What Is A Marketing Budget? – Q+M

What Is A Marketing Budget?

Some companies still have marketing budgets. Does yours? If not, we’ll tell you what it is and one proven way to calculate just how much ad spend should be tucked away. 

I’ll admit it. I worked in digital marketing for about two years before I actually put a pin through my ego and looked up how to calculate a marketing budget. Worse, I had to look up a solid definition of a marketing budget, too. I’d managed a company for about six years and, like a lot of people, my ‘marketing budget’ existed only in my mind and was spent willy-nilly, based more on who was asking that the ROI. 

With so many changes and challenges presented by 2020, we’ve been working with current clients to look at creating a budget that makes sense. Right now, it’s about identifying what works, what doesn’t, as well as what your business just can’t live without. 

There isn’t a golden formula for determining a market budget, but there are a few places to start. One we recommend most often is based on revenue. Many brands determine their budget based on net sales. Newer companies will often spend more, opting for 10-20% of their net sales as their annual budget. More well-known or established brands can usually spend something closer to 5-12%. In either case, every dollar in your budget should have a goal attached to it, plus a way to establish whether or not that goal was accomplished. 

Instead of starting with print, media, or social budgets,  shape your budget around three goals. 

Customer Retention – The least expensive customer, and often the best, is one you’ve already served. In any industry, there’s a lot to be said for investing in loyalty programs, coupon codes, or exclusive incentives offered only to past customers. To make the most of return customers, many brands rely on email marketing, custom apps, or even a good ol’ fashioned mailed sent only to those who’ve already supported the business. 

Customer Growth – By investing in the services or products your company offers, brands can create new demand in loyal customers and attract new customers, too. Think of this as the add-on. If your customer already liked the new messenger bag you sold them, they’re more likely to have an interest in other products throughout your line up, like a laptop case or a backpack. There are a million ways to effectively cross-promote additional products across myriad marketing platforms. And no, we’re not exaggerating with millions; the opportunities are endless! 

Customer Acquisition – Ask any brand and they’ll tell you; the toughest sale is the first one. Getting more eyes and creating new customers out of complete strangers is a bit like speed-dating. You have little time, no reputation, and the party across the table is already skeptical. These challenges make customer acquisition the most time-consuming and expensive element of your marketing budget. 

Part of your marketing should also be earmarked for the monthly or annual costs of supporting advertising campaigns. Make sure you keep careful track of your built-in expenses:


  • Website maintenance, domains, and updates
  • Content creation 
  • Events and Sponsorship
  • Community Investment
  • Loyalty Programs
  • Social Media 
  • Product samples
  • Logo merchandise


Finally, putting together a budget is nice, but it’s a complete waste if you don’t track expenses and evaluate things. Set aside time once a month or once a quarter to track, discuss, and adjust your marketing efforts. In most companies, it is often a full-time job to both plan and lead an entire marketing department, as well as relying on numerous other employees to contribute to content creation and feedback. 

Need help getting something together heading into the end of 2020 and beyond? We do that, too.