There’s no such thing as a perfect marketing budget. The right allocation of resources hinges heavily on your business, your customers, and more. If you’re just getting started with marketing (or even if you’ve been in the game a while), that can make budget allocation a prickly subject to tackle—how do you even approach it? But when your business depends on solid marketing to grow and thrive, solving the riddle of marketing budget allocation falls to you. So why create a marketing budget? How do you find the right distribution of tactics and budget for you? While there’s no right answer, we asked 52 marketers to share their best tips for allocating marketing budget. Here’s what they had to say. What is a Marketing Budget?Why is it Important to Have a Marketing Budget?What is Included in a Marketing Budget?16 Tips for Creating a Marketing Budget What is a Marketing Budget? A marketing budget can be best described as an estimation of a business’ revenue and expenses for specific marketing related projects (promotion of its products and services) over a specified period of time (monthly, quarterly or yearly). Marketing budgets are usually drawn up to cover expenses such as payment for new marketing software, website maintenance, speaking engagements, paid advertising, and so on. Why Is It Important to Have a Marketing Budget? Regardless of the size of your business, the benefits of setting money aside for driving awareness, boosting sales and revenue through your marketing efforts cannot be overstated. So below, we’ve put together a few reasons why having a marketing budget for your company is important. 1. It allows you allocate your resources effectively Having a marketing budget allows you to keep track of all your expenses, cut down on unnecessary costs and allocate your resources only to marketing projects that support your marketing goals and are likely to generate good results both short term and long term. 2. Easily track your ROI When it comes to creating a marketing budget for the new fiscal year, one way to assess how marketing contributed to generating revenue, as well as the ROI for your marketing efforts is to dive deep into your marketing budget. How much did you spend? How much profit did you make? Does it make sense to focus on certain projects next month, quarter or year if they’re not resulting in more leads, sales, etc? Related: Best Tips for Calculating Marketing ROI 3. It encourages long-term planning A marketing budget does not only cater to your current marketing needs but also covers future projects. A great practice would be to have your marketing budget closely aligned with your marketing or business goals/plan. So, for example, if you plan to publish 20 blog posts in a quarter, ideally, you would also want to ensure your marketing budget covers expenses such as the cost of hiring freelancers, paying for an SEO tool to help with keyword research, etc 4. Keeps everyone motivated Team members will be better motivated to put their best foot forward when they know that the company prioritizes funding tools, marketing reporting software, and resources that will help them do better work. Hence, why having a marketing budget is important. It communicates the company’s goals, priorities and involves team members by asking for their opinions on what the company should be spending on. What is Included in a Marketing Budget? Before we get into the details for effectively creating your marketing budget, it’s important to quickly review the things you should include in yours in order to create an accurate and realistic budget. Typically, the following should be included in your marketing budget: Software/Tools: Think your email service provider (ESP), any automation tools, analytics tools, web conferencing software, etc. You can include web hosting and domain renewals in here, too. Salaries: The salary of those on your marketing team should be included in your overall budget, too. Outsourcing: Does your team hire freelancers, temps, or paid interns for specific projects? It’s important to work that into your budget. Advertising Spend: Whether you’re advertising in search engines, social media, video, podcast, or even print. PR Costs: Using a paid service to distribute your press releases? Include that in your marketing budget. Events/Trade-show costs: These tend to eat up a lot of marketing resources, so plan accordingly. Swag: T-shirts, stickers, hats, etc. Training: Does your company help employees level-up with relevant training courses? That could fall under your marketing budget, too. Gear: Cameras, microphones, lighting, and other equipment to help your team create multi-media content. 16 Tips for Creating a Marketing Budget So how should you organize and prioritize these channels for your marketing budget? Here are 16 tips we gathered from our respondents on how to develop a marketing budget. Have an Attribution Model in Place to Measure PerformanceConsider Your Overall Marketing GoalsRemember That Marketing Channels InteractAlign With Your Sales TeamDon’t Rule Anything OutStart Where Your Team’s Expertise LiesChoose Channels Based on Your AudienceAllocate More to Efforts With Proven ResultsDon’t Be Afraid to Cut Your LossesFollow the 70/20/10 RuleResearch How Competitors Invest Their Marketing DollarsTest What Works for YourselfAvoid Putting Your Eggs in One BasketSpend More on Customers Deeper Into the FunnelDon’t Overlook the Top of the FunnelBe Flexible and Adaptable PRO TIP: How Are Users Engaging on My Site? Which Content Drives the Most Online Activity? If you want