For small and medium-sized businesses, it can be easy to forget the big picture of your marketing when you’re focused on other daily tasks. Creating a marketing budget will help you manage spending effectively, capitalize on opportunities, and build momentum for the long term.
This guide breaks down everything business owners need to know about marketing budgets. Learn the reasons behind it, how much to spend, and what to consider when creating your budget.
Why a Marketing Budget is Worth It
Marketing is key to building steady growth for your business by continually attracting leads and keeping your brand top of mind.
It doesn’t have to be just another expense – marketing can be your most valuable investment tool to drive business growth and ensure longevity.
Marketing Budget Benchmarks
How much money should your small business budget for marketing? Recommendations vary for
B2B (business-to-business) and B2C (business-to-consumer) companies.
According to the BDC, most businesses allocate 5 to 10% of their revenue to marketing.
The lower end of this range (5%) is common for B2B or established brands, whereas the higher end (10%+) is ideal for B2C, startups or businesses in growth mode.
These numbers are backed up by The CMO Survey, which found that marketing budgets across surveyed US companies accounted for 9.4% of their total revenue.
Curious what the typical marketing spend is for a business in your industry? Check out these industry averages for marketing expenses from The CMO Survey.
| Industry Sector | Marketing Expenses as % of Company Revenue |
| Banking, Finance, Insurance | 4.99% |
| Communications Media | 27.42% |
| Consumer Packaged Goods | 14.35% |
| Consumer Services | 15.86% |
| Education | 24.07% |
| Energy | 1.00% |
| Healthcare | 7.56% |
| Pharma Biotech | 18.17% |
| Manufacturing | 2.46% |
| Mining Construction | 1.13% |
| Professional Services | 4.20% |
| Real Estate | 23.58% |
| Tech Software Platform | 9.04% |
| Transportation | 1.06% |
| Retail Wholesale | 5.55% |
The key takeaway from all these stats?
Your small or medium-sized business should spend between 5% and 10% of its annual revenue on marketing. If you’re a startup or currently trying to grow, above 10% will probably be more effective.
Let’s take a closer look at other factors that may affect your total marketing budget.
Factors that Should Influence Your Marketing Budget
1 – Business Goals & Revenue
If you’re aiming for major business growth in the next few years, you should be prepared to increase your marketing spend. This also applies if you are introducing a new product or service line.
If your company is in a growth stage, especially for startups, your marketing costs could be between 10% to 20% of your revenue.
If your business is already well established, the typical 5% to 10% may be enough to achieve your goals.
2 – Market Competitors
If you’re operating in a highly competitive market, especially as a smaller player, consider increasing your marketing spend in strategic areas.
Even if your company is the industry leader, investment is needed to maintain that position over time.
3 – Sales Cycle Length
Your sales cycle measures the between your first contact with a customer to their eventual purchase.
B2B businesses typically have longer sales cycles than B2C. For example, a custom home builder will take longer to secure one contract than a consumer brand will to sell one bag of popcorn.
Understanding who your customers are, what they are seeking, and how to support their buying journey is key.
4 – Customer Lifetime Value
How much money will the average customer spend with your company over time? This is known as customer lifetime value (CLV).
B2B companies typically experience higher lifetime value, meaning they can afford to spend more on each lead. High-spending, long-term clients are the goal for B2B.
For B2C, the customer lifetime value is much shorter. Everyday items, such as shampoo, have a lower decision-making threshold than million-dollar B2B software. Due to the lower transaction value in B2C, you’ll need to acquire more customers to make your marketing spend effective.
What to Include in an SMB Marketing Budget
Here’s a quick summary of how to break down your budget based on your marketing mix:
- Website/SEO: This can include a new website design, updates to your existing website, and SEO optimization to help your site reach more people.
- Digital ads: Search and display ad campaigns, for example, will promote your business to online users.
- Social media: Posting organic content will help you create engagement with your target audiences and reach new customers on platforms like Instagram, Facebook and LinkedIn.
- Branding/content: How you present yourself matters. Aligning your visual brand with the content you put out, such as blog posts, ensures a unified brand identity and voice.
- Email, events, PR, and more: Other additional methods can be beneficial for different industries. Email marketing, for instance, is a simple way to stay connected with customers.
How to Allocate Your Marketing Budget Effectively
Now that you know how much money you’ll be investing in your marketing, it’s crucial that it’s allocated properly to keep your investment effective.
Your marketing budget should be tailored to your specific needs, depending on whether you are targeting a B2B or B2C audience.
