4 Factors To Determine Your Marketing Budget

Q3 and Q4 are busy quarters. There are performance and revenue goals to measure, plans and goals to be set for the upcoming year, and overall budgets to determine. When comparing revenue-based marketing budgets, in 2021 US companies spend an average of 13% of annual revenue on marketing. But the range for individual companies can land anywhere from 0.5%-20%.

While we can probably all agree that setting an appropriate annual marketing budget is an important part of reaching your business performance goals, there’s no exact science out there to help you nail down what that number should be. To complicate things further, there are a myriad of factors that should be considered and those can change depending on the industry, company, and market.

We’ve highlighted the top four factors we discuss with our clients during annual planning:

In A Nutshell

Increase your budget when you are:

• Planning for aggressive sales or growth goals

• Introducing new products or services

• Targeting a new market or segment

• Working in a competitive industry/market

Keep your budget flat when you are:

• Finding success with your marketing strategy and duplicating what was done previously (with a few smart optimizations, I hope!)

• Aiming to just maintain sales

• Facing supply chain or product shortage issues

If you’re limited in how much budget you can allocate to marketing…

You’re not totally out of luck. Start by making a list of things you can do vs. outsource (all of which should help you reach your goals while saving valuable dollars).

See the table below for an example: