When it comes to marketing budgets and Christmas sweaters, one size does not fit all.

Aligning Your Budget to Your Strategy

Your marketing budget is an investment in your business. How much you invest will also depend on your strategic goals. Are you operating in a run and maintain mode, or do you desire exponential growth this year? Your budget is best spent when you align it with your strategic goals. Too often, I see organizations that spend marketing dollars on an ad hoc basis and don’t consider the big picture. You will get a greater return on your investment if you link your marketing dollars to your goals – or better yet, a marketing plan.


Your marketing budget can be calculated as a percentage of overall gross revenue. The right percentage will depend on your sector, size, strategic goals, and growth stage.

The latest data from the 2015 CMO survey published by the American Management Association and Duke University provides some helpful benchmarks.

Marketing Spending As a Percentage of Revenue by Sector:

  • B2B Products: 7.4%
  • B2B Services: 8.6%
  • B2C Products: 9.1%
  • B2C Services: 9.3%

Right Sizing Your Budget

The Small Business Association (SBA) reports that 2-3% of revenue is typical for a maintenance marketing budget and 3-5% for a start-up. However, the SBA recommends that businesses with revenues less than $5 million should allocate 7-8% of their revenue to marketing (this assumes the business achieves margins of 10-12%).

Allocating the Right Mix

Your budget should be allocated to both brand development as well as promoting your business via ad campaigns, events, etc.

Typically, at least a third of your budget should be dedicated to online/digital channels. SEO (search engine optimization) and SEM (search engine marketing) are the most important to get right since they impact your findability. A balance of display, social, and mobile are usually included in the online mix of tactics. The use of marketing automation and content marketing will continue to deliver high value, cost-efficient results in 2016.

Marketing is all about testing. With digital advertising, we can monitor results along the way and optimize while the campaign is still in market to make sure you get the most qualified leads possible for your investment.

Negotiating with Partners

Many of us have been trained in negotiation skills and learned not to reveal too much too early. However, I believe when it comes to your marketing budget, you are better off sharing your budget and goals up front if possible. When you share your budget, you can save time and obtain competitive bids that allow you to equally compare quality and quantity of services.

Ultimately, you should challenge your marketing partner to maximize your budget in pursuit of your strategic goals.

VP, Client & Consulting Services


As Vice President of Consulting & Client Services, Holly brings almost three decades of federal, global, and corporate experience to LMD. She uses her expertise in behavioral science to improve organizational outcomes with a specific emphasis on marketing, branding, outreach, and...Read more