to discover how visitors engage with your website, and which content drives the most engagement and conversions, there are several on-page events and metrics you can track from Google Analytics 4 that will get you started: Sessions by channel. Which channels are driving the most traffic to your website? Average session duration. How long do visitors spend on your website on average? Pageviews and pageviews by page. Which pages on your website are viewed the most? Total number of users. How many users engaged with your website? Engagement rate. Which percentage of your website visitors have interacted with a piece of content and spent a significant amount of time on the site? Sessions conversion rate. How many of your website visitors have completed the desired or expected action(s) and what percentage of them completed the goals you’ve set in Google Analytics 4? And more… Now you can benefit from the experience of our Google Analytics 4 experts, who have put together a plug-and-play Databox template showing the most important KPIs for monitoring visitor engagement on your website. It’s simple to implement and start using as a standalone dashboard or in marketing reports! You can easily set it up in just a few clicks – no coding required. To set up the dashboard, follow these 3 simple steps: Step 1: Get the template Step 2: Connect your Google Analytics account with Databox. Step 3: Watch your dashboard populate in seconds. Try this template 1. Have an Attribution Model in Place to Measure Performance “Unless you know which campaigns and efforts are generating actual revenue, you’re resourcing your business blindly,” said Martin Shirvington of Plus Your Business. Many of the responses we heard centered around tracking performance and adjusting your allocation accordingly. But long before you spend a dime, you need to have systems and tools in place to measure that performance. “Trying to determine where to spend money without knowing how each channel is performing is like playing darts blindfolded,” said Quincy Smith of Ampjar. “Define and set up tracking for your marketing channels, so you know where the best ROI lies—before dumping any money.” Kelley Wrede of Revenue River pointed out that, until you test and measure marketing campaigns, you really have no idea what will work. “You may not know how things are going to work out the first time you invest in them, but if you collect data and can attribute dollars spent with dollars earned for each channel, the allocation process will become much more intelligent and successful for your organization over time.” Gazelle Interactive’s Ryan Walker suggested using an analytics tool that employs the same attribution model across all of your marketing channels—so you get the most holistic view of the real value of each. Shervington and team use HubSpot Pro because it connects marketing channels (like AdWords and Facebook Ads) and allows you to attribute “at the most granular level.” Additionally, you can leverage a great tool like our marketing dashboard software to monitor, assess and report on your most important marketing KPIs and metrics. Editor’s note: Want a more visual way to report and analyze how your marketing channels generate leads and turn them into customers? Download this free HubSpot Sources Report dashboard to view sessions, MQLs, SQLs, customers, and more—all broken down by source. 2. Consider Your Overall Marketing Goals One of the big questions we wanted answers to was what drives marketing budget allocation? We asked the marketers we spoke with to share the most important factors that help them determine marketing budgets. Around 40% of respondents told us that alignment with overall company goals was the single most important factor in driving their marketing budgets. “With objectives and strategy written,” said Daleep Chhabria of Growth Forte, “you might, for example, narrow down to PR, website, SEO/content-writing, social media for amplification, promotions, and a few marketing technologies.” “Are your goals reach-related or revenue-related?” John Donnachie of ClydeBank Media asked. “Are you trying to increase awareness for a new product or are you trying to increase sales for an existing product?” Jonathan Aufray of Growth Hackers added, “Does your company want more visibility? Do you want more sales? Do you want more downloads? Once you know your company’s goals, you can put more marketing dollars on the channels that will help you move the needle.” See also: 13 Tips for Setting (and Achieving) Your Marketing Goals 3. Remember That Marketing Channels Interact One unique tip we heard was to avoid taking a zero-sum approach to marketing channels—because they all work together and affect one another. Adding to Perreault’s comment, CodeCrew’s Alexandra Marin explained, “Successful marketing is a fine combination of multiple factors.” “If any of them is left behind,” Marin added, “the long-term resolve of your efforts may be disappointing—even if short-term results look good.” 4. Align With Your Sales Team Marketing budget allocation isn’t just about the marketing team. It requires input from throughout the organization, and that includes the sales team. Collaboration between the sales and marketing team is an excellent practice to strive towards—so G2’s Deirdre O’Donoghue told us you should define those goals together, before you worry about allocating spend. 