How Much You Should Invest In Marketing For Your Business?

Updated: Dec 17, 2021

If you want to expand your customer base and are in more of a maintenance marketing mode, a solid monthly marketing budget is the best way to go. Those who earn more can increase their budget by 10 to 12 percent as their business grows tend to see the best long term success. While every business is different in the sense of their overall budget, price of product/service, and how competitive your spaces all factor into how much you should invest into marketing. Just remember the key word is “invest” not “budget”.

Marketing Investing By Percent

There is a general rule of thumb in the marketing world that you should spend between 20% and 40% of your sales revenues on marketing if you are just starting off. At first glance, this may not seem generous, but if you break it down, it is actually quite reasonable. It is based on years of marketing experience and feedback from successful companies. Note that the 7% to 8% rule assumes that your business has a 10 to 12% turnover margin before spending is included in your marketing budget. If your business margin is below this, you should consider lowering your overall margin or spending extra on marketing.

This is a tough call for any entrepreneur, but you should not base your marketing budget solely on that and leave your other business expenses covered. Your marketing budget should cover all the costs required to market your product or service, including things like print ads, promotions, demonstrations, exhibitions, public relations, social media, free product samples and giveaways and costs covered by Google AdWords.

Check Out This Graphic Of Percentage Of Marketing By Industry

Percentage Of Marketing Budget By Industry

The Gartner CMO Spending Survey found that 26% of all marketing budgets are spent on paid media and digital media represented 16% of total marketing budgets when broken down by category. Digital marketing budgets averaged 60% of the total marketing budget in 2019, and this figure is expected to rise further.

Determining the right marketing budget can be cumbersome for companies. Maintaining a healthy balance between revenues and costs is particularly important for start-ups and small businesses to invest resources in the market in order to grow. Here are some great marketing analytics companies.

Marketing Budget by Company Size

The size of a company's budget varies depending on its market position, whether it has multiple products and how it distributes its marketing expenditures based on the status of the product market, its industry and other considerations. For example, industrial and commercial companies typically spend less than 1% of their net sales on the sales and marketing of established products while many consumer-goods companies spend 50% or more of their net sales on launching new products. Marketing spending also depends on how much you want to grow.

marketing budget by company size