For B2B businesses, your website, content such as blogs, and SEO optimization may be the most significant portion of your budget.
For B2C businesses, digital ads will play a bigger role, followed by website, content and SEO.
To give you some structure for developing your own budget, let’s look at a B2B budget and then a B2C example.
Creating a B2B Marketing Budget
In this scenario, BestSaaS is a mid-sized software company selling cloud-based storage solutions. Due to the complexity of their offerings and the approval process for B2B stakeholders, BestSaaS has a long sales cycle, stretching from weeks to months.
After a few years in business, BestSaaS is growing, reporting $500,000 in gross revenue last year. Based on a 10% approach, their marketing budget will be around $50,000 this year. Their focus is on generating quality leads and building relationships with current and future customers.
Let’s break down their marketing allocation into an effective budget.
| Category | % of Budget | Annual Budget |
| Website / SEO / Content | 25% | $12,500 |
| Digital Ads (LinkedIn/Google Ads) | 20% | $10,000 |
| Email Marketing / CRM | 15% | $7,500 |
| Social Media (Organic Management) | 10% | $5,000 |
| Strategy & Planning | 10% | $5,000 |
| Branding (Visual + Messaging) | 10% | $5,000 |
| Testing & Optimization | 5% | $2,500 |
| Total | 100% | $50,000 |
For this year, a major portion of their marketing budget is going toward updating crucial elements of their marketing strategy, including their website and blog content, paid media (ads) and email marketing.
As a B2B company, BestSaaS should also invest directly in its sales strategy, including CRM tools and support for sales representatives.
Creating a B2C Marketing Budget
In this scenario, BestSkincare is an emerging cosmetics company that sells its products online through e-commerce. Their sales cycle is relatively short, typically spanning mere minutes to a few weeks.
Last year, BestSkincare made $500,000 in gross revenue, meaning their marketing budget will be about $50,000 for the next year. Their marketing focus is on driving product sales through an easy user experience and engaging with new customers.
BestSkincare’s budget breakdown is consumer-focused, maintaining connection along every point of the buyer journey.
| Category | % of Budget | Annual Budget |
| Digital Ads (Social Media/Google) | 30% | $15,000 |
| Website / SEO / Content | 20% | $10,000 |
| Social Media (Organic Management) | 15% | $5,000 |
| Email Marketing / CRM | 15% | $7,500 |
| Branding (Visual + Voice) | 10% | $5,000 |
| Strategy & Planning | 5% | $5,000 |
| Testing & Optimization | 5% | $2,500 |
| Total | 100% | $50,000 |
Paid media, such as social and Google ads, will be the largest portion of their budget to target potential customers who have viewed the products but not yet purchased. Email marketing will build customer loyalty and drive repurchases. Organic social media management will help BestSkincare engage with audiences on the mediums they use most.
Finalizing Budget Allocation
Even though these scenario budgets can serve as guidelines for your business, there’s no one-size-fits-all approach to allocating your marketing budget.
If you’re not sure where to start, keep reading for some quick tips or reach out for assistance.
Marketing Budget Tips for Small & Medium Businesses
Start With a Strategy
It’s crucial to take the time to evaluate your business goals and determine the best marketing plans to achieve them. Balance short-term solutions with long-term strategies, such as SEO and content marketing, to drive growth for the future.
Track, Adjust, Repeat
After your marketing budget is up and running, evaluate the results over the next few months. Resist the urge to make drastic changes to your budget allocations based on limited data; instead, revisit your metrics quarterly.
Based on quarterly results, you can tweak your spend on certain areas to align with your marketing goals.
Take care not to change too many variables at one time when making adjustments, as this can make it difficult to determine what’s actually driving marketing success. Budget items like SEO can longer before you begin to see results, meaning patience is key.
Consider the Long-Term
Every business is different and requires a unique marketing budget. If you’re not sure what will be most effective for your business, consider starting your budget process by talking to a professional.
This can save you time and money in the long run, getting you started on the right foot.
With support from a knowledgeable expert, they can implement the best strategy and explain the “why” behind every detail.
Invest Strategically with Ripple Design & Marketing
Your marketing budget is what makes reaching your audience possible. But what about the strategy behind it all?
Ripple Design & Marketing is here to define your brand’s story and make it known in our digital age. Our comprehensive portfolio demonstrates our commitment to helping businesses like yours through strategic budgets that deliver results.
Ready to get started? Contact us for a free consultation!