How to Build a Marketing Budget that Maximizes ROI


While most companies strive to drive brand awareness, engagement and generate leads through marketing, far too often budgets are too tight to do it all. So how can your organization get the biggest bang for your buck? Start by setting realistic expectations from the start and focusing on the strategies and tactics that are going to yield the most promising results.

How much of my company budget should I allocate towards marketing?

Historically, companies have been taught to allocate two to three percent of their annual budget to marketing if they are an established company and three to five percent if they are a start-up. Experts have found that this is an outdated philosophy.

Budget allocation should be determined by the industry you are in, the size of your business and your current growth stage. As a general rule of thumb, companies that are three to five years old should be spending 10–25 percent of their projected or gross revenue in order to establish themselves in the market. For startups, the percentage is closer to 30 percent because brand awareness and lead generation efforts will both be needed to penetrate the market.

Once you have established a budget allotment, it is beneficial to start thinking of how you would like to sub-divide that amount into the different avenues of marketing (PR, digital marketing, traditional marketing, etc). If you want to take it even further, you can break down the budget allotments to be specific to a tactic. To showcase the amount of depth your organization can create in your budget check out the graphic below, created by Forrester Research, Inc, that showcases the budget projections for digital marketing.

US Interactive Marketing Spend Forecast - Build a marketing Budget

Once you are ready to allocate your marketing budget, start by investing in the basics, such as:

  • Market Research: Are you guessing your target market or do you actually have a sense of your ideal customer? Spend money on market research first to ensure you make strategic, cost-effective decisions down the line.

  • Messaging: Brand messaging determines how your customers will think about your brand and keeping it consistent will make all the difference.

  • Identify Your Goals: Aligning your marketing goals to your business goals for the year will ensure that you are making cost-effective decisions.

  • Build Your Marketing Strategy: After pinpointing your target market, defining your messaging and identifying your goals, you are ready to build your overarching marketing strategy.

Once you have your marketing strategy, you will be able to focus on what tactics and channels will maximize your potential ROI, saving your organization money both in the upfront and long-term. From there, you can always modify your strategy based on results.

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