Setting a Marketing Budget

Marketing budgets are a moving target for most businesses. When business is good, the marketing budget is flush with resources. But when cash is tight, marketing can be one of the first budget categories to be slashed, even though the services of a professional marketing firm become even more important during a downturn.

Walker Sands appreciates the budget realities our clients face. But instead of approaching marketing as a dollar figure expense, we encourage our clients to set marketing budgets based on a percentage of sales. The U.S. Small Business Administration recommends setting aside at least 2% – 10% of total sales for marketing, recognizing that certain industries may require as much as 20% to remain competitive.

Here are some other things you’ll need to consider when setting your company’s marketing budget:

• Branding. The marketing costs associated with launching a brand and major rebranding initiatives are higher than the costs incurred during a normal marketing cycle. If you’re currently setting aside 10% or less of your budget for marketing, you’ll need to plan to dedicate as much as 20% of sales to marketing if a major branding project is on the horizon.
• Maintenance. In a revenue-conscious company, marketing is more than a one-time expense. After you have invested in the development of a marketing strategy and/or campaign, you’ll need to maintain market visibility through ongoing efforts. Failure to adequately fund marketing on a go-forward basis can devastate the potential ROI of an otherwise promising marketing strategy.
• Company size. Your company size is a factor in determining the percentage of revenue that should be set aside for marketing. At the high end of the percentage spectrum, companies that earn less than $5 million in annual revenues typically spend 7-8% of total revenues on marketing. For businesses with more than $100 million in revenues, the percentage is reduced to 3-5%.
• Industry adjustments. Keep in mind that industry-specific marketing standards vary widely. For example, if your company is in the pharmaceutical or retail sectors all bets are off since normal marketing expenditures can exceed 20% of revenues.

Need more help preparing a B2B marketing budget?

We offer a free B2B marketing budgeting spreadsheet and e-book —useful, battle-tested budgeting resources that have helped countless marketers to improve their marketing budgeting process.

No matter how big or small your marketing budget, Walker Sands’ team of  talented marketing consultants will work to create a strategy that meets your goals without breaking your bank account. Call us today and learn how our client-centered approach can drive revenues and transform your company’s brand profile.