5. Don’t Rule Anything Out “It’s easy to make some assumptions and guesses about how certain channels will perform, but you won’t actually know until you experiment,” explained Corey Haines of Hey Marketers. Vivek Kumar of Qlicket agreed, adding that “any good marketing team must first all of their options first, before executing on any tactics.” Kumar says their team followed the process set forth in Traction, a book written by Gabriel Weinberg and Justin Mares. The book outlines nineteen “traction channels” for marketers to test, weighing the costs and benefits as they go. “From there,” Kumar said, “we were able to draft a marketing plan with the security of knowing that we considered all of our options.” 6. Start Where Your Team’s Expertise Lies We’ve heard tips about setting up attribution models and drawing allocation from your goals… but you always have to start somewhere. Chane Steiner of Crediful recommends that very first somewhere is wherever your in-house team has some level of expertise. “Start with one marketing channel at a time, and begin with wherever you have in-house expertise,” Steiner said. “Of course, you can’t stop there. Expand one channel at a time, continuing to A/B test your way into a position that generates ROI. From there, you can experiment with optimizing your ROI.” 7. Choose Channels Based on Your Audience John Donnachie of ClydeBank Media asked, “Where do your customers spend their time online? What channel makes the most sense to reach them?” “Understand your customers and their buyer’s journey before allocating budget to marketing activities,” suggested Kyle Turk of Keynote Search. “Don’t waste your budget on marketing initiatives that don’t directly impact your core customer group. If your target audience isn’t on Instagram, for example, don’t allocate money to Instagram ads.” 8. Allocate More to Efforts With Proven Results “After a few months to a year of promoting the business, you should check the ROI of each marketing medium using a marketing dashboard, and allocate your budget based on that number,” said Hassan Alnassir of Premium Joy. Once your marketing program is rolling and set up to track performance across channels, allocation becomes as simple as doubling-down wherever you see positive results—and cutting your losses where you don’t. Stacy Caprio of Conversiono recommends starting small, with budget spread relatively evenly across channels. “Once you have data that shows which channels are converting to paid customers in the most profitable way, you can start funneling more money into those channels.” Hill Gaming Company’s Casey Hill outlined the two-step process they use with clients: Identify which platforms work for the client’s audience and where there are initial indicators of engagementTest and iterate to refine the allocation Hill also recommended the wider focus of ROI, similar to Cook’s sentiment around time and energy investments. “Focus on where you can consistently produce quality content because you enjoy it. If you hate writing, don’t do a written blog—try video, or interviews, podcasts, etc.” Editor’s note: Want an easier way to see how marketing channels contribute to revenue? Download this free Google Analytics Product Revenue dashboard to view revenue across products, sources, and more. 9. Don’t Be Afraid to Cut Your Losses Drawing from that data-backed approach to allocation, several marketers advised that you can’t be afraid to cut your losses. Don’t fall victim to the sunken cost fallacy—just because you’ve invested in a channel doesn’t mean you must (or should) keep pouring money into it. “Don’t be afraid to move on from bad content,” warned Cristina Maria of Commusoft. “Many marketers seem to think that if they pour dollars into a channel that isn’t working well, it will magically transform it. Whether it’s Facebook Ads or paid Instagram Stories, you need to track ROI and cut your losses if it’s not working.” “Don’t fall in love with a particular channel,” advised Robert Donnell of P5 Marketing. “We see too many clients that are enamored with SEO or Facebook—to the exclusion of other channels. We have to be objective about the allocation.” In other words, kill your darlings and cut your losses. 10. Follow the 70/20/10 Rule Wes Marsh of BCA Technologies told us they have a hard-and-fast guideline for marketing allocation: “Put 70% of your budget into proven marketing channels that give you the best blend of quality leads at a low cost per lead, and then squeeze as much as you can out of it. Put 20% into other channels that still offer quality exposure and lead generation, even if there is less direct attribution (i.e. display, video, etc.). Finally, keep the remaining 10% of your budget available to explore new channels and for testing.” Hey Marketers’ Corey Haines also recommended leaving a portion of your budget available to experiment with new campaigns. “For every channel that you invest marketing dollars into, give yourself the ability to experiment with a portion of the budget. Even a small experimental budget,” Haines explained, “can go a long way in exploring new ways to use the channel, figuring out what works and what doesn’t, and exercising your creative muscles.” 11. Research How Competitors Invest Their Marketing Dollars At some level, the right marketing channels for your business come down to your industry and business model. That means you can glean some value out of researching how your competitors allocate their marketing spend. “I’d start by looking at several competitors to identify a trend in the pattern of their traffic sources,” Dresean Ryan of Dresean Consulting suggested. “Analyze some of the competitors in your industry with tools like SimilarWeb to see where they’re investing most of their advertising dollar—by looking at their traffic source, you’ll be able to tell where most of their budget is going.” 