend Analysis

Analyse marketing spend efficiency after significant initiatives are complete using attribution modelling. Identify programs generating pipeline and revenue vs. those wasting budget. Shift future funding accordingly.

Continuous optimisation of budget investment based on outcomes improves performance over time and sustains ROI.

Assess, Learn & Optimise

Marketing leaders must continually assess effectiveness and optimise budget allocation. Carve out dedicated time quarterly and annually to step back, learn from spending patterns and behaviours, and reallocate for better performance.

Quarterly Check-Ins

Each financial quarter, examine marketing budget consumption trends and alignment to goals. Adjust categorisation or constrain specific costs as needed. Identify inefficient spending for reduction.

Course correct budget breakdown across channels if fundamental shifts occur in market response or conversion rates. Use quarterly Analysis to keep the budget tightly tied to strategy.

Annual Re-Forecasting

Conduct an annual complete re-forecast of marketing budgets from the ground up. Roll forward what remains unused to extend impact into the following year.

Carefully determine updated business objectives, growth targets, competitive dynamics, and ideal activity mix considerations. Reflect on new learnings, tools and innovations.

Reset budgets completely using the same approach as initial goal-based planning. Significant evolution year-over-year keeps budgets supporting strategy in a dynamic market.

Build Institutional Learning

Foster a culture of constant assessment and learning around budget management. Encourage teams to share insights into spending efficiency, performance trends, changes, and innovations.

Capture institutional knowledge via documentation of ongoing experiments, shifts, and outcomes. Let collective understanding inform good judgement for budgets that flex continually towards what works now.

Equip others to make decisions through education vs. limiting autonomy—Optimise budget effectiveness through shared wisdom.

How Do Successful Companies Structure Marketing Budgets?

Still overwhelmed, determining where to invest your marketing dollars? Here, we analyse five actual companies dominating their industry to showcase smart budget allocation you can model:

Microsoft

The tech giant dedicates over $2 billion annually to marketing, split across channels:

• 10% events like tradeshows
• 25% TV, billboard, & print advertising
• 30% search & online ads
• 35% content creation and partnerships

This budget concentration on digital reach, personalised engagement, and strategic positioning perfectly aligns with Microsoft’s customer targets and offerings.

Starbucks

With over $300 million in annual marketing spending, Starbucks divides efforts into:

• 60% local store promotions like happy hours
• 15% partnerships & branded products
• 20% TV & print ads
• 5% on social media community building

Local experiential marketing matches Starbucks’ customer experience focus and fuels viral buzz.

Salesforce

The SaaS leader prioritises marketing budgets:

1. Webinars, events, & paid search (50%)
2. Customised ad campaigns (30%)
3. Content and social engagement (20%)

This alignment captures high-value B2B targets via personalised outreach and guides customers down the funnel.

Nike

Nike spends over $3 billion marketing globally through:

• 10% TV & print advertising
• 15% trade & retail partnerships
• 20% athlete & team sponsorships
• 55% digital ecosystem building (mobile apps, online community engagement, etc.)

Efforts focus on building aspirational branding and personalised customer experiences.

NAMIC Insurance

The national mutual insurance firm targets niche markets via:

• 5% radio & print ads
• 15% direct mail
• 20% call centre lead gen
• 35% agent education & training
• 25% custom market research

This hyper-targeted budget matches specific buyer needs.

While allocation varies drastically, common themes emerge: Channel budgets closely match ideal customers, and campaign strategies align to core sales messaging—Analyse industry leaders you want to emulate and structure budgets accordingly.

Key Takeaways

Managing a marketing budget to fuel growth while optimising ROI requires diligence across goal-setting, planning, analysing and adapting. Key steps covered include:

Budget Setting

• Based on business goals
• Benchmark competitor investment
• Factor growth stage needs
• Leave room for optimisation

Allocation

• Prioritise per objectives
• Balance short and long-term
• Compare channel efficiency
• Plan frequent adjustments

Expense Categorisation

• Map to workflow management
• Link budget tools and analytics
• Maintain visibility into spend

Optimisation

• Assess effectiveness quarterly
• Reforecast annually
• Instil budget-centric culture

With careful marketing budget oversight, your dollars can be strategically optimised to deliver the most significant possible business impact over time.

FAQs

The post How to Manage a Marketing Budget is by Stuart Crawford and appeared first on Inkbot Design.