There are many useful and delicious things that grow on trees: apples, oranges, lemons… the list goes on. Sadly, though, money is not part of this list. I’m sure we’ve all had a parent or friend remind us of this at one point in our lives.
While money doesn’t grow on trees, ideas are free, and we’re here to help you create a marketing budget that works for your business.
We’ve harvested all your need-to-know marketing budget information and are sharing our wealth of knowledge to answer your questions, like:
- What is a marketing budget?
- Why is a marketing budget important?
- How do you create a marketing budget?
- What does a typical marketing budget template look like?
With this post, you’ll get all the tools you need to make your marketing budget grow your success like a garden in spring.
What is a marketing budget?
A marketing budget is the amount of money you allocate towards promoting your business. When you implement a multichannel marketing strategy, a marketing budget helps you understand how much to spend on each marketing channel as well as the other factors that influence how to market your business.
Here are a few examples of what areas of your business would go into a marketing budget:
- Marketing software
- A marketing partner
- Your in-house marketing team
- Creative design
- Contract or freelance work
- Reputation management
- Website services
- Branding services
Essentially, a marketing budget outlines all the money you’ll spend on marketing-related projects over a period of time—typically a year.
Related: Want to know all the possible ways you could spread out your marketing budget? Take a look at our complete marketing channels guide that will break down all your marketing options.
Why is a marketing budget important for small businesses?
While it’s helpful to know what gets included in a marketing budget, taking the plunge to allocate funds towards those items can be a challenge for small businesses. But, it’s crucial to complete this step as part of your marketing planning.
Here are some reasons why:
1. It can inform your marketing strategy
With endless options for marketing out there, it can be difficult to know where to start. Your marketing budget gives you the best place to start—because if you know how much you can spend on marketing, you can prioritize the strategies and channels that both fit in your budget and will drive the best ROI for your business.
A marketing budget helps you keep your strategy clear and organized.
2. It helps you keep track of your results
If your marketing budget is tied to your marketing goals, you’ll set specific KPIs around the results you’re hoping your marketing budget will yield. This can help you understand if your marketing is using your budget wisely or if you need to make adjustments.
It also gives you an incentive to track your progress regularly—you want to see your money being put to good use!
3. It can help you identify areas of optimization
As you spend your marketing budget, you can identify which areas of your marketing are performing well and positively contributing to your ROI and which areas may need a little help. By keeping track of your marketing budget, your spend, and your results, you can easily identify slow leaks you can fix before they turn into a flood.
4. It can keep you competitive
As you plan your marketing budget, it’s also helpful to understand how other businesses like yours are thinking about their marketing strategies and budgets. Consider these statistics:
- 63% of businesses have increased their marketing budget in the past year.
- The amount U.S. businesses spend on valuable marketing data tools has consistently increased over the last five years, to about $30.61 billion just this past year.
- Between 2020 and 2021, there was a 14% growth rate in digital marketing budget spending across businesses.
- 72% of marketing budgets get put towards digital marketing channels.
- Over half of both U.S. and global advertising spend goes towards digital media.
These data points prove that you need to spend money to make money if you want to stand out from the competition. Using a marketing budget to scale your growing business may feel daunting, but clearly, the payoff is present in these stats.
How much should you budget for marketing?
You know you’ll want to implement some type of marketing budget. But the burning question is, of course, how much should you put towards your marketing budget?
Obviously, this will look different for everyone. However, here are a few factors to consider when deciding on your own marketing budget:
- Your overall business goals
- Your buyer’s journey or sales funnel
- Industry trends
- Your target audience
- Business expenses aside from marketing
Once you’ve looked at those aspects of your marketing plan, you can decide how you’ll source your marketing budget. For example, you could establish a dollar amount for the year or quarter, take it as a percentage of your revenue, or cap off your budget once certain goals are met.
This is entirely up to what works for you, but most businesses allocate their marketing budget based on a percentage of their overall revenue. In fact, we’ve found that most local businesses start with about 5-10% of their revenue going towards marketing. However, for growing businesses that number could climb as high as 14% or more.
How to create a marketing budget in 8 steps
Let’s look at the easy steps you can take to create your marketing budget:
1. Organize your financial information
First off, you’ll want to take stock of your current financial information and gather all your necessary documentation to understand your current business costs and finances. This will set you up for success later and make the whole marketing budget planning process easier.
During this step, you may need to consult with your accountant or financial planner to pull sales or revenue forecasts or look at your past years’ revenue to understand what might be realistic for your marketing budget.
2. Assess your marketing goals
Looking at the current state of your business first will help bring clarity to this next step: identifying your marketing goals. Knowing what you need to improve on will help bring to light which marketing strategies could be the best fit and how you’ll support them with your marketing budget.
When you’re setting your marketing budget goals, try to stick to our SMART goal template below to keep yourself on track.
Pro tip: Download our ultimate marketing calendar to help plan out your goals.
3. Choose how you’ll source your marketing budget
Once you get a lay of the land, you can start to identify how you want to set up your marketing budget. Again, this could mean taking a percentage out of your revenue, setting up a dollar amount, or establishing other goals to hit ahead of time.
