Learn how to create a marketing budget and what to do with it in this actionable guide. 

You need to spend money to make money. This is especially true when it comes to marketing. 

Sure, there are plenty of low-cost (or even free) marketing strategies out there. You don’t need a fortune to spend on marketing to achieve results. 

However, any good marketing campaigns require resources. You need tools, time, and expertise. You might also need a budget for advertising and promotions. This could start to get expensive for your business if you don’t manage it properly.

So how do you know how much budget to allocate to marketing? And how do you know this will help you make more sales and increase your revenue? 

After all, your goal is to pay off your marketing investment with interest. 

To help you get started, here’s a complete guide on how to create and allocate a marketing budget.

  1. What is a Marketing Budget?
  2. How to Create a Marketing Budget
  3. Different Strategies for Determining Your Marketing Budget
  4. Marketing Budget Template
  5. How to Allocate Your Marketing Budget
  6. How to Track Your Marketing Budget
  7. Common Challenges With Creating a Marketing Budget
  8. Tips for Making the Most Out of Your Marketing Budget
  9. How Much Do Small Businesses Need for Their Marketing Budget?

What is a Marketing Budget?

A marketing budget is the amount of money a company allocates for its marketing activities in a given period of time. It’s generally budgeted over a year, but quarterly marketing budgets are also often used.

Marketing budgets are used to plan and execute marketing strategies to achieve the company’s marketing and sales goals. This budget covers any expenses for social media ads, public relations, market research, your marketing team, promotions, marketing tools, and other marketing-related costs. 

The marketing budget is usually a portion of the overall company budget. Setting the marketing budget is based on a number of factors, including projected revenue, competition, and industry trends.

The most important thing is that your marketing spend generates a positive return on investment (ROI) for your business.

How to Create a Marketing Budget

You need to be strategic when you create a marketing budget. It’s not just a matter of setting aside any extra money your business has lying around. Instead, it needs to be a calculated process based on your marketing goals. 

Creating a realistic marketing budget is crucial in planning your marketing campaigns effectively. Without adequate funding, your marketing initiatives may not reach their full potential. Too much funding, and you might waste money.

Here are the steps to follow when building a marketing budget for your small business.

Define Your Marketing Goals

You need to know what you want to achieve before you can establish a budget to get there. Your goals determine your marketing tactics, and your marketing tactics are controlled by your budget.

Your goals should be specific, measurable, attainable, relevant, and time-bound. Consider your sales funnel and set both short-term and long-term goals, as well as KPIs to measure performance.

Conduct Market Research

To understand your target audience and the market, conduct in-depth market research. This will help you gather information on demographics, customer needs, and competition. Knowing your market helps you understand the kind of marketing strategies you’re going to use and who you’re competing against. 

You’ll need to have a solid grasp of this to understand how much money your marketing campaigns will require to be effective. This is especially important for running paid ad campaigns, as you need to outbid the competition.

Plan Your Marketing Campaigns

Your marketing budget will depend on what campaigns and tactics you run. Consider the marketing concept and message being delivered, which should align with the overall company strategy. Make sure you understand the costs of any materials, design, PPC budget, tools, and other marketing services required to pull these tactics off.

Here’s an example of a marketing budget based on specific campaigns (source

Choose Your Marketing Channels

Determine the most effective channels to reach your target audience. This could include social media, email marketing, content marketing, paid ads, and more. Understand what resources are required for you to be successful on these channels.

Estimate Your Marketing Costs

Now you’ve got your marketing plan laid out, it’s time to establish an estimate of how much this will cost. The more detailed you are in determining what marketing tactics you’re going to use, the easier this will be. 

Accurately estimate your marketing costs using techniques like revenue-based, competition-matched, top-down, or goal-driven. We’ll break these strategies down in more detail below.

If you know how much you need to spend on campaigns, then accurate marketing budget allocation becomes a lot easier.

Develop the Marketing Budget 

With the resources and costs determined, create a budget that aligns with your marketing plan and schedule. The marketing budget is a crucial part of the larger marketing plan.

This step involves allocating your budget and making sure you’ve got enough budget to cover your different requirements.

