How to Set a Marketing Budget (2025 Guide)

Why Do I Need a Marketing Budget?

Setting aside a dedicated budget is essential if you want to be successful in your marketing efforts. It helps keep track of how much money is being spent, how it’s being used, and how effective each campaign is.

By understanding how much money you have to spend on marketing, you can plan your activities accordingly and avoid any surprises or setbacks further down the line.

Businesses should see marketing plans as an investment aimed at business growth, rather than a cost within the company.

Planning a marketing budget allows businesses of every size to:

• Stay on track financially.
• Allocate money to the right places.
• Set realistic benchmarks and goals.
• Plan long-term and see the bigger picture of where the company is going.

What Does Digital Marketing Involve?

When you think of ‘digital marketing’, what’s the first thing that comes to mind?

Is it a paid advertisement on search engines and social media platforms? Is it creating a social media presence to interact with customers? Or is it optimising your website’s Search Engine Optimisation (SEO) to rank higher in search results?

The truth is, digital marketing involves all of these strategies and more. It encompasses any form of marketing that uses electronic devices or the internet to reach potential customers, grow awareness of your business and get your website noticed.

While the appeal of a grandiose and sudden paid digital advertising campaign can seem tempting, we suggest that companies look at the bigger picture.

After all, the most effective forms of digital marketing involve a slow and steady approach that fosters prolonged organic growth.

In fact, SEO is one of the key components of digital marketing that involves optimising your website and its content to rank higher on search engine results pages (SERPs), such as for Google and Bing.

This process helps increase organic traffic to your website and ultimately drives more potential customers to your business.

With more than $79.3 billion spent on SEO in the United States alone during 2020, it’s clear that this strategy holds significant weight in the digital marketing world.

However, attempting an SEO strategy yourself without the aid of an experienced SEO expert could lead to costly Google penalties that could harm your website’s performance in the search engine rankings and may even result in complete removal from the index.

Other key components of digital marketing include social media marketing, content marketing, email marketing, and PPC paid digital ads.

Each of these strategies serves a different purpose and can be used in conjunction with one another to create a comprehensive digital marketing campaign.

How Much Should a Marketing Budget Be?

Truth be told, there’s no one-size-fits-all approach when it comes to marketing budgets.

A marketing budget will greatly depend on how much money your business has available, how much of it needs to be spent, how much competition in your niche spends on marketing and how you want to allocate that money.

That being said, research shows that B2C businesses tend to spend 5% to 10% of their revenue on marketing, while B2B companies spend approximately between 8% to 9.5% of their revenue on marketing.

What’s more, recent research shows that modern companies spend at least half of their marketing budget on effective online strategies, such as SEO, email marketing and social media optimisation.

These figures serve as a great indicator of the importance of digital marketing in today’s business landscape, but the costs can vary greatly depending on the industry, target audience, and specific marketing strategies used.

Considering that the amount companies are spending on marketing strategies has grown by more than 5% since 2011, it goes to show that there is no set formula for budgeting and businesses are constantly looking for insights and guidance in this area.

However, it’s important to note that if you don’t have enough budget for marketing activities that drive results, then you should reconsider how much money is allocated to other areas.

The 70-20-10 Rule

As we mentioned earlier, you should try to see marketing as an investment within the company, not a cost.

That being said, the money must be well spent.

The best place to start with budget allocation for a marketing plan is by using the 70-20-10 rule.

This rule goes as follows:

• 70% of your content should be proven content and strategies that have helped build your brand and attract visitors to your site.
• 20% of your content is done using newer, more risky strategies aimed at growth and reaching a bigger potential new audience – e.g infographics
• 10% of your content should be done using experimental strategies.

While the exact ins and outs may be different for every company, this is an effective rule of thumb to get you started when budgeting for digital marketing.

Now, let’s look at how to set a marketing budget.

How to Create a Marketing Budget in 7 Steps

A marketing budget should cover everything from how much money is being spent, to how it’s being used and how effective each campaign is. Below are seven key steps to consider while creating a marketing budget to ensure it’s as effective as possible:

1) Look at the Bigger Picture

Before you start planning your marketing budget, it’s important to assess where your business currently is, how much money the company has overall and how this money is allocated.

