For most business owners and marketers, deciding how to allocate a marketing budget across various channels is a tricky balancing act. It’s challenging to make sure each dollar goes towards efforts that will move the needle, especially in a crowded, ever-evolving digital landscape. To help simplify the process, here’s an 8-step guide to creating a monthly marketing budget that will help you spend strategically, align with your goals, and maximize ROI.
Key Takeaways
- Businesses that have a clear, documented budget and track their ROI see a 43% higher return on marketing investment.
- 48% of small businesses allocate a significant portion of their marketing budget to digital channels, often without a structured plan, which means many opportunities for optimization are missed.
- Setting SMART goals will help map out your long-term and short-term marketing plans as well as help guide what channels you spend your dollars on!
8 Steps to Mapping Out a Monthly Marketing Budget
By breaking down marketing spending into clear, actionable steps, businesses of all sizes can make the most of their budgets, track progress, and pivot as needed to achieve meaningful results. A strong budget isn’t just about numbers—it’s about aligning spending with your brand’s vision and goals for lasting impact.
Step 1: Set Clear Marketing Goals
Your marketing goals should guide every aspect of your budget. Start by identifying what you want to achieve over the month. This could be:
- Increasing website traffic by a specific percentage
- Driving a certain number of qualified leads
- Boosting conversion rates on a new product or service
Once you’ve set your SMART (specific, measurable, achievable, relevant, and time-bound) goals, you’ll have a much easier time determining how much to allocate to each channel. Struggling to set SMART goals? Look no further. Read this guide! Studies show that goal-setting increases marketing effectiveness by up to 10%, so don’t skip this step!
Step 2: Know Your Total Budget and Get Creative
Plan your business finances and work out your total budget available per month. The U.S. Small Business Administration recommends that small businesses spend 7 – 8% of their revenue on marketing if they’re generating less than $5 million annually and have a profit margin in the 10–12% range.
So, if your monthly revenue is $50,000, that means a marketing budget of $3,500–$4,000 is advisable. But remember, this is just a guideline. You’ll need to adjust based on your unique situation, industry, and goals.
Also, don’t be afraid to get creative to make your budget go further! Instead of overspending on traditional advertising, Airbnb invests heavily in content marketing and user-generated content. Their budget prioritizes building a strong community, fostering user trust, and creating shareable content, such as their “Live There” campaign. By focusing on content and UGC, Airbnb achieved 4.5x higher ROI on its marketing spend compared to competitors relying on paid media. As of 2023, Airbnb reduced its overall marketing spend to focus more on unpaid strategies, helping the company grow revenue by 40% year-on-year!
Step 3: Analyze Past Performance
Benchmarking is vital when it comes to reviewing your budget and performance. Review the previous month’s data to see which channels or campaigns delivered the highest ROI. Struggling to calculate your ROI? Read this article for some top tips! Many marketers get caught up in spreading funds across all channels evenly, but this can dilute the effectiveness on the platforms that perform better. Statistics show that 76% of businesses experience wasted spend on ineffective channels – don’t be one of those businesses!
Analytics tools like Google Analytics and Facebook Insights can be used to identify which campaigns drove traffic, conversions, and engagement. Make sure you have a baseline for key metrics like cost per lead, customer acquisition cost (CAC), and return on ad spend (ROAS). Nike leverages data analytics to allocate marketing dollars efficiently across digital, social media, and experiential marketing. They shifted a significant portion of their budget from traditional TV ads to digital channels to better target younger audiences. Nike’s 30% increase in digital marketing spend drove a 59% growth in online sales in 2022, contributing to their overall revenue increase of 13%. Digital now accounts for over 50% of Nike’s total marketing budget, a strategy that aligns with their direct-to-consumer focus.
Step 4: Break Down Your Budget by Channel
Once you’ve analyzed past data, allocate your budget according to channel performance. Here’s a simple breakdown of how your marketing budget could be spent:
- Digital ads: 40%
- Content marketing: 25%
- Social media: 15%
- Email marketing: 10%
- Other (print, events, etc.): 10%
Keep in mind that these percentages are only starting points and will vary depending on the size, audience and industry of your business.
