Calculating your company’s marketing budget is one of those strategic decisions that can make the difference in your growth and your company’s survival.
During my time at Driza, I have seen all kinds of businesses at every stage (newborn, in the middle of puberty, nearing old age…). Therefore, today I want to help you clarify the following question:
How much should you allocate to marketing in relation to your annual revenue? What is the ideal percentage?
Be clear about which basket you put your eggs in 🥚
Before talking about figures, percentages, and scenarios, it is essential to understand a key point: not all marketing actions will return money at the same rate.
Some strategies generate a return in the short term (such as performance marketing, well-optimized ad campaigns, or aggressive discounts). Others, such as content creation, SEO, or branding, may take longer to show results, but they build an asset that will continue to attract customers in the future.
The most common mistake is to omit actions that do not convert immediately, when in reality many of them are building the foundation for short-term campaigns to be more effective. It is like wanting to bake bread without waiting for the dough to ferment: you could do it, but it will not turn out well (we will leave the real estate market dilemma for later) 🥖
💡 Tip: A comprehensive marketing budget covers not only advertising, but also market analysis, content development, and digital tools that scale your strategy. Keep this in mind!
Determine the ideal percentage based on revenue 💵
Now, the million-dollar question: what percentage of revenue should you allocate to marketing? Well, like everything… it depends. It depends on the sector, it depends on your company’s life stage (is it being born, maturing, or dying?), and it depends on the business interests.
According to the CMO Survey (conducted in 2022), this was the budget distribution of the analyzed companies based on their nature:
- B2B Product: between 8% and 10%
- B2B Service: between 10% and 11%
- B2C Product: between 14% and 21%
- B2C Service: between 8% and 10%
Furthermore, the sector also significantly determines this figure; in sectors such as technology, professional services, or banking, much more is allocated than in others like energy, pharmaceuticals, or real estate, given the barriers to entry and other expenses the company must face.
Source: statista.com
On the other hand, in the startup world, marketing is not just an investment; it is a bet on survival.
According to industry benchmarks, many startups allocate between 20% and 40% of their funding rounds to marketing, depending on the business model and the phase they are in. For example:
- Startups in the pre-seed or seed phase may allocate 30%–50% of initial capital to marketing and user acquisition.
- Startups in the growth phase (Series A or B) are usually between 20%–30%, as they begin to optimize channels and diversify strategies.
The key is not only to calculate what you could spend, but what you actually need to reach your objectives. And yes, you must always leave a margin for unforeseen events: changes in advertising costs, new market opportunities, or the need to adjust strategies along the way.
Divide the budget based on priorities 🎯
Putting it on paper, if you were a furniture company with €1 million in revenue in an early stage looking to expand market share, allocating 15% to marketing would be reasonable, which could be allocated to:
- Digital advertising (40%): Google Ads, social media.
- SEO and content creation (25%): search engine optimization, content creation, blogs, videos.
- Email marketing and CRM (15%): automation and loyalty tools.
- Research and analysis (10%): market studies, competitor analysis.
- Events and promotions (10%): trade fairs, collaborations, sponsorships.
As a piece of advice, map out your plan and budget in an Excel sheet where you unify and align: objectives, investment, and potential results. At Driza, we have a saying that “Excel can handle anything”. If we have been realistic, it will tell us whether the objective is feasible or not, and if it isn’t, how much more would need to be invested to achieve it.
In summary, and so you leave with some homework, the steps to establish the budget for your marketing plan are:
🎯 Establish your business objectives
🤔 Assess your company’s life stage, the sector, and your objectives, and allocate a percentage % of your revenue
📄 Distribute the budget based on the areas that will have the greatest impact on your objective and your business.
