The marketing budget should be tailored to your business type, industry, goals, and several other factors. Here’s how to structure it effectively, taking into account strategic parameters:
1. Analyze your business type and industry
• B2B:
• Consider longer sales cycles and an ROI-driven approach.
• Marketing budgets for B2B companies typically represent 5-7% of annual revenue.
• B2C:
• Prioritize awareness, rapid acquisition and loyalty.
• B2C companies often allocate 7-10% of revenue to marketing, or even more in competitive industries like retail or consumer packaged goods.
2. Evaluate the average lifetime value of a customer (Customer Lifetime Value - CLV)
• Why it matters: The higher the CLV, the more profitable it is to invest in acquisition and retention.
• Example: If your CLV is $1,000, investing $200 to acquire a customer can be profitable.
• How to integrate it:
• Allocate a significant portion of your budget for targeted campaigns aimed at acquiring high-value customers (SEA, email marketing).
• Use tools like HubSpot or Klaviyo to maximize loyalty and increase CLV through automated workflows.
3. Identify your best-selling products or services and their margins
• Focus on high margin products:
• Invest in specific campaigns to promote your most profitable products or services.
• Example: For eCommerce, focus SEA campaigns on categories with high demand and high margins.
• Appeal products:
• If some products have low margins but attract new customers, invest in advertising campaigns to increase their visibility, then segment your efforts on complementary high-margin products.
4. Consider the length of the sales cycle
• Short sales cycles (B2C):
• Prioritize fast channels like SEA, social ads, and retargeting campaigns to accelerate purchasing decisions.
• Example: A clothing store will invest more in dynamic ads and flash promotions.
• Long sales cycles (B2B):
• Allocate resources to SEO and content marketing to educate and nurture your prospects over the long term.
• Example: A SaaS company will invest in white papers and demos for the MOFU and BOFU stages of the funnel.
5. Tailor your budget to the stage of the marketing funnel you are focusing on
• TOFU (Top of Funnel):
• Objective: Awareness and acquisition.
• Priority channels: SEO, SEA, social media campaigns, partnerships with influencers.
• Budget: 40-50% if your brand is little known or if you are launching a product.
• MOFU (Middle of Funnel):
• Objective: Engage and educate prospects.
• Priority channels: Content marketing (blogs, webinars), email marketing, retargeting campaigns.
• Budget: 30-40%, especially if your prospects require multiple interactions before converting.
• BOFU (Bottom of Funnel):
• Objective: Conversion and loyalty.
• Priority channels: Personalized email marketing, SEA on keywords with transactional intent, CRM for lead management.
• Budget: 20-30% if your priority is immediate conversion.
6. Adjust according to your business phase
• Startup or product launch:
• Invest more in TOFU to increase awareness quickly.
• Example: 60-70% of the budget for SEA, social media, and influence campaigns.
• Established company:
• Focus on conversion optimization and retention, with a balanced distribution across funnel stages.
Example of budget distribution:
For a B2C business with an average CLV of $500:
• 40%: SEA and social media campaigns to attract new customers.
• 30%: Content marketing and email marketing to engage prospects.
• 20%: Retargeting and promotions to convert leads into customers.
• 10%: Loyalty via CRM campaigns and personalized offers.
Tip: Continuously adjust your budget by measuring channel performance and real-world ROI. Tools like Google Analytics , SEMrush , and HubSpot will help you analyze the impact of your campaigns to optimize your allocations.