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Working out your marketing budget might feel a bit overwhelming at first, but it doesn’t have to be. A clear budget keeps your strategy aligned with your business goals. And when you truly understand your audience, it becomes much easier to determine where to allocate your resources.
In this article, we’ll walk you through how to build a marketing budget that makes planning easier. When you know exactly how much you have to spend on different channels, campaigns, and projects, it’s easier to stay focused on what matters most and make smarter choices.
Marketing budget management is not a one-time task; it requires ongoing attention to ensure that your resources are allocated efficiently and adjusted as your business evolves.
A well-planned marketing budget is the foundation of any successful marketing strategy. It serves as a roadmap for your marketing spending, ensuring that every dollar invested in marketing initiatives is used to drive results that matter, such as increasing brand awareness, generating leads, and achieving sustainable growth.
A marketing budget is a document that outlines how much money a company will allocate for promoting its products or services over a specified period—typically one, three, or twelve months, depending on your planning cycle. A common guideline for how much a small business should budget for marketing is approximately 7.7% of company revenue, on average, according to Gartner’s 2025 CMO Spend Survey.
Benchmarks now cluster between 7 % and 8 % for most sectors, although high‑growth SaaS firms may reach 10 %+ of company revenue, depending on the sector and business goals. Understanding these averages can help inform strategic budgeting decisions. It's essential to recognise that advertising budgets, which encompass paid advertising campaigns, are a single component of the broader marketing budget.
Making a marketing budget can help you in many ways:
A good marketing budget is not only about money. It’s a tool that will keep you safe from problems and help you demonstrate to others why your work is important.
Before diving into strategy or execution, it’s critical to understand where your money goes, how your revenue targets shape spending, and what tools help you stay organized. This section guides you through the components of a marketing budget, including the costs associated with each, how to ensure it aligns with your revenue goals, and how to present it using a straightforward template.
Marketing costs encompass all the expenses a company incurs for selling, promoting, and developing its brand. This covers advertising, software, team, and content creation.
Setting aside budgets for marketing is important because it helps people become aware of your business and drives its growth. Even though companies often cut down on marketing activities when things get tough, they start adding them back bit by bit when things get better.
According to a Gartner survey, which involved 410 CMOs and marketing leaders from North America and parts of Europe, the channels that require the most budget allocation are social advertising, digital video advertising, influencer marketing, digital display advertising, and SEO.
Gartner’s 2025 CMO Spend Survey of 395 marketing leaders shows the biggest line‑items are still social advertising, digital video, influencer marketing, display, and SEO.
Digital advertising is projected to comprise a large percentage of overall marketing spending as consumer attention shifts online, requiring a shift in budget allocation. These channels are likely receiving more attention because they are more effective in reaching and engaging with customers online.
Digital ads, in particular, are a major focus of ad spend, as companies invest marketing dollars in high-intent digital channels to drive demand generation and customer acquisition. Smart allocation of ad spend across digital ads is a key part of modern marketing investments.
When you’re making a budget, keep in mind a few things to decide how to split up your marketing funds.
Laying out your marketing budget clearly helps you figure out how to spend your money in the smartest way. One common approach is the 70-20-10 rule: put 70% into channels that already work well, 20% into newer tactics that look promising, and save 10% for trying out something completely new.
This approach ensures your marketing investments are diversified and aligned with your marketing priorities, optimizing the impact of your marketing dollars.
We’ve prepared a Google Sheets budget template that you can use to control your marketing expenses.
The digital marketing budget is typically managed by the marketing team, especially the Chief Marketing Officer (CMO) or Digital Marketing Manager, who controls the allocation of resources across different digital channels. It includes costs for various online activities, such as social media advertising, search ads, social media platforms (social media ads), search engine optimization (SEO), email marketing, and paid online campaigns.
A Website Management budget includes funds to support and improve your company's website. The responsibility often falls on the IT or web development team, ensuring the site functions well and provides a positive user experience.
Creating content, such as blog posts, videos, and images, writing outreach articles, and sharing them with your audience also costs money. The responsibility for managing this budget often falls on the marketing team, particularly content strategists and content marketing managers, who plan, create, and distribute content through different channels.
