How Much Should You Spend On Marketing?

by Mark Dreistadt | Jul 15, 2022 | Marketing

Years ago, I worked as the Senior VP for a national ministry. While this organization had a robust fundraising program, there were no additional marketing efforts outside of direct fundraising. They were woefully weak in the areas of public relations, online communications, community engagement, as well as other types of promotional efforts.

My solution was to hire a Marketing Director to design and build out these initiatives. When I proposed my solution to leadership, they immediately approved the concept—but were uncomfortable with the term “marketing”—until I helped them understand that marketing is part of our lives and an important and necessary component for every growing organization.

Marketing refers to all advertising, public relations, promotion, fundraising, and communication efforts. It is a broad term that includes all efforts to reach and engage a growing audience, donor base, or customer base.

The first consideration in a Marketing Budget is to ensure that you have a strong brand and that all your messaging aligns with your brand. A clear and connected brand can propel you forward, but a weak, dated, or disconnected brand can literally hold you back. Take the time and the budget to make sure your brand is memorable and compelling and that all brand messaging is fully aligned.

Effective marketing is the universal key to growing an organization. However, in many cases, the marketing budget is the first line item that is cut when times become hard—which is the exact opposite of what should be done. If managed correctly, increasing the marketing budget will increase engagement and improve your bottom line.

So how much should you spend?

The US Small Business Administration recommends that businesses spend 7–8 % of gross revenue on marketing.
Many marketing consultants recommend that you spend 2–5% for B2B businesses and 5–10% for B2C businesses. Aggressively growing businesses often spend 20% or more on their marketing budget.
The most recent CMO Survey indicates that, while many companies reduced their marketing budgets somewhat during the COVID pandemic, on average, companies have consistently spent 11–12% of their budgets on marketing.

The bottom line is that, while these benchmarks provide a good starting point, several factors can impact the size of your marketing budget. Let me briefly walk you through the process of determining your marketing budget in THREE SIMPLE STEPS:

Once you are sure you have a strong and compelling brand, the next step is to establish clear and specific marketing goals.

If you are a nonprofit organization, those goals may be defined as the number of donors or prospects, the number of emails, total amount of contributions, donor acquisition cost, lifetime value, and more.
If you are a for-profit business, those goals may be defined as the number of new customers, leads or prospects, the total units sold, the total amount of sales, customer acquisition costs, and more.
If you are a church or ministry, those goals may be defined as the number of visitors, number of attendees, number of new members, etc.

The key is to establish clear and measurable goals. Simply saying more people or more donors is not specific enough. How many more? As it says in Habakkuk 2:2: “Write the vision and make it plain …”

The next step is to establish a fixed monthly budget number. Be sure to allow for seasonal adjustments or special events.

It seems that 7–12% of Gross Revenue is a good place to start. However, the actual amount of the budget can be impacted by four key factors:

Longevity – Well-established organizations may spend less money on marketing, while younger and growing organizations should consider spending a bit more.
Marketing Scope – The budget for a local organization is markedly different from the budget for a national organization. Regional cost factors may also impact the budget.
Competition – A good marketing plan takes into consideration who else is competing for the same dollars. Your marketing budget should be substantial enough to be heard and not drowned out by competition.
Visibility – Location can sometimes translate to good advertising. This is especially true for a local business or church. A highly visible location can reduce (but not eliminate) the amount of money needed to let people know you are there.

Once your budget number has been determined, then you need to allocate your budget to the various marketing initiatives. Your marketing budget should include all the items that create engagement with prospects, donors, or customers. These items may include:

Website – the costs to design, build, SEO, and maintain a user-friendly website
Social Media – the cost of posting and advertising on various social media platforms
Online Advertising – the cost of keyword and banner ads shown on the web
Traditional Media – the cost of radio, television, print, display advertising
Email and Direct Mail – the cost of producing newsletters, appeal letters, and promotions both online and in print
Public Relations – the cost of preparing a crisis management plan, as well as sending press releases, and developing earned media
Video – the costs associated with producing videos to use on your website, as well as all other media forms

Once your brand is strong, your budget is determined, and your funds are allocated, then the marketing budget needs to be managed and optimized. Well-invested marketing budgets produce results. Poorly-invested marketing budgets can cost you not only the marketing expense, but lost revenue as well.

Infinity Concepts is here to help you develop and optimize your marketing budget. For the past 20 years, Infinity Concepts has been helping grow organizations just like yours!

“A smart man makes a mistake, learns from it, and never makes that mistake again. A wise man finds a smart man and learns from him how to avoid that mistake altogether.”
—John Young

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