Have you ever wondered why your competitor is enjoying better growth even if your product or services are superior to his? The answer lies in your marketing strategy. The quality of a product or service matter only if they are able to reach the customer and a good marketing strategy ensures just that. Where most people think of marketing as an additional expenditure, the ones who perceive it as an investment are the ones who get the real taste of success.

The fact to consider here is the growth of the company is directly proportional to the money spent on marketing. From historic times where word of mouth would get you more customers to the times of newspaper and magazines and finally to the present time of Internet and social media, marketing has always been a crucial factor in the extent of your business’s growth.

While marketing has become relatively easier in the present times, it has created the need for smart spending. Having a proper strategy for how you create a budget for marketing, knowing where to spend and how much to spend, not just saves you money but also ensures that your business enjoys unabating growth.

Before asking yourself how much you should spend on marketing, you need to understand and prioritize the different options available. The plethora of platforms available for marketing makes it imperative to align your goals with your strategy and identify only the essential platforms for your organization. Even if you can afford to spend on all platforms, it will just divide your focus from the ones that can actually benefit your organization which eventually reduces the effectiveness of your marketing.

Consider the following questions for better clarity:

  1. What are the characteristics of your target audience?
  2. What is your target region?
  3. What are the most commonly used platforms in that region?
  4. What are your goals and the challenges in achieving them?
  5. What are your most important and immediate requirements?

Next, you should figure out the budget-related questions such as:

  1. Your company revenue
  2. Your company size
  3. The marketing areas

After defining these constraints, you can easily initiate your calculations for the marketing budget.

Ideally, a business with its net annual revenue below $25 million tends to spend an average of 11% of their revenue on marketing. A business making less than $5 million per year should consider spending around 7% of its revenue. However, this percentage varies for all businesses depending on multiple factors.

For instance, a startup or a business who is in pursuit of launching a new product needs more exposure for their product and hence more awareness. This high demand for the marketing of their product requires 25% to 35% of their annual revenue. If the competition for your product is too high, your marketing budget needs to go up even further. For a business which has been established for more than 5 years, 12% to 18% of their revenue share is adequate for their marketing needs. The increase or decrease in this percentage extensively depends on their profits margin. More profit margin means you should allocate more to your marketing budget and vice versa.

Another consideration for deciding the marketing budget is the performance of your business. If your business has experienced some setbacks or has shown no growth for some time, it is advised to increase your marketing budget by around 5%. The best practice is to observe the improvement in the growth through this increase for a considerable amount of time. The future budget-related decisions will depend on this observation.

Coming down to the areas of marketing, The following categories should be considered to allocate your budget and collectively, they define the overall budget requirements for the marketing of your business.

1. Website

A website is a preface to your business. Every other marketing technique and platform ultimately leads to your website which decides if a lead is converted or not. Apart from an unblemished design, the UX and SEO score of the website should be your main concern. If your website is optimized, more leads will be converted which means more sales. Moreover, the website does not require constant investment but the investment for development and then optimization once every 3 to 5 years. Therefore, you should consider hiring a professional and reputable service regardless of the expenditure.

2. Social media marketing

Social media has extended the reach of the businesses to an ocean of potential customers which is why they should have the highest priority in your marketing strategy. Around 40% of your total marketing budget should be spent on social media marketing. However, if this percentage crosses the limit of $10,000 per month, consider adjusting it as per your requirements because an average of $4,000 to $7,000 per month is sufficient enough.

3. Social media advertising and PPC

The expenditure for advertising on social media is just further bifurcation of the total expenditure of social media marketing. Generally, 40% of this expenditure is to be spent on advertisement. Advertising is a sure way to increase the traffic on your website and increase your brand awareness. PPC or Pay-per-click where you pay only for the times when a user actually clicks on your ad is another sure way of increasing the traffic with a justified expenditure. Facebook, Instagram, and Youtube are the top choices for advertisement in this category.

4. Content strategy

Videos and blogs have become a modern trend in marketing. Original content in form of blogs, articles, whitepapers, or use-cases attracts more customers to your services. It keeps the visitors engaged on your website and also optimizes your SEO. On the other hand, marketing through videos is a future-ready approach. Users have shown exponential interest in informative videos which require minimal expenditure. Therefore, content strategy is a must-have in your marketing strategy and it should be in your marketing budget.


There is no straight answer to how much you should spend on marketing because a marketing budget is unique to your business requirements. While the budget depends on your company’s revenue, the allocation of that budget is subjected to the current marketing trends and factors such as region, target audience, and goals.