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Marketing Budget

Do you want to know how to set a marketing budget to promote your business?

For starters, you need to keep in mind that this investment has high return potential — as long as you use the money wisely.

For each company, there is an ideal value to distribute among relationship actions, advertising, digital marketing, branding and whatever else works for your business.

So let’s find out how much do you need to take your marketing off?

Follow the reading and learn to plan your expenses in detail.

marketing budget requires a plan

The marketing budget is the document that aligns your dissemination and promotion strategies to the reality of your financial situation.

In other words: it is the conversion of your marketing plan into numbers.

Therefore, you need prior strategic planning to arrive at these values ​​and estimate your expenses with maximum precision.

It is worth remembering that each company needs to adapt its marketing budget to its needs and revenue, allocating the ideal percentage to its objectives in each phase.

To give you an idea, companies around the world earmarked an average of 11.2% of their revenues for marketing in 2018, according to Gartner’s CMO Spend Survey 2018–2019.

In Brazil, investments in advertising totalled BRL 16.54 billion in 2018 — practically the same as in 2017, with an increase of 0.57% — according to data from Cenp (Executive Council of Standard Norms) published in UOL.

The study also reveals that the most important channels in the Brazilian marketing budget are open TV (58.3%), internet (17.1%) and outdoor media (8.4%).

However, these numbers only serve as a reference, as your budget needs to be defined based on criteria such as:

  • Target audience and area of ​​expertise
  • Marketing objectives and goals for the period
  • Average investment of the competition and segment
  • Balance between budget and billing (including projections)
  • Investment history and marketing results.

All of this information forms part of your marketing plan, on which your budget will be based.

Therefore, it is no use speculating or simply inventing a random number to make up your budget.

To use your resources wisely, you first need to carefully plan your marketing strategies —and only then determine how much each action will cost.

Examples of marketing budgets

To better understand how to develop a marketing budget, nothing better than checking out some practical examples.

See how different types of businesses define their spending.

Startup marketing budget

The marketing budget is decisive for startups, especially in the acceleration phase, when you need to acquire as many customers as possible.

However, most of these companies don’t have a lot of money available at the start.

For this reason, startup marketing budgets follow the “do more with less” line, using growth hacking techniques — marketing focused on growth and innovation — to use resources creatively.

Therefore, instead of guiding their budgets by revenue percentages, startups tend to decide their spending with a focus on short-term goals (Ex.: increase their customer base by 40% in six months), and often include hours of work on the account.

In addition, their investments are focused on low-cost, broad-reaching potential strategies such as content marketing, viral marketing, referral marketing and social media.

The marketing budget of a large corporation

The marketing budget of a large corporation is much more complex and crosses variables such as historical data, objectives, comparison with the competition and percentage of revenue.

In fact, in many segments, there is a percentage standardized by the big players.

According to Deloitte’s 2017 CMO Survey, US retailers allocated 24% of their annual budget to marketing, against 15% for services and only 8% for industries.

With the fierce competition for leadership, global companies need to follow market references and invest more — and better — than their competitors.

In addition, the more consolidated the company is, the greater the budget for loyalty and retention actions, instead of focusing on customer acquisition.

The marketing budget of a B2B company

In B2B (Business to Business) companies, the marketing budget is usually smaller: between 6% and 7% of sales against 9-12% of B2C companies, according to the study by Deloitte.

This is because these organizations do not need to invest in mass media and focus their budgets on content marketing actions, corporate events and highly targeted channels.

In addition, long-term relationships with business customers reduce the need for customer acquisition and make the marketing budget more predictable.

How to set a marketing budget

Now we come to the practical guide on how to set your marketing budget.

Follow the steps to get your budget right.

1. Define your marketing goals and strategies

First, you need to have clear marketing goals and strategies.

To do this, follow the basic script of the marketing plan:

  • Make the diagnosis of previous results
  • Know your target audience in depth
  • Set clear goals (Ex: increase customer base by 20% or conquer a new market niche)
  • Outline strategies to achieve your goals (eg investing in digital marketing)
  • Turn the strategies into goals and create an action plan.

2. Determine your metrics

With marketing actions defined, you need metrics to track the success of each goal.

Some of the most used KPIs (Key Performance Indicators) are market share, campaign ROI, CAC (customer acquisition cost) and brand awareness (brand awareness).

3. Choose a budgeting method

As we’ve seen, there are several possible methods for setting your budget:

  • From the sum of the strategy quotes
  • Allocating a percentage of billing or sales
  • Basing the value on the previous year and projected results
  • Setting from the competition and industry standards.

You can also combine these methods to arrive at the most suitable value for your business.

Remember to consider your financial reality, based on financial statements and reports.

If you use financial management software like Conta Azul, for example, you will have immediate access to this data to adjust your budget.

4. Quantify each action

Now that you have an idea of ​​how much you plan to spend in total, it’s time to quantify your strategies and actions.

To do this, you just need to make quotes and estimates for each budget category, such as investments in branding, content marketing, advertising campaigns, events, promotions, etc.

A tip: it is good to always consider a safety margin of 10 to 15% more in the values.

5. Distribute smartly

Finally, it’s important that you allocate your money wisely, looking for the channels and strategies that work best with your target audience.

Often, a low-cost digital marketing action can reach a larger audience and yield more results than an expensive TV commercial, depending on its segment.

Also, you should closely monitor the performance of actions to change your budget whenever necessary.

See how the marketing budget has no secret? To ensure the strategic use of your money, try Lahar’s digital marketing automation— surely, one of the plans fits your budget perfectly.