The one universal truth in marketing is that there’s no one-size-fits-all solution. If you’re anything like us, it might drive you a little crazy that there’s no “best” or “standard” marketing budget, even though we just want to scream “Just tell me what to do!”

Friends, we hear you.

That’s why we put together this guide to help you determine a reasonable marketing budget for your business.

What percentage of my revenue should go to marketing?

Most companies spend between 7% and 8% of their gross revenue on marketing [The CMO Survey].

If your business makes $100,000 in recurring monthly revenue, that means you’d have about $7,500/mo. to dedicate to marketing initiatives.

If you’re currently working with some marketing vendors (social media management, paid advertising, designers, etc.) and you’re trying to figure out how much more you can reasonably spend on your business’s marketing, just deduct what you pay them from that 7-8% of your gross revenue.

7-8% of Gross Monthly Revenue – Any Existing Marketing Expenses = Available Marketing Budget

Other factors can influence how much money you dedicate toward marketing initiatives, including:

How long you’ve been in business.

According to Wordstream, new companies should be spending slightly more of their gross revenue on marketing (12-20%) than established companies (6-12%)

Your industry.

According to The CMO Survey, marketing budgets range from 4% of a company’s overall budget (Energy) to 24% (Consumer Products). This variance is heavily influenced by the competitiveness of the industry.

Your executive team.

Maybe you don’t have the infrastructure to handle an increase in inbound sales right now, or maybe a strategic shift has allocated resources elsewhere. Ultimately, your company’s marketing spend will come down to strategic decisions made by the executive team.

What’s included in a marketing budget?

There are a lot of different products and services that can help a business grow. The ones your unique business uses will depend on things like your industry, your total available marketing budget, and your competitors.

To give you a better idea of what you might include in your *marketing budget, we’ll give you a few example “marketing stacks” (cluster of products and services used to market a business).

*some businesses include operations expenses under the umbrella of marketing, but we’ve chosen to keep internal management systems such as bookkeeping and scheduling software separate.

The small business

Companies with fewer than 100 employees tend to spend their marketing dollars on:

  • Local listings & review management
  • Email marketing
  • Social media management
  • Paid search (ex: Google PPC, Local Service Ads, etc.)
  • Website content & blogging (like what Soapboxly offers!)
  • Website SEO, development, and design
  • Community events & sponsorships
  • Offline marketing (ex: billboards, radio, direct mail, print ads, etc.)

In our experience, small local businesses tend to spend about $6,000/mo. (~10 employees) to $60,000/mo. (~100 employees) on marketing, assuming an average annual revenue per employee of $100,000 — the same assumption we’ll make for mid-sized and enterprise businesses below.

The mid-sized business

Companies with roughly 100-500 employees tend to have more revenue to spend on marketing, and therefore might have in-house marketers as well as some outsourced marketing to drive marketing initiatives such as:

  • Local listings & review management
  • Email marketing
  • Social media management
  • Paid advertising (ex: PPC, shopping ads, Yelp advertising, paid social, etc.)
  • Website content & blogging
  • TV advertising
  • Radio
  • Video production / YouTube
  • Attribution software (Analytics, tracking numbers, etc.)
  • Web development
  • Design / UX
  • SEO

In our experience, mid-sized businesses tend to spend about $60,000/mo. – $300,000/mo. on marketing, depending on their unique mix of these expenses.

The enterprise business

Enterprise literally just means “business or company,” but it tends to be used synonymously for any business with over 1,000 employees and/or multiple locations nationally or even globally. The list of their marketing expenses would be long, so we’ll break it up into larger buckets of earned, owned, and paid media:

  • Earned media (don’t directly pay for, but other paid activities influence)
    • Word-of-mouth referrals
    • Social media engagement
    • Media coverage
    • Search engine rankings
  • Owned media
    • Website / SEO
    • Blog
    • Business profiles (ex: Yelp)
    • Email
    • Social media
    • Analytics / attribution
  • Paid media
    • PPC
    • Remarketing / retargeting
    • Paid social
    • Influencer marketing
    • Analytics / attribution

That’s definitely not comprehensive, but hopefully it gives you a better idea of the expanded scope of enterprise marketing. In our experience, enterprise businesses tend to spend at least $500,000/mo. on marketing, although this will of course depend on the unique business’s revenue, industry, and goals.

Is there ever a time to exceed your marketing budget?

Potentially, yes!

The saying “you have to spend money to make money” certainly rings true here. If your business is in a situation where you really need to increase your customer base and/or customer value, you may need a marketing budget surge (provided you’re spending it wisely) to achieve that goal.

Likewise, if your company is faced with a one-time (or at least irregular) expense like the need for a website redesign (which you should do every 2-3 years), you may need to “break budget” in order to avoid the cost of inaction and stay current.

Spending to grow vs. spending to maintain

Conventional marketing wisdom says that businesses should spend differently depending on whether they want to maintain their current pace or grow.

  • Spend 5% of your gross revenue on marketing if you want to maintain
  • Spend 10% of your gross revenue on marketing if you want to grow

What should I spend my marketing budget on?

The best way to determine what you should spend your marketing budget on is to get intimately acquainted with your business’s needs as well as your current situation. Here are some examples:

  • Paid advertising: Good if you have no earned search engine rankings or brand awareness yet. Pay-to-play means you get as much exposure as you’re willing to pay for, and for as long as you’re willing to pay for it. It’s also immediate.
  • Email marketing: Good if you have an existing email list (ex: customers or past customers) that you want to engage with in hopes of getting additional purchases. It’s typically easier to get more money out of existing customers than it is to go out and find new customers, so this is a good option for that.
  • Content marketing: Good if you want to increase traffic to your website to increase website conversions (inbound leads and purchases). Content can also get you earned exposure in search engines that can lower your customer acquisition cost over time (“free” traffic, as opposed to paid advertising traffic).

If you’d like to learn more about outsourcing your content marketing to Soapboxly, drop us a line! We’d love to chat with you about your goals.