Setting your marketing budget: five insights

“So what does that cost?” Transparency is in our DNA, so let us talk about marketing budgets for once. Because marketing does not have to be a cost. Smart marketing is an investment.

You know marketing matters for your business. It is part of every growing organization. But what is a workable budget? You have probably talked to agencies before. The creative ideas are there, you are on board with the strategy, and in the end there is one big question mark left: budget.

And also: which budget do you actually need?

If you are being honest with yourself, you know the answer. You have no idea. You know what you want to achieve, but not what you have to invest to get there. So you guess from your best thinking. Too little budget and your plan stays in the drawer. Too much and your CFO gets stressed.

Time to set your marketing budget the way it should be done: not as a guess, but as a growth plan.

1. Start with the basics: a percentage of revenue

A marketing budget is not finger in the air. In most sectors it is simply a percentage of your revenue. How much exactly depends on your ambition, your sector, your business model and your growth phase.

B2B (construction, industry, technology, consultancy) — 2 to 5% of current revenue. Focus on trust, expertise and long sales cycles. Spent on lead generation, automation, webinars and email flows.

B2C (retail, e-commerce, FMCG) — 5 to 10% of current revenue. Focus on visibility and conversion. Spent on ads, content, campaigns and loyalty.

SaaS, certainly in the startup phase — 15 to 40% of current revenue. Focus on lowering customer acquisition cost and raising lifetime value. Spent on SEO and SEA, account-based marketing, growth experiments and trials.

Healthcare organizations — 4 to 6%, sometimes up to 14%. Focus on reputation and impact. Spent on information campaigns, events and PR.

Financial and legal services — 7 to 10% of current revenue. Focus on reliability and ROI. Spent on thought leadership, dashboards and paid search.

Use this as a guideline, not as a ceiling. Your ambition sets the level, not your comfort zone.

2. Look at your cash flow

Any company that is not a hedge fund, a holding company or backed by outside capital is a cash flow business. In other words, you can only grow as long as your cash flows stay workable enough to support that growth. Because new customers also bring costs:

• growth in headcount
• extra purchases of materials or stock
• time to deliver, and therefore time before the cash arrives

So it pays to work out how much cash a new customer puts into the company account in the first thirty days after signing, and how much they will pay across your delivery process. Do not let that scare you off, it is quickly calculated, and your finance person or accountant usually has it to hand.

3. The real accelerator: your growth phase

Maintenance — 3 to 6% of revenue. You stay visible, but you do not really grow. The risk: your competitor is playing at 95% and you are playing at 5%.

Moderate growth — 6 to 10% of revenue. You want to move forward. More leads, more market share. Time for funnels, dashboards and content with a purpose.

Aggressive growth — 12 to 20%, or more for SaaS. Everything on growth. Data, ads, segmentation, AI. Marketing is sales.

4. Your approach makes the difference

Setting your budget well means putting a strategy behind every euro. Six things to watch:

1. Start with your goal. What do you want to achieve?
2. Work backwards. From customers to leads to conversions to the marketing work needed.
3. Define the work. Campaigns, landing pages, automation?
4. Use sector benchmarks. Compare, but do not copy.
5. Work in phases. Attention, growth, testing.
6. Spar with your agency. Good agencies do not think in hours, they think in impact.

5. Pick a good agency

How do you recognize one? They do not ask “what is the budget?” They ask:

• where are you now?
• what do you really want to achieve this year?
• from what growth percentage would you call this a successful partnership?
• do you want to do this just fine, or do you want to dominate?

And then they do the math with you. That is how we work. Talk to us.

In short

A strong marketing budget is based on your revenue, informed by how much cash a new customer puts in the account in the first thirty days, in line with your sector, adapted to your growth phase, and aimed at results rather than gut feel.