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Determining a Smart Marketing Budget

Business owners are often asking themselves how much to budget for marketing expenses. While the answer varies from business to business, there are a few guidelines to follow to help you answer that question for your specific business.

Digital Marketing Budget Factors

Many factors go into determining your marketing budget. Some businesses use a simple formula and allocate a specific percentage of sales to marketing annually. If you choose to go this route you should determine what that percentage should be by asking yourself what your growth goals for the next year are. Business with growth on the mind should allocate more towards marketing than business with other objectives. As a general rule, most businesses should spend at least three to ten percent of their sales revenue on marketing; and some spend more than 20 percent. The U.S. Small Business Administration recommends “spending 7-8 percent of your gross revenue for marketing and advertising if you are doing less than five million a year in sales and your net profit margin is in the 10-12 percent range” (Nuphoriq). There is no cut and dry answer, but that is a good starting point.

Other factors include what products and services the business is selling, if there is already built-in brand awareness, what your competitors are spending, and more. A new business may need to spend some extra money on increasing brand awareness and developing a customer base for example. If the competition is increasing you may also find yourself allocating more funds towards marketing.

Contact EMSC

As a small business ourselves, we understand how important it is to forecast a marketing budget and we can help you determine the right budget for your business.

Contact EM Search Consulting for a free marketing consultation.

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