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We live in an age where digital marketing has become essential for the success of any business or organization. With the spread of digital technology all over the world, businesses and companies are no longer restricted to their native regions or countries. The likes of social media and other advertising platforms allow businesses to market their products and services all over the world. On one hand, it allows businesses to generate more sales and revenue by selling to people who don’t belong to their home countries. On the other hand, it causes problems in the form of increased competition from other companies offering similar products. Today’s marketplace is filled with different companies and brands which are engaged in intense competition to establish themselves as the leaders of their divisions. Although budget allocation has always been a big part of any business (for example, setting a budget for purchasing raw materials, manufacturing costs, labor costs, etc.) companies now have to allocate a budget for marketing purposes as well. Although spending money on marketing is important, it’s how you spend this budget that counts the most. A good marketing plan should involve making informed decisions, reading the market, targeting the right audience, and using content relevant to your marketing goals. Not only that, but it is also necessary that companies should review their marketing campaigns to see what is working and what is not. By analyzing marketing campaigns, necessary changes can be introduced to further optimize costs. Spending willy-nilly on marketing campaigns without reviewing factors like costs, target audience, market conditions, etc. will do more harm than good. Therefore, a good marketing plan is necessary for the success of any company or brand and its marketing campaigns. This article will review factors included in a typical marketing budget and the best practices which companies can follow while allocating their marketing expenses.

What’s included in the marketing budget?

The marketing budget includes all the expenses that are required to promote your product or services and reach your target audience. This could include a lot of things, making the scope of the marketing budget pretty broad. In short, the amount selected for marketing has to cover salaries of the employees/marketing team, production costs, PPC (pay-per-click) costs, tools and software used in the marketing campaign, the various channels used for advertising purposes (social media sites, blogs, emails, videos, etc.) and much more. The amount of budget selected for marketing purposes can differ from company to company. Every business is different from others due to nature, background, location, etc. This makes it difficult to construct a budget plan that fits all businesses perfectly. Brand power and reputation also play an important role while determining the marketing budget. Established businesses will spend less on their marketing activities as they have an established consumer base. The same cannot be said for businesses that are starting anew. Such businesses need a strong marketing campaign to launch their brand and make themselves stand out from already established names. Statistics show that an average business spends around 10% of its revenue on marketing. Established companies tend to spend 6-12% while businesses less than five years old spend up to 20% on marketing.

How to allocate your marketing budget?

Any business can set its marketing budget by following the steps given below:

Setting your goals

The most important thing to consider while setting your marketing budget is the company’s marketing goal. What are the company’s marketing objectives for the coming months and how marketing can help them accomplish these goals? The best way to set your budget is to lay out your goals, plan a strategy, and then allocate the required budget to carry out the said strategy. Make sure that your marketing goals are relevant, achievable, and time-based. A flawed plan may or an unachievable goal will do more than good in the long run.

Set your budget based on past activities

Once the planning stage is out of the way, now it’s time to decide how much you need to spend to accomplish the task in front of you. Companies usually design budgets based on certain periods. A business can design a marketing budget on a monthly, quarterly, or annual basis. A good way to allocate your marketing budget is by reviewing your past results (quarterly or yearly). For example, suppose you spent 15,000 dollars for advertisement on a social media site like Facebook or TikTok but didn’t achieve any valuable results. This means a certain restructuring of your marketing campaign is necessary (make changes to your campaign, try other channels, change the amount of budget, etc.). Continuous analysis of your campaigns is an excellent way to optimize your marketing funds. This will allow you to get better results with fewer losses.

Factor in additional costs

As discussed above, the area that a marketing budget covers is pretty vast. Therefore, before deciding upon your final figure, it is necessary to include every single aspect of the entire marketing plan. These aspects could include:

    • Salaries of your employees
    • Fee for buying or using any marketing-related software
    • Market research costs
    • Money spent on any hired marketing agencies
    • Costs for operating and maintaining marketing websites

Tracking your performance

As mentioned before, setting up your campaign and setting it into action is half the battle. Companies can pour thousands of dollars into marketing campaigns but none of it will be of any value if the marketing campaign fails to meet its goals. The best way to ensure this is to continuously track your performance. The data obtained from your marketing campaigns help you in optimizing your marketing strategy to the max. This prevents you from taking any unnecessary losses. Therefore, it is always a good practice to measure and track all of your marketing activities and campaigns. The data obtained can be analyzed to make further refinements and introduce new policies. Measuring and tracking also help you in maximizing your ROI (return on investment). Check Our Ad Budget Calculator

Best practices for Budget allocation

The best practices to follow while allocating your marketing budget include:

Know your audience

The first step in developing your marketing strategy is to understand your target audience and their demands. What kind of people will buy your product? Which feature of your product is your main selling point that people find appealing? What is your target audience’s demographic? Analyzing your customers will help you improve your marketing strategies to improve sales and product growth. While designing your marketing budget, it is important to invest in channels that house your target audience. This will ensure that your product is exposed to the kind of audience that is most likely to generate leads or sales.

Focus on customer retention

Although gaining new customers is necessary for the growth and success of any business, it is equally important to retain the existing ones as well. Statistics show that it costs more to gain a new customer than to retain an old one. Having an established customer base is important for the reputation of a brand. Existing customers can also help you gain new customers through referrals. Running campaigns for offers specific to existing customers is a great way to keep them happy while targeting new ones. Therefore, it is necessary to allocate a portion of your marketing budget to existing customers.

Analyze data

Analyzing data obtained from campaigns is the most important component of running a successful marketing campaign. Data analysis can help you determine aspects of a campaign that are performing well and those that are not. Data can help construct marketing strategies and track progress. Ineffective campaigns can be either discarded or modified to save marketing funds, while more budget can be allocated to campaigns that produce valuable results.


Allocating your marketing budget can be a tricky task, but with the right goals and strategies, one can optimize the marketing costs to produce desirable results. Allocating funds based on previous data is also essential for achieving maximum ROI. Check out our article on how to allocate spend between Prospects, Cold and Hot Retargeting.

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