How to Create a Marketing Budget and Make Every Dollar Count

A marketing budget plan is like a roadmap for how you’ll grow your business. A budget gives you a clear overview of all your marketing costs (from display ads and content to tools and staffing) and helps you plan ahead. This means fewer surprises and less overspending. It also forces you to think about return on investment (ROI) for each marketing campaign or channel. 

In other words, a budget helps ensure your marketing spending is strategic and tied to your business goals. 

Companies that plan their budgets can measure success by comparing actual spend vs. projected spend and adjusting their strategy over time. Ultimately, a marketing budget reduces risk and keeps your marketing efforts focused on what truly drives growth in the long term.m

How to Create a Marketing Budget

So now the question is, how to create a marketing budget that works for your business? It comes down to balancing your goals with your resources. Below is a step-by-step guide to craft a budget that aligns with your objectives and keeps your spending efficient. Remember, every business is unique – a local ecommerce shop’s budget will look different from a global SaaS company’s – but the same principles apply. Let’s dive in.

Set Clear Marketing Goals (Short-term + Long-term)

First, decide what you want your marketing to achieve. Are you aiming for immediate sales in the next quarter or brand awareness over the next year? 

Most businesses have both short-term goals (e.g., X leads per month, Y% increase in website traffic) and long-term goals (e.g., build a recognizable brand, improve customer loyalty). Your goals will guide your budget. 

For example, a marketing campaign to drive quick sales might require more spend on digital ads, while a long-term brand goal like lead generation might justify investing in content or design. Define specific targets (maybe boosting online sales by 20% this year) and ensure they align with your overall business plan.

Determine How Much You Can Spend

Now the big question: how much should a small business budget for marketing? There’s no one-size-fits-all answer, but there are benchmarks. 

Many experts suggest allocating around 5-10% of your revenue to marketing for healthy growth. (B2C companies often spend on the higher end of that range, while B2B companies spend on the lower end.) 

For instance, if your company makes $500,000 in annual revenue, an 8% marketing budget would be $40,000 a year. In early stages, you might invest more to build awareness, and later adjust as you grow. The key is to choose a number that’s sustainable for your business.

The key takeaway? Choose a number that’s sustainable , goal-aligned, and realistic for your current resources. And if you're still wondering how much should a small business budget for marketing when every dollar counts, start with what you can afford, test what works, and build from there.

Know Your Customers and Cost of Customer Acquisition

Budgeting blindly is risky. You need to understand where your money will have the most impact. Take a look at your customers’ journey and how you acquire customers today. 

How do people learn about your products or services? What’s your average cost per acquisition? If you haven’t calculated this before, list out all the marketing efforts you use to get a single customer (advertising, sales calls, etc.) and how much those cost. This will highlight which tactics are cost-effective and which are not pulling their weight. 

For example, if you spend $500 on Facebook ads to acquire one customer who buys a $100 product, that’s probably not sustainable. On the other hand, spending $500 to acquire a customer worth $5,000 lifetime is a great marketing investment.

List Your Marketing Channels and Activities

Next, outline the marketing initiatives and channels you plan to invest in. This will likely include a mix of digital advertising, content strategy and content marketing, email, SEO, social media, and possibly traditional channels (depending on your business). 

Make a list of everything you want to do in your marketing plan. For example: Google ads, producing blog posts and videos, SEO improvements, etc. Don’t forget things like website maintenance, design work, or any tool subscriptions. 

As a small business, you might focus on high-ROI channels. For many, social media advertising is a go-to because it’s cost-effective and can offer a high return on investment (ROI).

Pro Tip: Be realistic. If you’re not sure which marketing channels to choose, do some research (or check out a resource on which marketing channels to prioritize) to see what works best in your industry. 

Estimate Costs for Each Marketing Activity

Once you have your list of channels and tactics, assign costs to each, and don’t be afraid of putting in a little research. For example, what's your estimated ad spending on pay-per-click? Will you use freelancers or an agency for content creation, and what are their fees? Look at historical data if you have it (last year you spent $X on email marketing software, etc.). 

Don’t forget to account for tools: maybe you need to budget for an SEO tool or a social media scheduling app. 

Allocate Your Marketing Budget Across Channels

Now comes the fun part: marketing budget allocation. Take your total marketing budget “pie” and slice it for each category or channel based on priority and expected ROI. For example, you might allocate 50% of your budget to online advertising and only 10% to email marketing.

There’s no perfect formula, but base it on what you expect to drive results. If you know email has a great ROI for you, you might give it a bigger slice. Just be sure that your allocations align with your earlier goals.

Track Performance and Adjust Over Time

A marketing budget plan isn’t a “set it and forget it” type of thing. You should revisit it regularly to compare your planned spend vs. actual spend and to measure results. 

This is where ROI and KPIs come back into play. Are you getting the desired outcomes from each investment? For example, if you have $1,000 to allocate to marketing via Facebook Ads and it’s bringing in $5,000 of sales, that’s a great ROI, and you might consider increasing that budget next cycle. 

On the flip side, if an effort isn’t yielding results, you can reallocate that money to something that is. Keep an eye on metrics like cost per lead, cost per acquisition, and the ROI of each channel. 

Marketing Budget Example: $10K/Month Breakdown

Here’s a marketing budget example allocation for a digital company spending $10,000 per month. The pie chart above illustrates one way to divide the budget across key categories. Of course, the exact percentages will vary based on your business. But for our example, let’s assume this company wants a balanced approach across content, advertising, and other activities. Below is a breakdown of the monthly budget and what it might cover:

In this marketing budget example, the company puts the largest share (30%) into digital ads, focusing on quick customer acquisition through paid channels. Content marketing is 20% of the budget, funding blog posts or creating videos that fuel long-term growth. 

SEO tools and efforts get 15%, which will improve organic visibility over time (a long-term play). Email marketing, at 10%, covers an email service provider and maybe a monthly newsletter or drip campaign. 

Graphic design is allotted 10%. This could go toward designing ad creatives, social media graphics, or website visuals. It’s worth noting you could stretch this $1K far by using an unlimited design service like ManyPixels. Starting at just $599/mo, you’d get a lot of design work done without hiring a full-time designer. 

Finally, 15% is allocated to personnel: whether it’s in-house marketing teams' time or outsourced freelancers/agency support. 

Feel free to use the above example as a starting point and adjust the numbers. Or, you take a look online and look for some free marketing budget templates. The best budget is one that matches your unique marketing strategy and goals.

Final Thoughts

Building a marketing budget might not be the most glamorous part of marketing, but it’s absolutely vital. It forces you to prioritize, allocate your marketing spending wisely, and think about ROI. Plus, it gives you a benchmark to measure success.

Remember that budgeting for marketing is an ongoing process. Review your budget regularly and be ready to tweak it. Maybe quarter 1 showed great ROI on content, so you boost that for quarter 2. 

Or perhaps you found a new opportunity (say, influencer marketing). Well, you can reallocate funds to test a small campaign. The flexibility and insights that come from budgeting will help you get better results from your marketing efforts.