Let’s use an example. If studies have shown that the average U.S. business with 10 to 19 employees brings in about $2 million in revenue per year, setting 10% of that aside for a marketing budget would leave $200,000 to spend on all things marketing for the year.
Pro tip: Stick to your budget once it’s established. If your calculations bring you more or less than you anticipated, this is an opportunity to realign your marketing strategy to best fit what your business can afford.
4. Decide how you’ll execute your marketing budget
Whether you plan to leverage an in-house team, an agency, a consultant, or other resources to execute your marketing, all will come with a price. Deciding ahead of time what you might need help with versus what you could do on your own will help you to allocate your budget across various strategies.
For example, if paying a full-time salary with benefits looks like it will take up your whole marketing budget, leveraging a marketing partner could make more sense.
Pro tip: Evaluate all your options before you rule anything out. For example, the cost of in-house versus a marketing partner may surprise you!
5. Factor in costs of the basics first
When it comes to spending your marketing budget wisely, some channels may take priority over others. So you’ll want to ensure that your need-to-have marketing strategies are covered first.
For example, your business needs an optimized website to get customers. Meanwhile, social media marketing and local SEO are necessary to promote your business online. Basically, you’ll want to prioritize strategies that are non-negotiable when boosting your online presence to see the best bang for your buck.
Pro tip: Use our free website grader to understand what marketing strategies will help you improve your online presence.
An example of prioritizing key marketing strategies using the LOCALiQ website grader.
6. Estimate your channel costs
Now comes the fun part, splitting up your marketing budget across all your various channels. Use industry resources (like our search ads benchmarks) as well as your own historical data (if any), to get an idea of how much each marketing objective may cost you.
For example, let’s say you’re looking to use local PPC ads to bring you in 10 new customers per month and your average cost per click is $10. Depending on your conversion rate, not every click will be a guaranteed customer. So, you’ll need to use over $100 per month from your overall marketing budget to see your desired results on this channel.
Pro tip: If you’re new to a certain marketing strategy you’re budgeting for, leave yourself wiggle room. That way, you’ll be prepared with time and money to A/B test or collect data on your KPIs.
Using industry resources like this will help you anticipate costs across channels for budget allocation purposes.
7. Make your marketing budget make sense for you
The nice thing about establishing a marketing budget is that it’s just for your own internal purposes. While the term “marketing budget” sounds complex, it’s totally up to your preferences how you choose to implement and track your budget. Feel free to set your budget up in a way that’s easy for you or your team to understand.
What’s more important is maintaining consistency with budget pacing. If it’s easy for your team to think in dollar amounts with a monthly timeframe, set your budget up to mirror that. That way, your budget allocation tracking is more approachable. You’ll want to check in on your marketing budget regularly, so keeping it simple will help you to stay on track.
Pro tip: Set up the ways you’ll measure your marketing ROI in advance, and schedule regular check-ins to keep yourself on track with your “big picture” goals.
An example of a Google Sheets marketing budget template that can be used for tracking and reporting.
8. Don’t forget the details
One thing that can often slip through the cracks is the logistics behind your marketing budget. Each platform and marketing cost may require different types of payment methods. Decide ahead of time whether you’ll be using invoices, a company credit card, or other payment methods before you go forth with your marketing budget.
The last thing you want is for a promotion to go down due to inaccurate payment info, a credit card limit, or other issues that could have been easily avoided if you got your ducks in a row in advance.
Pro tip: Try to maintain consistency across your payment methods to make all your costs easier to manage.
4 best marketing budget templates
While the steps above can help you create your own marketing budget from scratch, there are also plenty of handy templates you can use. Check out these online marketing budget templates we found that could make your life easier:
This marketing budget resource from HubSpot is accessible in a few different ways—making it ideal for a business owner on the go. What’s great about HubSpot’s list of marketing budget templates is that you’ll get eight to choose from. They’re categorized by marketing channel, so this resource does the job when you’re looking to get hyper-specific.
Monday used its own platform to create tons of free templates folks can access. The marketing budget templates on Monday are broken down by use and industry. So, if you have specific preferences for your marketing budget this is a great resource to have.
Smartsheet gives you 12 marketing budget templates to play with—including ones that are set up by timeframe or channel. Smartsheet’s marketing budget templates give a little something for every type of business owner or marketing manager out there. Consider this your “one size fits all” online budget template resource.
Our very own marketing planning template not only gives you a convenient marketing budget template to frame your spending around, but it also is chock full of tips and tricks to maximize your success. What’s even better about this marketing budget template is that it guides you through the steps before, during, and after you establish your budget so you’re clear on how to take action.
Grow your business with a marketing budget
Plant yourself a seed for success with a solid marketing budget. While creating a marketing budget can seem impossible at first glance, it only takes a few simple steps to make one that works for your business. There are plenty of ways to optimize both small marketing budgets and mega marketing budgets, so don’t hesitate to dive in—no matter what end of the budget pool you’re on.