The advertising budget is the money allocated for promoting a brand or product through paid methods within a specific timeframe (typically a year or a few months). Companies use this budget to pay for running ads (often measured by clicks or views), creating ad materials, and other expenses, like hiring an agency to handle the ad campaigns.
This budget covers expenses related to launching and promoting new products. Product managers and marketing teams collaborate to manage it and support activities like market research, product launches, and promotional campaigns.
Money for branding and creative marketing covers printing, supplies, IT equipment, and special software. Allocating resources to this budget allows you to create beautiful graphics, logos, and other creative elements that differentiate your business. These visuals not only attract attention but also communicate your brand's message, encouraging customer engagement and loyalty.
The PR and Events budget supports your company's public image and is important to participate in industry events. PR managers and event coordinators typically handle it, covering activities like media relations, press releases, and event sponsorships. Investing in this budget helps build brand reputation and promote valuable connections.
Email marketing remains one of the most cost-effective digital marketing tactics, delivering impressive returns when managed strategically. When planning your marketing strategy, it’s important to allocate a portion of your digital marketing budget specifically for email marketing. This includes investing in reliable email marketing software, creating engaging content, and maintaining a clean, targeted email list. Don’t forget to budget for ongoing testing and optimization to boost open and conversion rates.
The revenue goal is the financial target you need to set for a specific period, like a month, quarter, or year.
Setting a revenue goal is necessary as it provides a yardstick for the company’s performance. Tracking sales revenue allows you to measure progress toward these goals and evaluate the effectiveness of your marketing efforts.
Additionally, your total marketing budget should be aligned with your revenue goals to ensure effective resource allocation. If your business falls short of its revenue goal, you have to make improvements to enhance its financial outcomes.
To calculate your total revenue goal, start by evaluating your current earnings and growth ambitions. Take into account expenses, market dynamics, and industry trends. Then, break the goal into manageable stages aligned with your business strategy, and regularly monitor progress to adapt strategies as required.
Defining the sales cycle for your business means understanding the journey a customer takes from initial interest to purchase, which includes awareness, consideration, decision, and action. Identify touchpoints, stages, and interactions required in each phase to create an effective sales journey.
Lastly, take a closer look at your revenue plan by considering different ways you make money. Break down your goals into specific channels like online sales, partnerships, or direct sales. Decide how much money and effort you'll put into each area. This organized approach increases your chances of not only hitting but even exceeding your revenue goals.
A marketing budget template is an essential tool for organizing and tracking your marketing expenses. A well-designed template should include categories for each marketing initiative, such as social media ads, digital advertising, content creation, and traditional marketing efforts.
It should also have columns for the allocated budget, actual spend, and any variance, making it easy to spot excess and unnecessary costs. Including sections for market research and campaign-specific expenses helps marketing teams plan more accurately and avoid surprises.
By using a budget template, you streamline budget planning, improve transparency, and empower your team to make data-driven decisions that optimize marketing performance and keep spending on track.
Now that you understand the importance of a marketing budget, it’s crucial to create a marketing budget based on current business goals and data, rather than simply copying last year’s budget.
Every guide on creating a marketing budget will tell you this step is important – and they’re right. Your goals can be increasing sales, generating more leads, and increasing social media followers, etc. Clearly defining your marketing goals is essential, as these goals drive how you plan and allocate your marketing budget to achieve the desired outcomes.
When you choose your goals, make them specific and smart. Instead of “selling more,” aim at “increasing online orders by 30% within the next three months.” This way, you have a clear target – you want to see a 30% increase in online orders – and you’ve set a timeline, which is the next three months. It helps you and your team focus on a clear objective and work together to make it happen.
Completing your marketing budget planner involves more than just numbers; it’s about aligning costs with your goals.
If you focus on increasing awareness, put more budget into social media, like creating eye-catching posts, running targeted ads, and collaborating with influencers. Understanding your buyer journey aids in effectively allocating your marketing budget, ensuring that resources are directed to the most impactful stages of the customer experience.
As you distribute resources and monitor progress, it’s essential to track spending regularly to make sure your budget stays on course and aligns with your plans.
Also, consider supporting public relations activities such as press releases and events that will help get your brand noticed by a broader audience. This strategic distribution ensures your resources are directed where they’ll have the most effect and get you closer to achieving your specific goals.
