Set a marketing budget around commercial priorities
A useful marketing budget explains what the business is trying to achieve, where investment is needed and how decisions will be reviewed. Start with the commercial priorities and the work required to support them. A percentage of revenue alone cannot tell you whether the proposed activity deserves the money.
Editorial responsibility: Nardus Oelofse, Chief Consultant.
By Chase & Marshal
Connect the budget to a buying opportunity
Identify the customers, services or products the business wants to grow. Understand the buying cycle, current enquiry flow and delivery capacity. Decide where marketing can make a useful contribution, such as reaching a new audience, improving conversion or supporting repeat business.
Be realistic about the rest of the commercial process. Additional enquiries have limited value if the business cannot respond, quote or deliver. Include the work needed to handle demand when estimating what a marketing programme can achieve.
Separate the costs of building and running
Distinguish foundational work from recurring activity. Positioning, website improvements and sales materials may support several campaigns. Media, content production, management and reporting create ongoing commitments. Both belong in the plan, but they serve different purposes.
For an illustrative business entering a new segment, the budget may need customer research and a specific service page before a larger campaign. Spending everything on promotion could expose an offer that the audience does not yet understand or trust.
Model assumptions openly
Use the available evidence to estimate how activity might translate into enquiries, qualified opportunities and customers. Show ranges where uncertainty is material. Include the contribution and delivery requirements of the work you hope to win, rather than treating all sales as equally valuable.
A model is useful because it reveals what must be true. If the plan requires a conversion rate the business has never achieved, identify the evidence or improvement needed. Avoid turning an optimistic scenario into a promised return.
Fund learning and protect useful continuity
Set review points that reflect the buying cycle and available evidence. Allow a bounded amount for testing uncertain opportunities, with a clear question and decision rule. Keep reliable activity under review too, particularly when its commercial context changes.
When the budget is constrained, prioritise the work most closely connected to the current opportunity and reduce competing activity. Record what will be deferred and the likely implication. The resulting budget should help the team allocate effort, make trade-offs and explain changes as evidence arrives.
Questions answered
What percentage of revenue should we spend on marketing?
Use a percentage only as context. The right plan depends on your growth objective, current demand, conversion, margins, buying cycle and delivery capacity. Build the budget from the work needed and test the assumptions behind it.
Related
Sources
Sources supporting the factual statements in this article. Findings should be read within their stated dates, geography and scope.
- Marketing strategy - Business.govt.nz. www.business.govt.nz. Publication date not supplied.
Build a budget around the opportunity
We can help connect your marketing budget to the customers you want, the work required and a practical way to evaluate the investment.
