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Marketing Budgets: How to Set, Allocate & Optimise Them
ventureharbour.com
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Loyalty: Users who regularly buy from you and find it difficult to go elsewhere. “Advocacy: Users who actively recommend you to potential buyers.” By attributing channels and campaigns to specific user actions, you can optimise them to the KPIs that truly matter. Here’s an example of a marketing funnel you might have for a mobile application:
Yes, a comprehensive marketing budget should include salaries, software subscriptions, tools, agency fees, and overhead costs alongside paid advertising and campaign spend. Including all marketing-related expenses gives you a true picture of your total marketing investment and helps you calculate accurate ROI figures, ensuring you’re not underestimating the true cost of your marketing operations. “Effective allocation requires understanding which channels drive results for your business, whereas budgeting requires understanding your overall financial constraints and business objectives.”
There’s no universal percentage, but most B2B companies allocate 5-10% of revenue to marketing, whilst B2C businesses often spend 10-20% depending on their growth stage and competitive landscape. The key is to align your budget with your business objectives rather than following industry averages blindly, as your specific goals, market position, and sales funnel structure will dictate what’s appropriate for your organisation. “Start by analysing where your audience spends time and which channels drive the highest ROI for your business, then distribute your budget proportionally across those channels.” Begin by defining your marketing objectives and the activities required to achieve them, then cost those activities to establish a bottom-up budget figure. This objective-based approach is more reliable than percentage-of-revenue methods because it ensures every pound spent directly supports your business goals rather than simply matching what competitors or industry benchmarks suggest.
We can then use CPAs and total as KPIs for this campaign to ensure that performance is on track. If we’re capturing leads for less than our target CPA, we can increase bids to capitalise on the success of this campaign. If we’re overspending, we pause our spend and use it for marketing actions that are achieving better results. “you now have to allocate it across each channel with the aim of maximising the performance of your overall marketing strategy.” This is where you decide how much to invest in organic search, email marketing, conversion optimisation, etc.
With your marketing budget set, you now have to allocate it across each channel with the aim of maximising the performance of your overall marketing strategy. “This is where you decide how much to invest in organic search, email marketing, conversion optimisation, etc.” Once again, the best way to approach this is to start from your marketing objectives and work backwards. In the previous section, we looked at how you can set a budget for specific marketing goals, define a maximum target CPA and work out the cost of marketing operations to ensure you hit your targets.
There’s no universal percentage, but most B2B companies allocate 5-10% of revenue to marketing, whilst B2C businesses often spend 10-20% depending on their growth stage and competitive landscape. The key is to align your budget with your business objectives rather than following industry averages blindly, as your specific goals, market position, and sales funnel structure will dictate what’s appropriate for your organisation. “Data-driven allocation means regularly testing different channel mixes, measuring performance against KPIs, and shifting budget away from underperforming channels towards those generating the best results for your specific business model.” Begin by defining your marketing objectives and the activities required to achieve them, then cost those activities to establish a bottom-up budget figure. This objective-based approach is more reliable than percentage-of-revenue methods because it ensures every pound spent directly supports your business goals rather than simply matching what competitors or industry benchmarks suggest.
“Marketing budgets are a tricky topic for every business and there’s no single formula that calculates the perfect budget for any given strategy.” Set your budget too low and you’re never going to get the results you need from your marketing strategies, meaning your entire investment is compromised. Spend too much or allocate your budget in the wrong places and you risk running out of funds before making a return on your investment.
“The ideal figure depends on the nature of your business, how it’s structured, what your objectives are, how your sales funnel is constructed and a whole bunch of other factors.” Set your budget too low and you’re never going to get the results you need from your marketing strategies, meaning your entire investment is compromised. Spend too much or allocate your budget in the wrong places and you risk running out of funds before making a return on your investment.
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