Once you’ve got your budget all set, check the numbers and how much you’re actually spending. This helps you see what’s working and what’s not, so you can make changes. Reallocating funds from underperforming areas to high-performing initiatives optimizes marketing spend. Spending on successful marketing initiatives should be increased based on historical data showing their effectiveness, ensuring that your budget is used where it delivers the best results.
Now it’s time to put your marketing budget into action by following these steps:
Approve your marketing budget. Prepare a detailed marketing budget proposal that outlines your goals, strategies, and how the allocated funds will be used. Include a breakdown of expenses for various marketing activities and channels. Your Founder, CEO, or Board members might have questions, so be ready to answer them and acknowledge potential risks in your marketing plan.
Discuss the new marketing plan with the team. Have a meeting with your marketing team to lay out the new plan. Share your business plan, marketing strategy, sales schedule, product launches, target customers, and events you’re involved in. Talk about the goals, strategies, and what everyone’s role will be.
Conduct weekly team meetings. Regularly sit down with your marketing team to plan out the week ahead. Begin by reviewing the tasks and goals set in the previous meeting: discuss what was accomplished, any challenges faced, and the lessons learned. At the end of the meeting, assign responsibilities and deadlines, and ensure everyone understands their role moving forward.
Measure and evaluate progress. Keep track of how things are going. Are you reaching the targets you set? Are you spending according to the plan? Determine the specific metrics that align with your goals. For instance, if your goal is to increase brand awareness, metrics like website traffic, social media engagement, and reach might be relevant. Review the effectiveness of past marketing campaigns to understand which channels and tactics delivered the best ROI, and use these insights to inform future budget decisions.
Define budget effectiveness and improvement. As you go along, figure out what’s working and what’s not. What parts of your marketing budget are really effective, and what areas need improvement? Management of marketing budgets requires a strategic and data-driven approach to avoid wasteful spending. This will help you adjust your budget for the future.
Making a good marketing budget can be hard, and if you make a mistake, it could cost a lot. Moreover, you might not have as much money as you want for your budget. So, it’s important to know the common mistakes businesses make when planning budgets.
Let’s look at these mistakes and figure out how to avoid them:
One of the most critical mistakes is creating a marketing budget that doesn't directly support your business goals. It's a good idea to ask your team members how their work helps achieve the company's objectives. Sometimes, they may spend money on things that don't really help the company.
For example, they had $10,000 planned for a campaign but only spent $8,000. What happened to the remaining $2,000? This is what is called "trapped budget." People might spend that leftover money on something not directly linked to helping the business, like buying more stuff for a trade show.
To prevent this, keep an eye out for non-strategic spending.
It's essential to regularly evaluate the performance of different channels and allocate resources to those that generate the most results. Analyze main metrics like conversion rates, customer acquisition costs, and revenue generated from each channel to identify where your budget should be focused.
Actually, it's more effective and cheaper to keep the customers you already have. Instead of always looking for new ones, invest in strategies to keep your current customers happy. For example, you can create loyalty programs, send them personalized messages, and give them exclusive deals.
If you only use last year's budget without checking how well it worked, it could slow down your growth. Things change – how people buy and what they like. Instead of just changing numbers, look at what happened with last year's budget. If your costs remained relatively stable and within budget last year, you might consider maintaining similar spending patterns.
Combining data from various sources can easily lead to errors or lost data, which in turn will mess up your budget calculations. But good analytics can stop these problems and give you trustworthy information for smart planning.
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Let's go through the following steps to see if your marketing budget is effectively planned.
Use spreadsheets or specialized software like Looker Studio to store and analyze the data. Using marketing tools can make a big difference in how you work. For instance, automation or analytics tools can tell you where your results are coming from, how much each lead costs, and how many people are actually becoming customers. It can also help you find new leads and take care of them until they're ready to buy.
CAC (Customer Acquisition Cost) estimates the cost of acquiring a new customer. It considers not only the cost of generating leads but also the expenses associated with converting those leads into paying customers.
To calculate CAC for a specified period, divide the total costs (marketing + sales) by the number of new customers. Then, repeat the calculation for each marketing channel you're using to compare the efficiency of different channels.
Customer Lifetime Value (LTV) is a method to predict the total amount of money a customer will spend over the entire duration of their relationship with the company.
