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How to set a marketing budget

Marketing is how you can grow your business and get your name out there. But what types of marketing should you be doing? And how much should you be spending? We've broken down the ways you can successfully set the right marketing budget for your business.

Knowing your customers is one of the first considerations when setting a marketing budget. What do your customers want? What can you offer them to keep them coming back?

A quick online survey will help you gather valuable data and connect with your customers.

Being a member of Checkatrade can also help you to make the most of your marketing budget. Your membership will bring you brilliant benefits for your marketing efforts, from your online Checkatrade profile to free van vinyls and marketing materials.

How to create a marketing budget

When it comes to allocating your marketing budget, you’ll need to make sure it works with your overall budget planning. You’ve already done your research into customer behaviour and expectations.

Now it’s time to find out where you should focus your efforts and take a closer look at how to create your marketing budget. That means working out where to allocate all of your marketing spend, and which channels you’re planning on marketing through.

Your marketing budget will need to be split across various potential areas.

The best marketing channels for you will be based on predetermined goals for your business. But initially, you should consider the broad types of marketing you could do.

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Marketing channels

Marketing can be broadly categorised into traditional marketing and digital marketing.

  • Digital marketing is a powerful tool for your business. With so much business done online, it would be a mistake to overlook all things digital. We’ll go into detail on this later on in this guide. But briefly, digital marketing includes anything online like social media marketing, or improving SEO for your business website.
  • Traditional marketing includes all kinds of print marketing. That’s anything from mailers and flyers sent to potential customers, or adverts in magazines or newspapers.
  • Good old-fashioned word of mouth is also a type of traditional marketing. And that’s a very valuable tool to boost your business and improve brand awareness through customer advocacy.

Some of the best marketing strategies incorporate traditional and digital marketing elements to create a comprehensive approach.

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How to allocate a marketing budget

How you allocate your marketing budget will differ from company to company. It will depend on your goals, expectations, and how much money you have available for marketing.

Once you’ve decided on an amount to spend, you can begin allocating your finances.

An excellent way to allocate your marketing budget is by choosing a percentage of your budget to spend on each channel. Let’s take a look at an example of how you could break that down.

Marketing budget example

Here is an example of a marketing budget with percentage allocation for each channel and a breakdown of each channel’s function.

Social media – 14%

Social media is used by people all around the world. It is, therefore, the place where you are likely to attract the most customers.

Sites like Facebook, Twitter, Instagram, and YouTube are no longer just for personal use. They are big business and a great way to connect with your customers.

Digital advertising – 13%

Digital ads are everywhere. They pop up on all types of websites, from news articles to online videos. Using online advertising is a great way to build brand awareness.

Remember, a memorable advert will stay with your customers; when they want a product, they will remember your company name.

SEO – 12%

Search Engine Optimisation (SEO) involves improving your website to rank higher in Google search. Many factors affect SEO. A great website with relevant content is an excellent place to start.

How Checkatrade can help with SEO

One thing to note is that being a Checkatrade member can help your SEO efforts. When you create an online profile on the Checkatrade website, you can be found by potential new customers.

We put our own marketing efforts into ranking well, and you’ll benefit from that by appearing higher in super-relevant searches.

Customers trust the Checkatrade tick, and when they’re searching for businesses like yours you can make sure you’re appearing with your optimised Checkatrade profile.

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Website – 10%

Your website is your digital shop window. It’s the place where potential and existing customers find out all they want to know about what you do. Your website should be easy to navigate, user-friendly, informative, and enable customers to contact you directly.

Content – 10%

Online content helps to improve your website. It boosts SEO by giving you authority in a particular sector. It also allows customers to engage with your brand.

Digital content could be in the form of a regularly updated blog, news stories, infographics, and product reviews and descriptions.

Paid ads – 9%

Paid ads or PPC advertising (pay per click) ensures that you appear on the first page of Google for specific online searches. It is a guaranteed way to ensure that your website is visible to any potential customers.

Email marketing – 9%

Email marketing directly targets a list of existing and potential clients. Thes campaigns can offer customers something more than the average website visitor will get. They can be personalised or designed to boost traffic and increase potential sales.

Branding – 8%

Getting your brand identity right is essential to growing your business. Choosing a memorable name and logo for your business will help to improve consumer confidence and boost your business.

PR – 8%

Public relations is all about managing your public image. PR marketing can help to bring awareness of your company to customers who may not usually discover your brand. PR can include magazine articles, online content, and even industry events and awards.

Traditional print – 7%

As mentioned earlier, traditional print marketing can still be essential in attracting customers. Many people in the UK are still uncomfortable using the internet. These are the potential customers to target with flyers, brochures, and drop cards.

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Marketing strategy forms part of your business plan

Marketing budget comparison (small, medium, and large-sized companies)

It should perhaps go without saying that the size of a company will impact the marketing budget.

Although small companies may wish to spend more on marketing to build their business, it’s often best to start small and find out what works best before increasing your spending.

For a general idea of how much money to allocate to a marketing budget, it’s essential to look at the percentage of your gross annual revenue.

  • Small companies/start-ups – 6% – 8%
  • Medium-sized companies – 10% – 15%
  • Large companies – 15% – 20%

These numbers are just a general guide. Other factors such as sector, market confidence, and expectations will affect budget allocation.

Marketing budget templates

There are lots of ways to start putting together your plan for marketing spend. Naturally, a marketing budgeting template can be a great place to start.

But before you start your budget planning in earnest, we’d recommend looking at our marketing planning guide template first. It’s completely free, and with a handy marketing checklist, you can make sure that you’re putting your focus and energy in the right place.

FAQs

What is a marketing budget?

A marketing budget is the amount of money allocated by a company to promote its products and services.

You can create a basic marketing budget calculator using a spreadsheet. This allows you to model and test how best to divide your spending between all desired marketing activities.

It’s worth constantly reviewing your marketing methods to identify what is working best. Using a “cost per lead” (example calculation below) is the most straightforward measure of your current marketing performance.

These “lead” costs allow you to make sensible adjustments to your marketing spending throughout the year. This ensures you do not waste money on things that are not working.

How to calculate your marketing budget?

Divide money spent on marketing by leads generated to determine the cost per lead. For example, if you spent £10,000 on marketing and received 1,000 leads, this would equal £10 per lead.

How do you set a marketing budget?

Plan carefully. Look at your available finances. Decide what your business goals will be. Do your research and decide on the best marketing channels to achieve your goals.

If you want to invest more into marketing than first, though, you may need to take stock of your overall spending and rework your finance plan. Our money-saving tips article may give you just the inspiration you need.

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Content disclaimer: This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer here.

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