Complete guide to creating an effective and sustainable marketing budget

Imagine this: you’re in a meeting with the company’s board, coffee (or mate) in hand, and suddenly, the CEO asks the key question: “How’s the marketing budget going?”

Cue the dramatic pause.

I get it, it’s one of those questions that feels like you’re on a reality show where the grand prize is a headache, courtesy of Excel. But it doesn’t have to be that way. Creating a marketing budget can be a complex task, but with the right guide, not only will you survive the process, but you’ll also come out on top.

At REM Media Consulting, we’ve handled so many marketing budgets we could probably do it with our eyes closed. Though, of course, we prefer to keep them wide open to ensure every penny is perfectly aligned with our clients’ goals. Here’s how we do it.
 

What Is a marketing budget?

 
Let’s start with the basics. A marketing budget is the financial plan that outlines how much you’ll spend and on what activities to achieve your company’s marketing goals. It’s the roadmap that guides your efforts and helps you maximize the return on investment (ROI) for every dollar spent.

A marketing budget typically includes elements like:

 
• Paid advertising: From Google Ads to influencer sponsorships.
• Branding: Investments in both digital and offline branding strategies.
• Content development: Creation of blog posts, videos, and other materials.
• Tools and software: CRM, marketing automation, data analytics, etc.
• Events and trade shows: Costs associated with participating in industry events.
• Human capital: The cost of having dedicated marketing professionals in your company.

 

 

Why is having a marketing budget crucial?

 
Planning a marketing budget is essential to ensure that resources are used efficiently and strategically. Without a clear budget, it’s easy to overspend on campaigns that don’t deliver the expected return, while neglecting key areas that could have a significant impact.

Additionally, a marketing budget serves as a clear roadmap that helps you prioritize effective strategies and ensures that you achieve the highest percentage of your goals with the least amount of expenditure.

Three key reasons for having a marketing budget:

1. Financial control: It’s not just about knowing how much you can spend, but also ensuring that every dollar is invested in a way that contributes to the company’s success.
2. Strategic planning: A clear budget allows you to plan long-term and align your marketing efforts with the company’s broader objectives.
3. Performance measurement: A budget enables you to measure ROI and adjust your strategies as needed to improve results.

According to the 2024 CMO Survey, 75.3% of companies are using marketing technologies (MarTech), and spending on these technologies currently accounts for 19.9% of the marketing budget, with projections to grow to 30.9% over the next five years. This highlights the importance of allocating a significant portion of your budget to tools that enhance the efficiency and reach of your marketing efforts.

Now that we know why a budget is important, let’s dive into the action. As my grandfather used to say, “let’s get to it.”
 

Step-by-step: how to create your marketing budget

 

Step 1: set your marketing goals

 
Before diving into the financial details, it’s crucial to have a clear understanding of the goals you want to achieve. Do you want to increase sales by 20%? Expand your presence in new markets? Defining these objectives will help you direct your budget and ensure that every investment aligns with your strategic goals.

Example goals:

• Increase website traffic by 30% over the next 12 months.
• Boost online sales by 15% before the end of the year.
• Generate 50,000 qualified leads in the first half of the year.

Pro tip: Make sure your goals are specific, measurable, achievable, relevant, and time-bound (SMART). This will help you stay focused and evaluate your progress effectively.
 

Step 2: analyze your current marketing channels

 
Not all marketing channels deliver the same return. Some may be highly effective, while others could be draining resources without generating the expected results. Analyze the performance of each channel and consider whether it’s time to adjust your focus.

Common channels to consider:

• SEO and content: Content creation, page optimization, etc.
• Digital advertising: Google Ads, Meta Ads, TikTok Ads, etc.
• Social media: Organic and paid strategies.
• Email marketing: Newsletters, automation, etc.
• Public relations: Sponsored articles, press releases, etc.

Suggested visual: A comparative table showing the ROI of each channel over the past year, making it easier to identify the most effective ones.
 

Step 3: define your total investment

 
It’s crucial to determine how much you’ll invest in marketing. This can be a percentage of the company’s revenue, a fixed amount, or a budget adjusted based on specific objectives.