Different Strategies for Determining Your Marketing Budget

Now that we’ve covered the basics of how setting marketing budgets works, it’s time to start allocating your marketing money.

There are a couple of different approaches businesses can take when creating a marketing budget. Here are the three main options.


This is when a percentage is allocated for marketing based on the business’s annual revenue. 

Typically, this would range from 6.5% to 8.5% for established businesses or up to 12% for businesses under five years old. Although, the exact percentage really just depends on your business’s specific budget and marketing requirements.


This is when your marketing budget is based on the amount spent by competitors in the market. This approach is typically used when you plan to go heavy on paid advertising and need to compete with other ads.

Of course, you can’t just access your competitor’s marketing budget to use as a reference. However, you can analyze their marketing efforts to get a rough idea of the resources required to compete with them. 


Marketing goals are established first, and then a budget is set to achieve them. 

For example, the goal could be to gain a certain number of social media followers or website conversions. Then the budget would be determined based on how much each goal would cost. 

This is one of the most efficient strategies for small business marketing teams, as you know exactly where each dollar goes.

Marketing Budget Template

Now you’ve got an idea of how much money you’re going to spend on marketing. To make sure you use this wisely, you’ll need to lay out a clear marketing budget plan. 

Your marketing budget template should include each marketing initiative your business plans to do and assign a monetary value to each one. This makes marketing planning and small business administration a lot easier. 

Check out these simple templates you can copy.

marketing budget template

How to Allocate Your Marketing Budget

Establishing your marketing budget is the first step. Once you know how much you can spend, the next essential step is figuring out how you can spend it. 

Allocating your marketing budget requires careful consideration of your marketing goals and strategies, target customers, and competition. Here are some steps to help you allocate your marketing budget effectively.

Prioritize Your Marketing Goals

Identify which marketing initiatives are most important to achieve your business goals and allocate your budget accordingly. The most crucial marketing tasks that will take up most of your focus should probably get the most budget.

Assess ROI Potential

Consider the potential return on investment (ROI) for each marketing activity and allocate a budget to the initiatives with the highest ROI potential. 

This makes sense as you get more bang for your buck. However, it’s not always applicable as sometimes it’s important to invest in certain marketing activities that don’t offer an immediate monetary ROI – like campaigns that spread brand awareness.

Know Your Audience and Channels

Allocate the budget to the marketing channels and activities that best reach your audience. The better you understand your audience’s behaviors, the more effectively you can allocate the budget to tap into this.

Monitor Performance

Regularly track the performance of your marketing activities and adjust your budget allocation as needed based on the results. This is essential, as it lets you understand what kind of results you’re getting based on what you’re spending.

Be Flexible

Finally, it’s important to be prepared to adjust your budget allocation if circumstances change. 

This could include changes in the market, competition, or your target audience. Being firm about your budget is good, but always leave room to ensure you put your marketing dollars in the right place.

Remember, the allocation of your marketing budget should support your overall marketing strategy and help you achieve your goals. Don’t continue spending money on marketing if it isn’t helping you achieve this.

How to Track Your Marketing Budget

So you’ve established your budget and know how you’re going to spend it. Now you need to know how to monitor this spending and understand your ROI. 

Tracking your marketing budget is crucial to ensure that you stay on track and make the most of your marketing investment. Without this, you could just be throwing money into a never-ending pit.

Here are some steps and tactics to help you do this:

  • Create a Budget Plan – Start with a detailed plan that outlines your marketing budget, goals, and strategies.
  • Establish a Tracking System – Choose a method to track your spending, such as using a spreadsheet, accounting software, or a marketing budgeting tool.
  • Record Expenses – Document all marketing-related expenses, including advertising, promotions, market research, and event costs. Make sure you know where each expense is going.
  • Compare to Budget – Regularly compare your actual spending to your budget plan to ensure that you are staying on track.
  • Analyze Performance – Evaluate the performance of your marketing activities and adjust your budget as needed based on the results.
  • Adjust Budget – Regularly review and adjust your budget based on changes in the market, competition, or target audience.

