Fundamentals, Strategy 6 mins read

How to Create a Marketing Budget

Traversing into the world of marketing and the expenditures that come with it can be overwhelming, especially if it’s been on the back burner for your small business for some time. Display ads, banner ads, video ads, mobile ads, desktop ads, personalized ads that follow a customer across their digital footprint, programmatic advertising delivered through AI?! What about ads on local radio stations or direct mail? How do you decide what to do and how your company could afford it?

Creating a Marketing Budget

The process of developing a marketing budget for small businesses and big brands can be simplified by having a clear understanding of your company’s goals and target audience. Think about it like this: if your goal is to receive more sales for a product that you know is popular among people over the age of 65, you probably don’t need to allocate very much funding for ads on Tik Tok or Instagram. Likewise, if your customers skew to a younger age range, those platforms could be an ideal source of engagement and revenue. 

Though advertising can seem like an excessive spend for a small business with many other operational expenses to consider, the ROI of effective advertising is guaranteed. In simple terms, ad costs are small fees that could lead to your brand gaining a client or customer who purchases your products or services for life. 

How much should my company allocate for marketing?

When it comes to budgeting for digital advertising and marketing campaigns, there is no “one size fits all” solution. Many brands create marketing budgets based on a percentage of revenue (between 2 and 10%). If you’re looking for an average spend to fit your company, start by researching marketing in your industry. Take a look at what channels your competitors are using, define the lifestyle and needs of your target customers, and base your budgeting on strategy.

How to Create a Marketing Budget - Crimson Park Digital

Here’s a tip for developing marketing plans for start-ups or small businesses: start small and expand as the ROI becomes evident. Define which channels your brand is interested in advertising on and allocate dollars accordingly. Your budget should also be segmented by time periods, i.e. years, months, or quarters.

To decide on time segments, think through how your company’s revenue ebbs and flows over the year. Perhaps you have a big increase in sales around the holidays but a slump after the new year. In that case, it would be wise to spend less in January on advertising and allocate those funds toward additional marketing efforts in November.

If your brand thrives during the warmer months and is slow for the rest of the year, start your big marketing pushes in Spring. (Note: You can spend more on advertising during these slower times, but it may be more effective to boost the sales you’re already expecting.) What’s the bottom line? Marketing expenditures become more attainable for companies of all sizes when the funds are being used strategically.



What should a marketing budget look like?

A marketing budget template should include all of the following pieces:

Segmented time ranges. This could be a full fiscal year separated by month, quarters, weeks, or any other time period that fits your brand’s needs.

Clearly defined channels. Include a section for each type of advertising your brand is including in the marketing plan. Content marketing, SEO, social media, and paid search can all be line items within this section, for example.

Allocated spend and actual cost. Report on what is actually spent compared to what was allocated. This allows marketers to understand how their campaigns are pacing and to reallocate unused funds into different marketing channels. Keeping track of advertising costs based on specific marketing strategies is essential. Reporting high-level data to prove the ROI of campaigns and adjust for future campaigns.


Still not sure where to start? Schedule a consultation now to discuss how our team can help with next year’s budget planning and get a free marketing budget template included!



Frequently Asked Questions

What is included in a marketing budget?

A marketing budget contains all the expenses that a business is planning to spend over the course of a given time period, like the quarter or year. This allotment should include every expense related to the marketing campaign, including software and tracking tools purchased. A marketing budget will also account for team member salaries as well as the campaign’s scale. Budget considerations are made based on which marketing channels you plan to utilize, like paid advertising, organic search, or social media marketing.

What is a good marketing ROI ratio?

A good marketing ROI ratio is at least 5:1. Anything higher than that is considered extremely successful. The bare minimum for profitability is 2:1.

How much should a marketing budget be for a startup?

Startups should base their marketing budget on either their gross revenue or projected revenue. Conventional wisdom says to allocate between 10% and 20% of that revenue toward marketing.

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About the author

Alexa Parker launched Crimson Park Digital in 2018 with an entrepreneurial spirit and a passion for digital marketing. With nearly ten years in the industry, she's been fortunate to learn from the best mentors, work on inspiring campaigns, and fine-tune her craft. Now, along with my team, she provides expertise to clients across the country and enjoys every day of it.