How Much to Spend on Marketing: Marketing Minute

Deb DeFreeuw, President/Certified Brand Strategist

Setting a Marketing Budget

As we start our new year, I would like to talk briefly about typical percentages of revenue that should go be allocated towards setting your marketing budget. For small businesses (revenues of 5 million or less), a common rule of thumb is that B2B (business-to-business) companies should spend about 5% – 7% of their revenue on marketing. For B2C (business-to-consumer) companies, the proportion is often higher—closer to 10%. This is because B2C companies typically need to invest in more marketing channels to reach various customer segments. If you are launching a new product, the budget should be higher, closer to 15% of revenue.

Marketing Budget and Industry

Of course, the type of business (B2B or B2C) is only one factor when determining marketing budget percentage. Industry is also a major factor – higher education requires more ad spend than healthcare for example. When you are thinking about your marketing budget it is important to set clear goals. They need to be measurable and specific. Setting your goals will allow you to plan what needs to be done—and what kind of investment will be needed.

More isn’t always More

Setting clear goals for your marketing dollars is critical, and depending on your industry, simply more marketing adspend might not be the only (or best) solution for you. Looking at your key competitors to see where they are spending their ad budget can give you a clue as to how to effectively place your messaging in front of the eyes of your prospects. Especially if you’re just getting started in the digital advertising world, wise use of your budget is going to be determinant upon the quality of research you do in understanding the behavior patterns of interested buyers when they are searching for solutions to their problems.

If you are looking for some help prioritizing your marketing goals and realistically looking at what kind of investment is necessary, we would love to guide you. Contact us using the button below: