What Is A Good Marketing Budget?

It’s that time of year again—when you and your company start making financial decisions for the year ahead. One of the biggest questions we find our clients tackle each year is, “What is a good marketing budget?”
On any given year there are multiple factors to consider. Marketing during a global pandemic presents its own set of challenges. Trueline is a full-service marketing agency that helps our clients position themselves for success. We’ve broken down what percentage of your gross revenue should be allocated to marketing and made some recommendations.
In addition, we talk about how to spend that budget in order to get the most bang for your buck.
Does the Old Rule of Thumb Still Apply?
The U.S. Small Business Administration advises that a company who makes less than $5 million per year should spend 7-8% of their gross revenue on marketing initiatives. They go on to suggest that a company making over $5 million a year should spend 10-12%.
A one-size-fits-all approach may take the guesswork out of the equation, but there are other considerations that should influence your budgetary decisions.
1. Are you a startup?
As a startup, growth is your number one priority. Companies that spend 22% of their revenue on marketing, report a year-over-year growth rate of 16-30% on average. While capital is scarce during your first year of operation, money spent on marketing is bound to yield future gains.
Trueline recommendation: 25%
2. Are you looking to gain awareness or grow your audience?
Look at your competition. Where are they advertising? Who are they speaking to? Do you know how your customers are finding you? Determine who your audience is, where they live and where they are on the buyer’s journey.
Trueline recommendation: 15%
3. Have you noticed stagnation or a decline in growth?
If you notice your business goals are trending in the wrong direction, it may be time to mix things up. Increasing your marketing budget, even for a short time, can give your business a shot in the arm. Increase your budget for 6 months, then assess the results. You may find it advantageous to continue or choose to increase your spend even further.
Trueline recommendation: 5% more than your current spend
What’s the Best Way to Spend Your Marketing Budget?
Now that you’ve allocated a percentage of your gross revenue towards a marketing budget, what’s the best way to spend it? This comes down to your company’s unique goals and challenges. Start by determining where you want to go and identify the obstacles that stand in your way. Only then can you effectively plot a course to target your audience in the places where they live, work and breathe.

There are a variety of channels that provide meaningful results both your long and short-term business goals. Of the outlets available to funnel your budget into, we’ve prioritized what we deem the most critical.
1. Website Design and Optimization
Your website is your biggest opportunity to engage and connect with your customers. Due to Covid-19, consumer behavior has changed. It’s too early to see if these changes are temporary, or if they are indicative of a larger shift away from in-person sales. Regardless, on-premise sales are down in nearly every sector and in every location. With this decrease in foot traffic, now is the perfect time to evaluate your website.
Major changes or a complete redesign can be costly, but there may be some small edits that can yield big rewards for a lot less money. Rewriting your content to include more relevant, long-tail keywords can make a big difference in your SEO. Providing thoughtful calls-to-action (CTAs) can give your users more options to initiate contact to start a conversation.
2. Logo Redux/Branding
Your brand often provides your customers with their first impression of your company. What does your logo say about you? There are a lot of things to consider when determining when it’s time to update your brand. Maybe you didn’t have the resources, time or money to invest in your logo when you were first starting out. That doesn’t mean you’re stuck with a logo that doesn’t speak to your services or values. Just as your business goals and priorities change over time so can your brand.
An update to your brand helps project you as modern and current to new users and tells existing customers that you are thinking long-term.
3. Add a Blog
Content is king. When Google crawls your site, it assigns a value to the content on the page. This “score” determines how high your pages rank (or display) in search results. We all want our site to display on the first page of Google search results and having content that provides value increases the likelihood users will see (and click) on your site. A regularly updated blog tells search engines that your site is current and that you, as a company, are engaged.
A blog is a relatively inexpensive addition to your website that can add a ton of value.
4. Pay-Per-Click (PPC) Advertising
PPC is when you as an advertiser, pay a publisher—such as Google—each time a user clicks on an online ad. This requires you to put a monetary value on what a new customer is worth. If your average customer spends $200 and you spend $5 to attract that customer, then that is a great ROI.
How much you spend per month on PPC differs from business to business. By researching keywords and optimizing on-page SEO, you can maximize the impact of that monthly spend. As always, you should evaluate and adjust how much you spend a month based on results.
5. Email Marketing
Mailchimp and Constant Contact both offer basic plans that offer tools to build and curate an email list. Capturing email addresses from your visitors provides you a trove of people who are interested in your content. Once they’ve made the choice to opt in, then they are more likely to convert from users into customers.
Both Mailchimp and Constant Contact provide multiple design templates to choose from and forms that can be easily integrated into your website. The most valuable tools these platforms offer is their analytics. By evaluating the data, you can track your campaign’s success and gain insight into what works and what doesn’t. This allows you to make changes to subsequent campaigns in order to increase engagement.
The Bottom Line
When it comes down to it, determining much to spend on marketing is just as important as deciding where to spend said marketing budget. Whether your budget is big or small, there are things you can do to better position your business to succeed.
If you have questions, contact Trueline today. We love to help our clients find innovative solutions to their business challenges.