How to Plan Your Marketing Budget for 2024

As you prepare for 2024, you’re likely working on a budget and plan for your marketing dollars. A question we often hear is:

How much should I budget for marketing?

Let’s break down this question and give you a game plan to start creating your 2024 marketing budget.

How much should I budget for my marketing program?

Every business is different - different industries, different revenue models, different customers. There’s no one-size-fits-all solution to how to plan your budget. However, there are a few methods you can use to help guide you to the best answer for you.

One way is through percentages. The Small Business Administration recommends that small businesses invest about 6% to 7% of gross revenue in marketing and advertising. New businesses and those that market directly to consumers (B2C) often need to spend more.

Another more data-driven way is to use your sales goals to help you set a budget using this formula:

Step 1: Determine how many new customers you’d need to reach next year’s revenue goal.

Step 2: See how many new leads you need to generate to reach that number of customers.

Step 3: Determine your cost per lead (divide the total amount you spent on marketing by the number of leads generated).

Step 4: Multiply your cost per lead by the number of total leads you need to reach your customer goals.

If you’ve been spending the same amount on your marketing program year after year, ask yourself if you’re really happy with the results you’re getting.

Are new leads coming in?
Are more people hearing about your business (and are you able to track those leads)?
Are your current customers happy and staying with you?

If you’d like to see improvement in any of these areas, it may be time to tweak your marketing budget.

What’s my ROI?

Your total spend itself doesn’t tell the whole story. If you tried using the formula above, you probably noticed that in step 2, you actually need to determine your conversion rate - how many people actually become leads based on your marketing spend. And to take it a step further, you can then determine how many customers you’re actually winning.

This all points to your ROI. And that’s what you have to keep in mind when determining budgets. Perhaps your overall marketing spend looks higher lately, but you’re also converting at a higher rate - and winning higher-value customers. Or maybe the opposite is true. Either way, that’s why it’s crucial to evaluate the channels where you’re currently spending and see what’s working - and what’s not.

How much are other companies spending on their marketing?

Another way to help you determine your marketing budget is by looking at what competitors are doing - although there is a caveat to this.

In times of economic downturns or slower sales, it’s tempting to pull back on your marketing budget. You may see competitors doing this, too.

However, before you follow suit, think of this as an opportunity for you. If they’re reducing their budget spend, you can stay the course - or even slightly increase your budget - for a chance at capturing that market share.

How should the economy influence what I spend on my marketing?

Senior marketing leaders across all industries are seeing upward trends despite economic volatility, as reported by LinkedIn Marketing Solutions:

6 in 10 senior B2B leaders say budgets have increased in past years
Two in three say budgets will continue to increase in the next year

Expenses are higher than normal, while staffing is a continuous challenge. Marketing directors are being pulled in many directions, and no one knows exactly what’s on the horizon.

It might be tempting to play it safe when considering the effects of a fluctuating economy. However, it’s important not to cut budgets prematurely to create a downward spiral. For example, you notice sales are dropping, so you cut your marketing budget to save money. However, in doing this, you can actually preclude even more sales. So think wisely before you make any quick changes to your planned spend.

Get help with evaluating your marketing budget

Quote from Tyler Louth

Every situation is different, and whether you’re starting a new company or trying to grow an existing one, there’s a lot of planning involved.

At Marketing Essentials, we can help you evaluate what’s working and what’s not in your marketing program, plus make suggestions for improvement, with a free 30-minute consultation. During our meeting, we will:

Discuss your business goals
Take a look at your current strategies - SEO, email, video, sales, etc.
Review your website for opportunities, security issues, etc.
Analyze what your competitors are doing
Provide you immediate takeaways and give you direction on what we would recommend to achieve your goals

Book your consultation here.