Options for defining the budget:

• Percentage of revenue: A common approach is to allocate 5% to 10% of annual revenue to marketing. This percentage may vary depending on the industry and growth goals.
• Goal-based model: Define the budget according to what’s needed to achieve specific goals, which requires detailed analysis and is often more precise.
• Competitor analysis: Analyzing competitors’ spending can help ensure you’re investing competitively.

 

Step 4: allocate the budget to each channel

 
Once you’ve defined the total budget, it’s time to distribute it across different marketing channels. This allocation should be based on past performance and the potential of each channel to contribute to your goals.

Suggested distribution:

• SEO and content: 20%-30%
• Digital advertising (PPC): 30%-40%
• Social media: 15%-20%
• Email marketing: 10%-15%
• Events/PR: 5%-10%

Suggested visual: A pie chart or bar graph illustrating how the budget is distributed across different channels.
 

Step 5: set KPIs to measure success

 
KPIs, or Key Performance Indicators, are essential to measure the success of your marketing efforts and ensure you’re on track to reach your goals.

Common KPIs include:

• CPA (Cost per Acquisition): How much it costs to convert a lead into a customer.
• CTR (Click Through Rate): Percentage of clicks on your ads or emails.
• Conversion rate: What percentage of your leads become customers.
• ROI: Return on investment from marketing.
• Engagement: Social media interactions, email open rates, etc.

Pro tip: Select KPIs directly related to your goals. Tracking too many metrics can dilute focus and make decision-making harder.
 

Step 6: monitor and adjust

 
A marketing budget is not a static document. Markets change, trends evolve, and consumer preferences shift. It’s essential to regularly monitor your budget’s performance and make adjustments when necessary to adapt to market fluctuations.

Tools for monitoring:

• Google Analytics: To track website performance.
• HubSpot: For CRM and campaign tracking.
• Spreadsheets: Sometimes classic methods are best for detailed control.

Final tip: Don’t hesitate to adjust your budget if necessary. It’s better to correct course than to keep investing in strategies that aren’t delivering the expected results. While there are common mistakes to avoid when creating a marketing budget, practice and a deep understanding of your business will make this process easier over time.
 

 

How to get finance and marketing to work together as friends

 
Have you ever been in a management meeting where each team presents different data on sales, customers, transactions, or other key metrics? If so, raise your hand. Don’t worry, we’re not recording. Just kidding, we’re not. But if you raised your hand, we truly appreciate your enthusiasm!

This issue is more common than you might think, and it usually happens when there isn’t a system in place to standardize the data, nor a department responsible for overseeing data management. At REM Media Consulting, we’ve seen this a lot in growing companies, especially medium-sized ones.

This is where the beloved and sometimes criticized Finance and Administration department comes into play, often met with applause and cheers. This department handles accounting and tax management, and while they are the most qualified team to deliver accurate numbers, they often speak a language entirely different from Marketing.

Just think about it. While they mention “advertising expenses” in their financial report, your brain explodes because you’re thinking: “It’s much more than that! Where’s the spend on Google Ads? What about TikTok Ads? Are you saying Events is the same as Press?” … and the list goes on.

To bridge this gap, it’s important to establish a common language based on shared goals. Marketing needs to present its strategies and budgets in terms that align with financial principles, such as Return on Investment (ROI), Customer Acquisition Cost (CAC), and spending efficiency. On the other hand, Finance must be willing to understand that marketing investments are a strategic bet for long-term growth.

Additionally, regular meetings between both teams are highly recommended to review the budget, analyze results, and adjust strategies as necessary. These meetings not only foster transparency but also allow Finance to see the tangible impact of marketing investments, while Marketing gains valuable insights on optimizing the use of financial resources.
 

Conclusion

 
Building a marketing budget might seem challenging, but with proper planning, it becomes a key tool to guide your efforts and achieve company goals. Plus, there are tools available to streamline the process, ensuring that no important details are overlooked.

Remember, your budget is not a static document but a dynamic guide that should adapt to market changes and the needs of your company. The best advice we can give you is to plan carefully, remain flexible, and ensure that every investment is aligned with your strategic goals.

At the end of the day, a well-crafted budget not only helps you control costs but also provides a clear roadmap for maximizing the impact of your marketing efforts. Be sure to review and adjust it regularly to reflect changes in the market and your business priorities. With the right strategy and aligned execution, your marketing budget will become a crucial tool for sustainable growth and the success of your company.