Average Purchase Value (APV) = $50
Purchase Frequency (PF) = 2 purchases per year
Customer Lifespan (CL) = 3 years
LTV = $50 × 2 × 3
LTV = $300
In this example, the Average Customer Lifetime Value (LTV) is $300. This means that, on average, each customer is expected to generate $300 in revenue over the course of their relationship with the business.
There are also other important metrics you can calculate for each marketing channel:
CPL = Marketing Costs / Number of Leads
What it shows: CPL helps you understand how much you're spending on generating each lead. It's good for comparing the efficiency of different channels in terms of lead generation. Lower CPL indicates more cost-effective lead generation.
Conversion Rate = (Number of Conversions / Number of Leads) x 100
What it shows: Conversion rate tells you the percentage of leads that actually become customers. It helps you measure the effectiveness of your sales funnel and how well your leads are being nurtured and converted.
Conversion Rate = (Number of Conversions / Number of Leads) x 100
What it shows: Conversion rate tells you the percentage of leads that actually become customers. It helps you measure the effectiveness of your sales funnel and how well your leads are being nurtured and converted.
Number of Leads Needed = Desired Number of Customers / Conversion Rate
What it shows: This formula helps you calculate the number of leads required to achieve a specific number of customers, considering your conversion rate. It helps set realistic lead-generation goals.
Let's calculate these metrics for different channels for an online store. Let's say that a store is running two marketing channels: Google Ads and Instagram Ads. In a month, it spends $500 on Google Ads and $300 on Instagram Ads. Let's see some metrics for each channel:
Number of Leads: 100
Number of Conversions (Sales): 10
Conversion Rate: (10 / 100) x 100 = 10%
CPL: $500 / 100 = $5
Number of Leads: 120
Number of Conversions (Sales): 12
Conversion Rate: (12 / 120) x 100 = 10%
CPL: $300 / 120 = $2.50
So, what these figures can tell us? Since Instagram Ads have a lower Cost Per Lead (CPL) of $2.50 compared to Google Ads' $5, the store might consider allocating more budget to Instagram Ads to generate more leads at a lower cost.
Both channels have the same conversion rate of 10%. This indicates that the sales process is consistent across both platforms. However, it doesn't necessarily show which platform is more effective at converting leads. The store might want to analyze other factors like the quality of leads, the effectiveness of sales tactics, or the user experience on each platform.
Blended Customer Acquisition Cost (CAC) is a metric that shows the total cost of acquiring customers across all marketing channels. To calculate it, add up all your marketing and sales costs for a specific period, including expenses from various channels, such as advertising, content creation, sales team salaries, and tools. Then, divide the total costs by the number of new customers.
Let's say your total marketing and sales costs for a quarter were $10,000, and you acquired 100 new customers during the same time frame.
Blended CAC = $10,000 / 100 = $100
A Blended CAC that is lower than the average customer lifetime value is generally considered good. For example, our average customer lifetime value is $300, and Blended CAC is $100. It means that we can confidently allocate a portion of our budget to the channels that are contributing to this favorable CAC, while also considering investing in efforts to maintain high customer retention rates.
The LTV:CAC Ratio is calculated by dividing the Lifetime Value (LTV) by the Customer Acquisition Cost (CAC).
LTV:CAC Ratio = Lifetime Value (LTV) / Customer Acquisition Cost (CAC)
In this case, the LTV:CAC Ratio would be:
LTV:CAC Ratio = $300 / $100
LTV:CAC Ratio = 3
A ratio that is higher than 3 suggests strong ROI from customer acquisition. Thus, you can adjust your budget accordingly:
We have uncovered the strategies for improving the LTV:CAC ratio in this article.
To summarize, it is essential to consistently monitor your marketing expenses to stay within budget. Then, adapt your budget according to campaign performance, focusing on successful channels and trimming spending on less productive ones. Tracking key performance indicators (KPIs) is crucial for evaluating the effectiveness of a marketing budget and ensuring that resources are allocated efficiently.
Using OWOX BI can help you track how well your budget is working in real-time. OWOX BI utilizes data to inform your investment decisions, enabling you to allocate your funds for optimal results.
Tracking your online marketing helps you see if it’s bringing in the results you want across all your channels. Measuring ROI (return on investment) is a key part of this; it shows whether your budget is being used effectively and if your spending is really helping you reach your business goals.
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