Marketing Budget Allocation: What’s the Right Amount?


Marketing is not one-size-fits-all; and allocating budget for marketing is also not the same for each and every enterprise. But there are a few truths, and some rough formulas, that marketers can use to plan their marketing expenditures for the New Year.

Marketing has certainly been more challenging in recent years with the pandemic and the related economic slowdown. Any forward-looking strategies used to budget for marketing can be derailed by circumstances beyond anyone’s control. However, marketing budgets should not be set – and cannot be determined – assuming a health crisis will happen; or when it might end.

Marketing is an Investment

Dollars out, dollars in. For each dollar spent on marketing, there should be an expected return on investment (ROI); or in a better, more-specific marketing term: return on ad spend (ROAS). The higher the ROAS, the better marketing is performing. Here’s a nice breakdown of ROI vs. ROAS.

So one truth is that marketing is indeed an investment, and it must be measured to see not only if it is working, but how it is working. Which campaigns are performing well, and which are not? Multi-touch attribution is one such measurement tool that can inform marketers.

More truths when preparing marketing budgets include:

  • Determining what an enterprise’s business goals are, and aligning marketing budgets to achieve those goals. Is it growing a new customer following? Is it growing the existing customer count (with new products and services and/or new offers)? Is it building brand awareness? 
  • Using attribution data to identify what makes existing customers tick and where they are finding a business’ products and services. Then do more of that.
  • Taking a pulse of the economic landscape and seeing how that might shape outreach via marketing; and try to forecast as best as possible what the next 3, 6, or 12 months have in store.
  • Investing in technologies that help with marketing measurement, and aiming resources toward people (could be one person at a small company, or a team at a larger enterprise) that can work with a vendor to cull insights from that data to make actionable recommendations.

So How Much Does One Budget for Marketing?

According to Gartner, “Marketing budgets are climbing back” in 2022. While marketing spend has not returned to pre-pandemic levels, the average marketing spend increased from 6.4% to 9.5% of company revenue across almost all industries (from 2021 to 2022), the June 2022 Gartner article cited.

A LeadsRx blog from February 2022 cited this stat from a 2019 article: “More than one-third of small businesses (37%) spend less than $10,000 on advertising each year. A smaller percentage of small businesses (20%) spend between $10,001 to $50,000 on advertising. Just 7% spend more than $1 million annually on advertising. This advertising spend is small compared to some of America’s largest companies, such as Disney, AT&T, and Procter & Gamble, which annually spend more than $2 billion on advertising.”

Another article puts it this way when it comes to what to spend on marketing: “There is a general rule-of-thumb in the marketing world that you should aim at spending between 2-5% of your sales revenue on marketing. This 5% rule has been based on years of previous marketing experience and feedback from successful companies.”

What Does a Business Spend Marketing Dollars On?

Note that the last article cited above also suggests adjusting marketing expenditures based on the industry a business is in. This is where marketing analytics, such as multi-touch attribution, can add real value for marketing teams. Examine past and current programs, evaluate them, dig deep into the data, and then make budget adjustments based on the data.

While analytics will tell a business what marketing channels to appropriate dollars to, the marketing budget is more than just what expenses are dedicated to advertising. Consider investing in resources (people, software and technologies), marketing strategy, website design/redesign and development, and branding.

Some other specific marketing expenditures to consider include:

  • Public relations
  • Trade shows and other events
  • Outsourcing to freelance writers and graphic designers and temp employees as needed to staff events and handle increased workload related to special projects
  • Promotional products
  • Training. This one should not be overlooked; perhaps an employee needs training on reviewing and analyzing attribution data, or new technologies or software require group training(s).

Keep Measuring Performance After the Budget is Set

Setting the initial budget is vital, but making adjustments to it should be ongoing. Again, this is where having a solid marketing analytics program in place is valuable. Measure. Measure. Measure. Then adjust, adjust, adjust.

Just look at how granular the marketing team at this furniture company gets with its marketing analytics data to make real-time decisions – from what TV program to advertise during, to which channels are increasing foot traffic to its five stores, to implementing email and SMS marketing programs. Download the full case study to see how the family-owned retailer not only survived, but thrived, during the pandemic when stores were shuttered and a new, digital approach was required to reach customers.

Take a look at these other case studies across several industries where data, analytics and insights were used to make budget adjustments on the fly to improve marketing performance.

Learn more about LeadsRx Attribution™ or click and schedule a brief demonstration today:


Request a Demo