If you’re just starting out, then look at how much of the initial capital will go into marketing. If you already have a running business, then take stock of how much of the revenue is going towards marketing.

Generally speaking, start-up businesses will spend more than those that are already up and running. However, this depends on how competitive your market is and how much you think you need to stand out from the crowd.

2) Know Your Buyer’s Journey

Otherwise known as a sales funnel, a buyer’s journey is how a customer finds and eventually purchases your product or service.

By understanding how customers move through this journey, you can tailor your marketing budget to where they are in the cycle. The sales funnel typically has four stages:

• Awareness: Your audience first becomes aware of a problem they have and will start looking for solutions. How are potential customers going to find out about your company?
• Consideration: Your audience has begun looking at the options available to them in the current market. How do these potential customers decide whether they will buy from you or not?
• Decision: The audience has narrowed down their focus to the select few companies that provide the best solution and/or product to suit their needs. How does a customer make the final purchase decision?
• Action: Your lead has decided to choose your company and become a customer. How does a customer actually make the purchase?

To complete this step, you must also understand your target demographic – after all, not everyone can be your target audience.

The best way to approach this is by creating buyer personas. Buyer personas are a semi-fictional representation of your ideal customer, based on market research and real data about your existing customers.

By creating buyer personas, you can get an in-depth understanding of your customer’s needs, how they make their purchasing decisions, and how you can best target them through your marketing campaigns.

3) List External Costs (and Beware of Hidden Costs)

While this step may be the most straightforward, it’s definitely one that cannot be overlooked.

By listing all of your external costs, you can paint a realistic picture of how much money your company has to work with regarding its marketing budget.

Start by creating a spreadsheet and list every external cost your company currently has, including staffing costs, marketing materials, software, marketing research, and operational costs (like web hosting, sales tax, professional fees, and content outsourcing fees).

The capital leftover is what could be used for your business’s marketing budget, but we’ll look at how to spend this money wisely in the next chapter.

It’s important to be aware of any hidden costs which can creep up on you along the way.

For example, how much will it cost if you decide to outsource specific tasks such as website design or content writing? Or, how much would it cost to hire extra staff to help with marketing?

Make sure that every detail is accounted for in your budget – it might seem tedious now but it will save you a lot of time and stress further down the line.

This essential step allows businesses to set a baseline for measuring return on investment (ROI) – but more on that shortly.

4) Set Business Goals

Now you’ve established how much money could be spent on your marketing, it’s time to set some goals.

Having well-defined goals allows businesses to create an actionable plan and measure progress accurately. By aligning your marketing budget with your overall objectives, you can ensure that every penny spent is yielding a positive return.

These goals should be realistic and achievable within the chosen timeframe. For example, your goal could be to acquire 500 new customers in the next 6 months by increasing brand visibility through digital marketing campaigns.

This not only makes it easier to track how much money is being spent on each campaign but also how effective they are in bringing in new customers.

But first, there are some key questions you must ask yourself about your business that may help you establish your business’s goals:

• What do you want to achieve?
• What do success and failure look like for your company’s objectives?
• How will you measure the effectiveness of your marketing efforts?
• How much revenue do you need?
• How many sales do you need to achieve your revenue goal?
• At what percentage do your leads usually convert?
• What are your business objectives for this year? What about the next three years?

5) Discover Your Competition

Another important step in how to set a marketing budget is researching the competition within your niche.

By understanding how your competitors are spending their money on their marketing efforts, you can better determine how much you should be spending and where your opportunities lie. This allows you to stay ahead of the curve and remain competitive in an ever-evolving market.

More often than not, you’ll find that your online competition is different to your offline competition.

Luckily, most SEO companies, like Inc Studio, will do the research and discover who your online competitors are.

With this information, you can gain a better understanding of what types of content you should be creating and how much money should be spent on marketing compared to your competition.

From here, an SEO company can help set out SEO goals to ensure your marketing strategy is focused on certain KPIs.

After your competition has been identified, take a deeper look at their strategy. Are they targeting the same audience as you? Have they found a more successful way of reaching their target market with fewer resources?

6) Create Your Marketing Plan

Now, for the part you’ve all been waiting for – it’s time to create your marketing plan.

Using the information from the steps above, you’re already well on your way to creating a tangible marketing plan aimed at achieving your business goals.

