With many businesses budgeting for January or March cycles, it’s the perfect time to set clear marketing goals and financial plans for the year ahead.
But how much should you spend? Where should the money go? And most importantly, how do you make sure your investment delivers real results?
To answer these questions, we spoke with Robert Stead, one of our experienced Marketing Directors, to discuss the art and science of marketing budgets. As well as hear how he’s helping his clients shape theirs to achieve real results.
Why do most businesses struggle with creating marketing budgets?
Anyone can create a marketing budget. But creating the right marketing budget takes more than just selecting a number that feels right.
"Most businesses can dream up a number, but that number often isn’t tied to anything meaningful,” Robert says. “It’s either what they’ve always spent or what they think they can afford—neither of which is a strategic approach."
Instead, businesses should treat marketing budgets as an investment that’s tied to clear outcomes, not just an overhead expense.
“‘How much should I invest in marketing?’ is a question I get a lot," Robert explains. But it’s not that simple. "Figure out what works, and invest until you can invest no more. If you don’t know what works, focus on figuring that out first."
One of Robert’s first steps with a new client is to ask, “How much are you spending on marketing?” He notes, “You’d be stunned how many people don’t actually know.”
For example, one recruitment business Robert worked with was spending hundreds of thousands on Google Ads—but had no way of tracking its effectiveness. “They didn’t think of it as marketing,” he explains, “So they weren’t measuring what worked or what didn’t.”
By introducing performance tracking, Robert helped the business reduce their Google Ads spend by over £100,000. This approach revealed inefficiencies and allowed them to allocate budgetary resources more effectively.
If you want to learn more about how we help clients focus their marketing efforts and drive real results, see our case studies here.
Start with goals, not numbers
A common pitfall is starting with a set budget figure and building a plan around it. But Robert suggests flipping the process.
"Plan top-down and budget bottom-up," he advises. "Too often, I see businesses start with a marketing budget and go from there, resulting in plans that fit the budget but don’t actually meet the business’s needs."
Instead, plan your marketing spend based on what you want to achieve, not around an arbitrary figure:
- Set clear business goals. What do you want to achieve? Is it more leads, higher revenue or better brand recognition?
- Define marketing’s role. How will marketing contribute to these goals? What activities need to happen to achieve them?
- Estimate costs. Once you’ve outlined the necessary activities, calculate the costs to create a budget.
Practical budgeting methods that work
Building a marketing budget shouldn’t be a guessing game.
Practical budgeting methods can simplify the process and ensure you allocate resources effectively.
- Understand your spend: Many businesses don’t know how much they’re spending on marketing in total, let alone how it breaks down. "That includes activities, tools, and salaries," he says. "If you don’t know, start by mapping it out today."
- Use benchmarks. For B2B businesses, marketing spend typically falls between 2% and 5% of turnover, split roughly evenly between programs and salaries. "It’s not a target, but a useful reference point. If you’re spending outside that range, ask yourself why."
- Measure performance. Marketing investments should be tracked and optimised. "If you can’t map performance, you’re flying blind," Robert warns. "Metrics like cost per lead and conversion rates across your different channels are critical."
Robert recalls a business that was shocked to learn the true cost of generating leads. “They had a very high-value sale worth hundreds of thousands, but when we calculated the cost per lead, it was several thousand pounds. They nearly fell off their chairs, even though it was still excellent value” he says.
However, spending a few thousand to develop a lead for a multi-million-pound sale turned out to be a strong investment once they understood the numbers. That’s why it’s so crucial to not only understand your spend, but also its impact, so you can factor that into your budgeting and not miss out on crucial opportunities.
It’s worth noting that some goals are easier to measure than others. Just because something is hard to measure, doesn’t mean it should be deprioritised. Brand awareness can be hard to gauge but has a huge impact on overall marketing ROI.
A useful rule of thumb is a 60/40 split between long-term investments in brand and short-term investments in lead gen. This ensures you’ll drive long-term growth over the next few years and short-term ROI over the next few quarters.
Now’s the time to act
With many businesses planning their budgets for January or March cycles, now’s the time to set clear marketing goals and financial plans. But it’s never too late to make a solid marketing budget.
Start by asking:
- What do I want marketing to achieve?
- What activities will deliver these results?
- How much will they cost?
- How will I measure success?
"Treat marketing budgets as an investment tied to outcomes, not just an overhead expense," Robert concludes. "And be prepared to adjust as you learn what works. Marketing isn’t set-and-forget – it’s an ongoing process of optimisation."
If you’re looking to adopt a strategic approach to creating your marketing budget, our part-time Marketing Directors bring the expertise and guidance you need to help you succeed.
