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5 min read
By Lisa Teh

How to determine your marketing budget


In your marketing plan, you should include a marketing budget. The marketing budget will give you a certain amount of money to invest in marketing ventures which should increase brand awareness and sales. If you spend too much on marketing, you may find that your increased sales do not make up for the marketing expenses.

For many new business owners, creating a marketing budget can be difficult, but it does not have to be. In short, you will want your budget to be around 8% of your total revenue, but the exact amount depends on your needs, intended audience, and marketing channel. Read on to find out more.


It is recommended that small businesses who make less than $5,000,000 a year should only spend around 8% of their gross revenue on marketing. This percentage allows you to effectively market your business without going into debt.

With that being said, the exact amount that you spend on marketing depends greatly on your business and what it offers. There is no one answer to how much you should spend on marketing. As a result, it is important to create a marketing budget that fits your exact needs.


Determining a marketing budget is not difficult. Here is an easy three-step plan for determining your business’s marketing budget:


The first step to determining your marketing budget is to establish your marketing goals. These goals should be separated into short-term goals and long-term goals. Together, the short-term and long-term goals create a marketing plan or strategy for your business.

Whenever you set goals, make sure that they are reasonable and measurable. Your goals should be lofty enough that you feel challenged by them, but they should not be so difficult that it is impossible to accomplish them. At the same time, make sure that they are measurable. Use numbers, stats, or something that can quantify whether or not you accomplished your goal.

Short-term goals should be able to be accomplished within a week’s or month’s time. Remember, marketing will take more than a day to see results, so you don’t want to set unreasonable goals for the short-term category. If you set unreasonable timeframes, you will most likely not accomplish your goals and feel discouraged at your progress.

In contrast to short-term goals, long-term goals will take longer to accomplish. Most of the marketing income will be seen from accomplishing your long-term goals. Long-term goals can be set within a six month to five year timeframe.


The next step to creating a marketing budget is understanding your target audience. Your target audience is the main demographics and people who you are selling to. You sell to your intended audience by catering your marketing campaigns to their buyer persona. Remember, your product is not for everyone. So, specify your buyer personas in order to attract as many target audience members as possible.

In order to better understand your target audience, there are several steps you can take. Here are the most effective ways at better understanding your company’s target audience:

  • Survey current customers
  • Interview potential customers
  • Use Google Analytics
  • Use Facebook Insights

As you are understanding your target audience, there are several factors to consider in the target audience’s buyer persona. Here is what you should be looking for when determining your buyer persona:

  • Age
  • Location
  • Marital status
  • Job
  • Income
  • Education
  • Motivation
  • Information sources

Once you understand your target audience and buyer persona, you’ll be able to interact with your customers and potential customers in a more informed way. This will allow you to tailor your marketing strategies to the clientele you cater to.


There are four main marketing channels that you can use to market your company. You will determine which marketing channel to follow based on your intended audience. Here are the most popular marketing channels:

  • Digital marketing includes social media, online content, automated or manual emailing, online advertising, or search engine optimization. This strategy is best for younger intended audiences who are frequently online.
  • Inbound marketing includes search engine optimization, blogs, videos, e-books, and other types of content marketing. This strategy is best for audiences who search for information online.
  • Outbound marketing includes TV and radio advertisements, content marketing, public relations, and video marketing. It is difficult to track, but this strategy is good when paired with inbound marketing.
  • Brand awareness campaigns can include any of the previously mentioned marketing techniques in order to make users more aware of the brand.

Each marketing channel comes with its own costs. You will select the marketing channel based on your intended audience and your cost or budget. Social media advertising is often the most budget-friendly option.


You can gauge your marketing success by tracking your marketing budget. There are many ways that you can track your marketing budget. Here are a few ideas:


Using a tool like Microsoft Excel, create one line per lead. List the campaign name and invested amount. The invested amount includes involved employee salaries and total time it took to complete the project. Then, create another line that lists any increase in sales.


Once again, use a tool like Microsoft Excel. Create one line per lead with the date, lead source, campaign, assigned sales rep, notes, and revenue generated.  Over time, you will see trends in the leads and be able to tailor your marketing strategy more effectively.


A marketing budget is the best way to create an effective marketing plan that reaches the most amount of people and maximizes your company’s profit. Begin by establishing your goals, understanding your audience, and deciding on a marketing channel. Then, use an appropriate amount of money to tailor your marketing strategies. From there, track your marketing campaigns or leads to see the effectiveness of the marketing plan.

About the author


Co-Founder of Lisnic 🌏 Founder of CODI Agency (Digital Marketing)📱
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