You’ll need to outline how you will reach your business goals so you can see how much each marketing activity will cost, how long it will take to achieve the desired results, and how much of your budget should be allocated to each element.

To create your marketing plan, you’ll need to outline:

• How much money your company has available to spend on achieving your goals.
• Your target market, how they want to be marketed to and how you are going to reach them.
• The channels you’re going to use for marketing (e.g., social media, email marketing, etc.).
• What type of content you’re going to produce (e.g., blogs, videos, graphics).

It’s also important that you consider how different activities work in tandem with one another.

For example, paid advertising might be effective in the short term, but to maintain its effectiveness in the long term, you’ll need to consider how this works with content marketing and organic search engine optimisation.

Understanding current and future trends can be a vital part of knowing how to set a marketing budget. This information could help your business see a faster turnaround of results, all while allowing you to plan and prepare better for the future.

An integral part of any marketing plan is to remain brand-consistent, as this will help build customer trust and increase brand awareness.

Once you have a plan in place, you can start assessing how much money each activity will cost and how much of your budget should be allocated to it. This is one of the most important steps in how to set a marketing budget, but more on this later on!

7) Prepare to Measure ROI

The final step in how to set a marketing budget is measuring the return on investment (ROI) of your activities.

Measuring ROI helps you determine how much money your marketing efforts are bringing in, as well as how successful they’ve been overall.

This can be particularly helpful when it comes to understanding how different activities such as content marketing and paid advertising work together to generate more revenue.

To measure how successful your marketing efforts have been, you’ll need to track the right metrics, such as:

• How many people are visiting your website?
• How many leads are you generating?
• How much time they’re spending on your page?
• How often do they convert into customers?

Measuring ROI can help you understand how your marketing budget is being spent and how well it’s working. It can also help you decide where to allocate funds for different activities, as well as how much money should be allocated to each activity.

What Are the Most Effective Digital Marketing Channels?

Much like how much money you should set aside for your marketing budget, there is no single most effective digital marketing channel as each has its own advantages and drawbacks.

Some of the most effective digital marketing channels include:

• Social media marketing (SMM): SMM is one of the most popular forms of digital marketing, with companies leveraging platforms such as Facebook, Instagram, Twitter and LinkedIn to reach out to their target audiences.
• Content marketing: Content, such as how-to guides, videos, infographics and even blog posts, can be used to engage with potential customers and increase leads.
• Search engine optimisation (SEO): SEO is a great way to improve how your website ranks in search engine results pages, helping you attract more organic traffic. You could also take your SEO strategy one step further and optimise for local SEO to boost visibility in your specific geographic area.
• Pay-per-click (PPC) advertising: PPC ads, or paid search advertising, is a great way to reach out to a larger audience, but it can be a very competitive field.
• Email marketing: Email campaigns can be used to help nurture relationships with customers and provide valuable information about products and services.
• Video marketing: Videos are becoming increasingly popular, as they offer an entertaining and informative way of delivering content that can be easily shared.

Most major businesses focus most of their funds on social marketing, digital advertising and SEO, according to a recent study by Statista (see image below) highlighting the average percentage spent by large companies across the UK, France, Germany and North America on marketing.

To understand the size of the current market, it’s estimated that over £43 billion ($52 billion) will be spent on ads across websites and mobile apps in 2025.

It’s important to remember that the success of any digital marketing channel will depend on how well you use it and how well you track your results and ROI

By understanding how each of these channels works, how they can be used effectively, how much money should be allocated to them in the budget and how to track their results, you will be well on your way to creating an effective marketing plan that will help grow your business.

Elevate Your Company with Inc Studio

Thank you for reading our post on how to set a marketing budget.

We hope this blog post has given you a better understanding of how to set a marketing budget and how much money you should allocate to each channel.

Now you know how to set out a marketing plan and how to budget a marketing campaign, it’s time to put it into action.

We may be biased, but there’s no better place to elevate your company to the next level than with Inc Studio.

We’re a B2B creative agency that focuses on bespoke website design and SEO. Our team of experts are dedicated to helping you reach new heights and turn your company into a success.

If you’re ready for a more powerful website and to take your marketing strategy to the next level, contact our experienced team today.