Step 5: Allocate for “Always-On” Marketing
Some marketing efforts need consistent funding, regardless of monthly goals. “Always-on” marketing ensures that your brand stays visible and relevant to your audience. Here are a few common “always-on” strategies:
- SEO efforts (5 – 10%): Organic traffic often takes time to grow, but this is budget-friendly, so invest in SEO continuously to support long-term organic traffic goals. SEO is a marathon, not a sprint.
- Social media management (5 – 10%): Maintaining active profiles across social channels helps build brand trust and can be a constant driver of engagement.
Studies show that businesses with “always-on” marketing grow their leads by up to 70% over those with sporadic campaigns. Coca-Cola allocates the majority of its marketing budget to brand-building campaigns rather than short-term promotional efforts, spending 6–7% of its revenue on marketing globally, which amounted to $4 billion in 2021! They focus on storytelling and emotional branding to maintain their status as one of the world’s most valuable brands. As a direct result of this strategy, Coca-Cola has held its position as the 6th most valuable brand in the world, with an estimated value of $57 billion!
Step 6: Allocate for Short-Term Campaigns
Aside from “always-on” marketing efforts, make room for short-term or seasonal campaigns that align with monthly business goals. These might include:
- Product launches
- Seasonal promotions
- Targeted ads for specific events
For example, if you’re launching a new service this month, allocate 10 – 20% of your budget to promoting it across relevant channels, particularly ones with high engagement rates like paid social media or Google Ads.
Step 7: Plan for Testing and Adjustments
It’s smart to keep 5 – 10% of your budget flexible for testing new strategies or as a contingency plan in case a campaign is running particularly well or, not so well. Testing can include anything from trying out a new ad platform to running A/B tests on emails or landing pages. You can read more about A/B testing here. In fact, companies that regularly experiment see up to a 30% higher ROI than those that don’t.
If you’re allocating $4,000 for the month, set aside around $200 – $400 for testing. This will give you the chance to try out different strategies and adjust your approach based on what’s working.
Step 8: Track, Measure, and Reallocate
Tracking your budget throughout the month is key to making sure you’re on track with spending and performance. Set weekly check-ins to review campaign results, which will ensure nothing is running over budget; you can highlight areas for improvement quickly and can equally add a little extra spend into channels that are working well.
Reallocate funds to high-performing channels if possible. For instance, if a social media ad campaign is driving tons of traffic but costing less than anticipated, you might decide to put more dollars there. Businesses that continuously reallocate marketing budgets to match performance see a 20% higher marketing ROI.
Crafting a monthly marketing budget takes careful planning, but the payoff is worth it. By breaking down your budget into clear, goal-aligned steps, you’ll be able to stretch every dollar for maximum impact! Remember to make data-driven decisions and align your test and learn strategy with your monthly marketing budget.
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FAQ:
How much should I allocate to my monthly marketing budget?
The ideal monthly marketing budget varies depending on factors like your industry, company size, growth stage, and revenue. A common guideline is to allocate 7-8% of your revenue to marketing if your annual revenue is under $5 million and you aim for a 10-12% profit margin. However, if you’re in a competitive market or in growth mode, you may want to invest more—up to 10-15% of revenue.
How can I make sure I’m getting a good ROI on my marketing spend?
To maximize ROI, track key performance indicators (KPIs) for each campaign. These might include cost per lead, customer acquisition cost, and return on ad spend. Set measurable goals and adjust your budget based on performance data. Regularly reallocating funds from underperforming channels to high-performing ones can boost ROI significantly—businesses that do this can see up to 20% higher returns.
How often should I revisit or adjust my marketing budget?
A monthly budget doesn’t mean you set it once and forget it! Weekly check-ins on spending and performance are essential to stay agile. If certain channels exceed expectations, consider reallocating additional funds mid-month. Businesses that frequently adjust their budgets based on real-time data generally see better returns and can adapt to shifts in consumer behavior faster.
