For most business owners and marketers, deciding how to allocate a marketing budget across different channels is a difficult balancing act. Especially in a crowded, ever-evolving digital landscape, it’s hard to make sure every dollar is going toward efforts that will move the needle. 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 your ROI.
Key Takeaways
- Businesses that have a clear, documented budget and track their ROI a 43% higher return on marketing investment.
- 48% of small businesses they 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 you formulate your long and short term marketing plans, as well as guide which channels you spend your dollars on!
8 Steps to Plan Your Monthly Marketing Budget
By breaking down marketing spend into clear, actionable steps, businesses of all sizes can get the most out of their budgets, track progress, and take action as needed to drive 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 Objectives
Your marketing goals should guide every aspect of your budget. Start by determining what you want to accomplish during the month. It can be:
- Increase website traffic by a certain percentage
- Manage a certain number of qualified leads
- Increasing conversion rates on a new product or service
Once you’ve set your SMART (specific, measurable, attainable, relevant and time-bound) goals, you’ll have an easier time determining how much to allocate to each channel. Struggling to set SMART goals? Look no further. Read it this guide! Research shows 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 US Small Business Administration recommends that small businesses with annual revenue of less than $5 million and a profit margin in the 10-12% range spend 7-8% of their revenue on marketing.
So, if you have a monthly income of $50,000, it is advisable to have a marketing budget of $3,500-$4,000. 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 stretch your budget further! Instead of overspending on traditional advertising, Airbnb invests heavily in content marketing and user-generated content. Their budget prioritizes building a strong community, building user trust, and creating shareable content, such as the “Live There” campaign. By focusing on content and UGC, Airbnb achieved a 4.5x higher ROI on marketing spend than competitors based on paid media. Since 2023, Airbnb has reduced overall marketing spend to focus more on unpaid strategies, helping the company grow its annual revenue by 40%!
Step 3: Analyze past performance
When it comes to reviewing your budget and performance, comparison is critical. Review the previous month’s data to see which channels or campaigns yielded the highest ROI. Struggling to calculate ROI? Read this article for top tips! Many marketers tend to spread funds evenly across all channels, but this can reduce effectiveness on better-performing platforms. Statistics show that 76% of businesses spend wastefully on ineffective channels – don’t be one of those businesses!
Analytics tools like Google Analytics and Facebook Insights can be used to determine which campaigns are getting traffic, conversions and engagement. Make sure you have a baseline for key metrics like cost per customer, customer acquisition cost (CAC) and return on ad spend (ROAS). Nike uses data analytics to efficiently allocate marketing dollars across digital, social media and experiential marketing. They shifted a significant portion of their budget from traditional TV advertising to digital channels to better target younger audiences. Nike’s 30% increase in digital marketing spending led to a 59% increase in online sales in 2022 and a 13% increase in total revenue. 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 Channels
After analyzing past data, allocate your budget according to channel performance. A simple summary of how your marketing budget can be spent:
- Digital ads: 40%
- Content marketing: 25%
- Social media: 15%
- Email marketing: 10%
- Other (press, events, etc.): 10%
Remember that these percentages are just starting points and will vary depending on the size, audience and industry of your business.
Step 5: Set aside for “Always On” Marketing
Some marketing efforts need consistent funding regardless of monthly goals. “Always on” marketing ensuring your brand remains visible and relevant to your audience. Here are some common “always on” strategies:
- SEO efforts (5 – 10%): Organic traffic often takes time to grow, but it’s budget-friendly, so invest in SEO continuously to support your long-term organic traffic goals. SEO is a marathon, not a sprint.
- Social media management (5 – 10%): Maintaining active profiles on social channels helps build brand trust and can be a constant engagement driver.
Research shows that businesses with “always on” marketing increase their leads by up to 70% compared to those who run occasional campaigns. Coca-Cola allocates most of its marketing budget to brand building campaigns rather than short-term promotional efforts, and spends 6-7% of its revenue on global marketing, which is $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 maintained 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
In addition to “always on” marketing efforts, allocate space for short-term or seasonal campaigns that align with monthly business goals. These may include:
- The product is released
- Seasonal promotions
- Targeted ads for special events
For example, if you’re launching a new service this month, set aside 10-20% of your budget to promote it on relevant channels, especially paid social media or high-engagement channels like Google Ads.
Step 7: Test and Fix Plan
It’s smart to keep 5-10% of your budget flexible to test new strategies or as a contingency plan if a campaign is doing particularly well or not so well. Testing can include anything from testing a new ad platform to running A/B tests on emails or landing pages. You can read more about it A/B testing here. In fact, companies that test regularly see up to 30% higher ROI than those that don’t.
If you’re setting aside $4,000 a month, set aside $200-$400 for testing. This will give you a chance to try different strategies and adjust your approach based on what works.
Step 8: Track, measure and reposition
Tracking your budget throughout the month is key to making sure you’re on track with spending and performance. Schedule weekly check-ins to review campaign results, ensuring nothing goes over budget; you can quickly highlight areas for improvement while adding little extra cost to channels that are performing well.
If possible, reallocate funds to high-performing channels. For example, if a social media ad campaign is attracting tons of traffic but is costing less than expected, you may decide to put more dollars into it. Businesses that continually reallocate marketing budgets to match performance a 20% higher marketing ROI.
Creating a monthly marketing budget takes careful planning, but the payoff is worth it. By breaking down your budget into clear, actionable steps, you’ll be able to stretch every dollar for maximum impact! Remember to make informed decisions and align your testing and strategy with your monthly marketing budget.
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Frequently Asked Questions:
How much should I allocate to my monthly marketing budget?
The ideal monthly marketing budget varies depending on factors such as your industry, company size, stage of growth, and revenue. A general rule of thumb is to allocate 7-8% of your revenue to marketing if your annual revenue is less than $5 million and you’re aiming for a 10-12% profit margin. However, if you are 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 from my marketing spend?
Track key performance indicators (KPIs) for each campaign to maximize ROI. These may include cost per lead, customer acquisition cost, and return on advertising spend. Set measurable goals and adjust your budget based on performance data. Regularly reallocating funds from low-performing channels to high-performing channels can significantly increase ROI—businesses that do this can achieve up to 20% higher returns.
How often should I review or adjust my marketing budget?
A monthly budget doesn’t mean you set it once and forget it! Weekly reviews of costs and performance are essential to stay agile. If certain channels are exceeding expectations, consider reallocating additional funds mid-month. Businesses that adjust their budgets frequently based on real-time data generally see better returns and are able to adapt more quickly to changes in consumer behavior.