12. Test What Works for Yourself “Test, reallocate budget, test some more, reallocate some more, and so on. Amplify your successes and don’t be put off if something doesn’t work at first,” recommended Oliver Roddy of Catalyst Marketing. Corey Haines of Hey Marketers explained, “It’s easy to make some assumptions and guesses about how certain channels will perform, but you won’t actually know until you experiment.” The marketers we heard from recommended starting with small budgets and testing to see what works. “Figure out what’s working and then turn up the dial accordingly,” said Zaahn Johnson of The Kingdom. “Only through testing each channel will you be able to determine where to allocate larger percentages of your marketing budget,” said Alistair Dodds of Ever Increasing Circles. “When you find a channel that absolutely flies and is delivering high ROI, be prepared to scale up quickly.” “Make sure that you invest in a channel where you can accurately measure the metrics of your return,” noted Software Path’s Megan Meade. “That way you can identify the most profitable areas for future investment and scaling up with the data. 13. Avoid Putting Your Eggs in One Basket While it’s important to direct your budget toward the most profitable marketing channels and activities, you should also be mindful of investing too much in just one channel. For example, if you spend 90% of your marketing budget on SEO and Google changes their algorithm… you’re out of luck and out of budget, David Hoos of The Good suggests, “If you find wild success with one channel, that doesn’t mean you should abandon the others. You don’t want to have the success of your business riding on a single channel.” It seems like the marketers we spoke to our following this best practice, too. We asked, on a scale of 1-10, which channels do you typically invest more dollars into? While content marketing emerged as a clear leader, the answers were pretty evenly spread—with SEO and email marketing being just behind content, and Facebook and Google Ads in the top half, as well. 14. Spend More on Customers Deeper Into the Funnel “My one piece of advice,” said Sara Bennett of PACE Staffing Network, “is to start further down the marketing/sales conversion funnel and work you way up as you can based on resources (money, time, etc.).” “It’s imperative to understand what stage your customer is at in the sales funnel,” explained Lewis Kemp of Lightbulb Media. “I have always seen my marketing efforts for where they are on the conversion funnel,” added Bennett. “That often correlates to how quickly you’ll receive a return on your investment.” “I encourage marketers to invest in channels that are further down the conversion funnel (like lead generation, SEO, and Google Adwords) because there’s much less financial risk—and you’ll see ROI faster. Once these marketing channels are operating to a satisfactory level,” Bennett explained, “you can begin investing in channels higher in the funnel, until you work your way up to awareness and exploratory research.” Kemp went on to echo Bennett’s advice about starting your investment deeper in the funnel, adding that marketers should “utilize cost effective channels (like paid social and email) higher up the funnel. Once the brand becomes more established, make the move to higher yielding and intent-based marketing channels (like Google and LinkedIn Ads). 15. Don’t Overlook the Top of the Funnel I know we just talked about investing in the bottom of the funnel. And if you can only invest a little, that’s a good place to do it. But for marketers who have a little more wiggle room, it’s important not to overlook the top of the funnel. As Brooks Manley of Engenius advised, “Don’t neglect investing in the top of your funnel. You won’t see the returns as quickly, but your sales funnel a year or two down the road will thank you.” 16. Be Flexible and Adaptable “Marketing changes daily. What worked today might not work tomorrow, so you need to have the flexibility to move dollars around,” said Kyle Turk of Keynote Search. “Shifting budget to high performing marketing channels and activities from low performing ones, requires you to be flexible and adaptable—and enables you to maximize ROI,” Turk explained. “Evaluate what’s been done already. Reevaluate where your customer is spending their time Shift dollars there,” advised Maria Kiagias of Social Gold Group. “It sounds easy, but it’s hard for many businesses to let go of older marketing initiatives.” Jacob Landis-Eigsti of Jacob LE Video Production told us adaptability is also a key component to being able to double-down on investment when you find something that really works. “When you’re testing a strategy, you can keep spending low. But when you find a plan that works, keep putting money towards. I spent $400 a month while testing and ramped that up to $3,000 a month when I found a strategy that works.” Allocate Your Marketing Budget for Better ROI We heard a lot of tips from the marketers we spoke to, and they all boil down to a few key takeaways: Be open and objective to testing new and varied channels and campaignsStart small, based on any info you can get your hands onSpread your allocation across multiple channels and throughout the marketing funnel By following those basic rules and adapting to the results you see, you’ll find the right allocation for your marketing budget—and maximize your ROI along the way.