Here at Rare Bird, we’ve been privileged to sit across from hundreds of folks in a huge variety of industries to help them forge the connection between their products and services and their customers. We love meeting with potential clients and diving into the details of their particular business, finding ways to maximize their reach into the world. 

It’s the kind of thing that gets us out of bed in the morning, and it looks like this:

Ideas and information are flying around the table. Excitement is in the air. Heads are nodding. And then the question of a marketing budget comes up and — more often than not — some head scratching begins. People are frequently unsure how to determine their budget, or what’s appropriate or “normal” when it comes to marketing dollars. 

During a recent strategy session, a client replied to my budget inquiry with a question of his own: “What should the budget be?” Great question! At the time, we weren’t completely sure what the right answer was, but we pledged to help him figure it out.

We turned our crack research staff loose to do some digging to provide some clear guidance. The answer was… well, a bit complicated.

Marketing Budget Benchmarks

If you’re a ‘get-to-the-point’ type, a quick answer is probably somewhere between 7-12% of your total revenue. If that’s enough guidance for you, go forth and set the world on fire.

But we can narrow the gap a bit by figuring out where you might fall inside this range. To determine your own percentage, you’ll need to assess your company’s unique needs. For instance, is your business younger or more established? (Getting a newer name out into the world requires more effort and dollars.) What type of business are you? B2B? B2C? Product or service? (B2C service businesses typically dedicate the highest percentage of their revenue, closely followed by B2C products, with B2B coming in slightly lower.) And finally, what’s your goal? How would you define your current Point A and what it would look like to arrive at your desired Point B? Articulating the scope of your marketing needs will help inform the amount that makes sense to invest. 


Marketing Budget Calculator

How much money should you be budgeting for marketing? Use this handy calculator to find the right number based on industry benchmark research and adapted for your specific situation.

How it works:

The calculator depends on knowing your overall revenue metrics and then simply answer the questions below. Based on your responses, we’ll calculate your marketing budget as a percentage of revenue. 

How mature is your business?
What is your primary market?
What are your industry conditions?

Your Marketing Budget:

(Not yet calculated; choose your options above)

*Start-ups are a special consideration. For one, they usually don’t have enough revenue to support this type of calculation. For another, marketing is often postponed in favor of product development. But examples abound of savvy start-ups using marketing to drive demand long before the products are ready. In any event, this is very likely a gut-check reference for you to decide what makes the most sense to achieve your goals.

If these answer appears high at first blush, remember the budget encompasses all normal marketing expenditures: personnel, software, outreach, product development, etc. 


Allocating the Budget

With a marketing budget in place, it’s time to decide where to allocate it most effectively. At Rare Bird, this is what we call Modern Marketing—looking across all the available channels and choosing the right mix for your particular product or service. Whether that’s an investment in your website, social media, event marketing, email, video, online advertising, storytelling, or more, finding the best way to engage your customer base is key. 

Choosing the right marketing mix is a topic to be explored in more detail another day, but determining the overall budget is the right place to start. Still, our industry research paints an interesting picture of where companies are concentrating their spending:

  • Though traditional outlets (broadcast, print publications, outdoor, etc.) continue to play a role, the average firm allocated 42% of their marketing budget to online channels, and this percentage is growing each year. 
  • Search engine marketing is the where most of these online dollars are spent, with online display (banner ads, online video, etc.) in second place. (And a full 78% of businesses plan to increase spending on Google Ads next year.)
  • Email marketing is still the gold standard, holding the highest percentage of reported ROI.
  • Social media marketing is continues to grow, along with online video.

 

Note: we sourced a variety of industry sources and studies to develop this calculator. If you’d like to dig a little deeper into the data, here are some additional sources:

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