Budget season is upon us, and you may be grappling with an age-old question: How much of my budget should be allocated to marketing?

More often than not, this triggers a collective bout of head-scratching. Otherwise astute business leaders are sometimes unsure about how to determine this part of their overall budget. What constitutes a “normal” allocation for marketing expenditures, anyway?

At Rare Bird, we’ve had the privilege of working with countless companies across all market sectors. We relish the opportunity to meet with potential clients and dive deep into the intricacies of their specific businesses, seeking ways to maximize their global reach. And this head-scratcher of a question comes up often.

To tackle this challenge, we set loose our formidable research team to gather information and report back.

Marketing Budget Benchmarks

If you’re a “just the facts” type, we’ll get to the point: Your marketing budget should be somewhere between 7-12% of your total revenue. If that’s enough guidance for you, go forth and conquer.

However, we can narrow this range down by helping you determine where your business might fit within it. To establish your own percentage, you must evaluate your company’s unique requirements. Consider factors such as the age of your business—is it relatively new or well-established? Launching a new brand often demands more extensive efforts and financial resources, after all.

Additionally, what kind of business are you? Are you in the B2B or B2C market? Do you offer products or services? Typically, B2C service-based businesses allocate the highest percentage of their revenue, closely followed by B2C product-based businesses, while B2B businesses tend to allocate slightly less.

Finally, define your goals. What does your current Point A look like, and what do you envision as your desired Point B? Clearly articulating the scope of your marketing needs is an essential step in this process.

Marketing Budget Calculator

How much should you budget for marketing? Our handy calculator will help you find the right number based on industry benchmark research that has been adapted for your specific situation.

How it works: If you know your overall revenue, simply answer the questions below. Based on your responses, your marketing budget will be calculated as a percentage of overall 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 the answer appears high, remember that the marketing budget encompasses all normal marketing-related expenditures—personnel, software, outreach, product development, etc.

Budget Allocation Strategy

Once you’ve established your marketing budget, the next step is to strategically allocate it for maximum impact. At Rare Bird, we meticulously evaluate all available channels and select the ideal blend tailored to your specific product or service. We refer to this as Modern Marketing.

Whether it involves enhancing your website, leveraging social media, orchestrating impactful event marketing, optimizing email campaigns, creating engaging video content, harnessing the power of online advertising, storytelling, or other innovative approaches, the primary objective is to effectively connect with your customer base. The process of determining the optimal marketing mix warrants a deeper exploration, which we’ll delve into on another occasion. Nevertheless, beginning with an overarching budget allocation is a necessary step.

Our industry research provides an intriguing perspective:

  • The average company now allocates 57% of their marketing budget to online marketing, a percentage that grows each year. 
  • Email marketing is still the gold standard, holding the highest percentage of reported ROI.
  • 45% of businesses report using their social media channels to sell products.
  • 82% of global internet traffic comes from either video streaming or video downloads.

If you need help allocating your budget, finding the right marketing mix, effectively reaching your customer base, or just feel out of your element, three resources for further reading:

Whatever you do, don’t cut back on your marketing budget for next year. Jim Cota, Rare Bird’s CEO; has argued that slashing your marketing budget in a recession can be catastrophic—and that advice might be more prescient this year.

We’d love to partner with you and dive into these details. Over the last 25 years, Rare Bird has become the Midwest’s most trusted marketing agency, and we work with brands from coast to coast.

Let’s talk soon.