The Importance of a Marketing Budget

People will work on corporate identity, but not plan for the budget to implement it. Build the car, but not have enough money to put gas in the engine. While it’s essential to have an initial budget for developing your logo, website and marketing materials, it’s also crucial that you have an ongoing plan for how you are going to get the word out and a budget for putting your plan into action.

The best way to do this is to create a marketing strategy and setting a monthly or yearly marketing budget to make sure it happens. A marketing budget is a guide to ensure that you are staying on target with estimated costs vs. the actual costs.

Everyone has heard the phrase “You have to spend money to make money.” However many companies tend to under spend on marketing, thinking that by not spending they are saving. But by not spending on marketing, they are missing out on an enormous amount of business!!!

What does a marketing budget include?

Your marketing budget will include all of the prices that you expect to pay for each type of advertising you do. This would include printed materials, website development and ongoing maintenance and search engine optimization. It would also include radio and commercials, trade shows, advertisements in newspapers and other publications, mailings, etc.

How much should a business spend on marketing in their budget?

The amount of money a company should budget for marketing varies greatly by industry and business size. The US Small Business Administration and the Counselors to America’s Small Business define the variable for a proper marketing budget to be between 2% and 10% of sales. Some companies spend up to 20% of net sales. The average is between 4% and 6%.

Are there guidelines that help determine what a marketing budget should be?

There are guidelines that should be considered when setting your marketing budget.

  • First consider any development or refinement of your current branding. Is your image up to par? Do you have the professional logo, website and marketing materials in place that represent you as a credible company? Is there consistency in the look and feel of your materials? If not, what needs to be revamped?
  • Second, what are the ongoing expenses of advertising, maintaining and promoting your brand to your target audience? If you stop advertising, they will forget you. If you don’t keep your website and materials up to date, you will lose credibility and rankings with the search engines. So what is your plan for keeping your company visible and what will it cost?
  • You can visit the Small Business Administration ( for more guidelines and information. They have charts that compare revenue with ideal marketing budget percentages. They also list variables that need to be considered.

Marketing is a fundamental ingredient for growth and profitability. Many companies fail simply because they do not allocate enough money for marketing. When done properly, marketing brings back sold returns.