Marketing budgets are going to be hugely different if you are a solopreneur compared to that of a large corporation. The goals of your marketing will differ greatly and the channels you will use will also have a completely different approach. For example, most small businesses and entrepreneurs will not be taking out TV ads or getting a huge billboard in the London Underground. Most of them simply won’t have the budget to do this.

So, while the approaches to spending the budget may be very different, the principle of calculating it may be quite similar.

How do I calculate my marketing budget?

There’s a lot of debate about this and various reports will give different figures. But most economists largely agree that small businesses should allocate 9-12% of their annual revenue to marketing spend.

This will of course differ depending on which stage of business you are at. If you have a new product/service and you want to make more noise about it, then this number will be a lot higher.

This is the most popular way to calculate a marketing budget as then it’s all relative. As you grow, your marketing budget will grow. You then won’t have the tendency to let it get out of control.

However, there are lots of other ways companies calculate their marketing budget:

  • Flat Amount: Many people set a flat fee for their marketing spend, as this can then easily be factored into cash flow. This may work for one-time purchases and is purely set of judgement by what the business thinks it can afford.
  • Matching Competitors: This is a common approach, but a risky one. Many new businesses copy competitors in many ways, thinking that this will lead to their success. But your competitors could be spending incorrectly and you just end up copying their mistakes.
  • Marketing Objectives: When you create your marketing plan, you set out a list of objectives that you wish to achieve. If you place a fee on each of those and determine a budget that way, there’s a clear path to where your funds will be spent and KPIs to assess their effectiveness.

What’s included in a marketing budget?

This will differ again for different companies because it will depend on what industry you’re in. But most companies will not just include digital marketing and PR activities in their marketing budget, but they will also include the following:

  • Branding
  • Website design
  • Web development and maintenance
  • Events (including virtual)
  • Video
  • Strategy
  • Sponsorship
  • Print
  • Trade shows
  • Overheads of executing all of the above

What marketing channels should I use and how much should I spend on each?

For most small businesses, they won’t be doing much in terms of offline media, as there just won’t be the budget for TV, radio and billboards. Therefore, a lot of spend will be on digital marketing and PR.

We help most companies with the following:

  • SEO
  • Social media
  • Email marketing
  • Copywriting
  • Podcast marketing
  • Press releases
  • Ad campaigns

If you have a sizeable budget, you can absolutely tackle all of the above channels and it may make sense to. But those who do not have the luxury of doing this will have to be selective.

Generally, we wouldn’t advise our clients to spend money on regular marketing unless they had a budget of at least £1500 per month. This is because they could spend a bit of money and try to spread it thin, but it wouldn’t really have any impact at all and they’d end up wasting their money.

It’s better to invest a larger amount so you can see results. Of course, there are ways you can spend less and just work on a few bits and bobs and slowly see results. This is great if you want to save money.

What Return On Investment should I see from marketing?

This is really the key question! Because it almost doesn’t matter how much money you are spending if you are seeing a positive ROI.

With some channels, this is extremely easy to calculate. For example, when it comes to running Google Ads campaigns or Facebook/Instagram ads, then you can look directly at the amount of money spent on those ads and how many new customers you got as a result and calculate the Return on Ad Spend (ROAS).

However, not everything has a monetary value and not all marketing is designed to create sales. For example, we spend a great deal of time writing content for our website because we want to help our clients and educate others on the topics of marketing, design and development. We cannot properly calculate a clear ROI of the time spent writing these blogs. Although, each time someone sends us a message to thank us, it makes it all worth while.

A lot of the time, marketing is a long-term game too – it’s about improving the overall brand reputation and building relationships.

So, it’s really important that when you decide what your marketing spend will be, don’t fixate purely on the numbers and get angry if your content marketing companies aren’t generating thousands of pounds of sales right away. They may be bringing more traffic to the website, building up your brand reputation and making connections in your industry.

Think about ROI in a bigger picture and you can then assess whether your marketing is worth it.