By tracking your marketing budget, you can ensure that you are maximizing your investment, achieving your marketing goals, and making data-driven decisions.

Common Challenges With Creating a Marketing Budget

Creating a marketing budget can be challenging, as it requires careful planning. There are also many factors involved that could determine or affect your marketing budget.

To make sure you’re on track and know how to plan your marketing budget as best as possible, let’s break down some common challenges marketers and businesses face.

  • Limited Budget – Having a limited budget can make it difficult to allocate resources effectively and achieve all of your goals. This is especially true for new businesses. However, just remember that the budget you allocate to marketing can help you increase your profits in a big way (if you do it wisely!).
  • Uncertainty – Changes in the market, competition, or your audience can make it challenging to plan and allocate your marketing budget effectively. This is why having a flexible marketing budget and consistently monitoring your results is important.
  • Measuring ROI – Measuring the return on investment (ROI) of marketing initiatives can be difficult, making it challenging to allocate budget effectively and make data-driven decisions. Follow these tactics to understand your ROI clearly.
  • Allocating Resources – Deciding which marketing initiatives to invest in and how to allocate resources can be a complex process. Make sure you understand your marketing goals to help you know what channels are most worthy of investment.
  • Balancing Short-term and Long-term Goals – Finding a balance between short-term and long-term goals can be challenging, as resources may need to be allocated differently for each. Again, having a well-planned marketing strategy makes this decision easier.
  • Adapting to Change – The marketing landscape is constantly changing, making it difficult to stay on top of new trends and technologies and allocate resources effectively. Always monitor your marketing results and always be open to readjusting your budget.

Tips for Making the Most Out Of Your Marketing Budget

Now you’ve got a solid marketing budget template you can follow. Although, there are always ways you can make your money and do more for your marketing team.

Here are some tips to help you maximize your marketing budget and make sure you get the most bang for your buck.

Set Clear Goals 

Clearly define your marketing goals and objectives, and allocate resources based on these goals. If you don’t have goals and KPIs in place, you won’t know where to focus your marketing spending or how to monitor this. The more granular your goals are, the better.

Conduct Market Research

Research your target audience, competition, and market to gain a better understanding of the opportunities and challenges you face. The more you know the market you’re targeting, the more efficiently you can optimize your budget.

Focus on Data-Driven Decisions 

Use data to make informed decisions about which marketing initiatives to invest in and how to allocate resources. Always look at the numbers, and understand exactly what kind of return your channels provide. This is necessary for making sure you don’t waste your budget.

Always invest in initiatives that have the best chance of delivering the results you want, and allocate resources accordingly.

Use Multiple Channels

Don’t rely on and invest in a single marketing channel. Instead, use a combination of channels to reach your target audience and achieve your marketing goals. Distributing your budget will help reduce risk and ensure you can achieve value from various sources. If you make a mistake, any budget lost won’t be a trainwreck.

Utilize Technology

Utilize marketing technology to streamline processes, automate tasks, and gain insights into your marketing performance. With the right fully-integrated marketing solution, you can run marketing campaigns a lot more efficiently without requiring as many resources.

How Much Do Small Businesses Need for Their Marketing Budget?

How much you spend on your marketing budget really depends on the specifics of your business. It depends on your revenue, your operating costs, your targets, and what you aim to achieve. 

Of course, the more you spend on marketing, the more potential you have to make a greater return. 

The key here is to understand your ROI. You could spend $100 on marketing and make $400 in sales. For that same campaign, you could spend $1000 on marketing and make $4000 in sales. 

So, how much money you budget for marketing really just depends on what you have available to spend. 

A good strategy is to invest a small amount in a campaign, monitor the results, and then increase the budget for campaigns that deliver a strong ROI. This way, you can continually increase your marketing budget and gain better results as you do it.


There you have it, all the considerations you need to make when establishing your marketing budget. 

The most important thing is that you invest in the right tools and tactics for your business. At the end of the day, it’s not about having a big marketing budget as much as it’s about having a smart marketing budget that helps you achieve your goals. 

Get in touch if you’d like to chat with a marketing expert to see how you can better establish and allocate your marketing budget to get the best results.

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