The marketing budget isn’t just an expense line item in a spreadsheet. It is, in fact, the clearest reflection of what a business aims to achieve, how seriously it intends to do so, and how strategically it plans to execute its moves. It’s not just about “how much money will be spent,” but rather where, how, why, and with what specific objective.

Yet, in practice, it is often defined haphazardly—either based on gut feeling, by simply replicating last year’s number, or with the logic of “what we can afford this year.” The result for these businesses is disjointed campaigns, resource allocation with no measurable return, and, at the end of the year, that familiar sinking feeling for the business owner: “I spent money, but I don’t know if it delivered results.”

The correct starting point, however, is never the amount. It is the strategy.

What are the business’s real marketing goals?

Everything starts with the company’s real business goals. The budget exists purely to serve them. If the goals are vague, the budget will simply be “burned” on activities without a clear direction.

A word of caution, though: when we talk about marketing goals, phrases like “we want more sales” or “we want to be more well-known” are not enough. Goals must be Specific, Measurable, and Time-bound.

For example, it is one thing for a business to say “we want growth,” and quite another to define that “we want a 20% increase in B2B leads via LinkedIn within the next six months.” Similarly, “we want more sales” is different from “we want a 15% increase in online sales to our existing customer base within the next quarter.”

The meaning of Customer Acquisition Cost and how it affects the budget

This is precisely where the budget starts to be “built” in real terms. The cost required to increase sales to existing customers is different from the cost of entering a new market.

At this point, a critical metric known in marketing as CAC (Customer Acquisition Cost) comes into play. Simply put, it is the amount a business needs to spend to bring one new person through its door. A basic rule applies here: acquiring a new customer almost always costs more than retaining an existing one (though this certainly doesn’t mean we should only focus on existing customers). Such a decision is enough to change the philosophy of the entire budget.

How to convert goals into an annual marketing plan

Goals alone, however, are not enough. They need structure, timing, and prioritization. This function is served by the annual marketing plan. It is where broad goals are broken down into quarters and months, where product launches, campaigns, seasonality, peak periods, and maintenance periods are foreseen.

A well-structured plan allows for better budget distribution over the year, limits “last-minute panic,” and provides a clear picture of the true cost of each action. Without an annual plan, the budget simply turns into scattered spending.

How business assets influence the budget

Next comes the honest assessment of the business’s actual assets. Every company starts at a different level. Some have modern infrastructure, others do not. A proper budget requires a clear picture.

For instance, is the website fast, modern, mobile-friendly, and designed to convert visitors into customers, or does it need investment? Is there an internal team that can support content, social media, and service, or will everything be outsourced? Is there existing photo and video material available, or does it need to be produced from scratch?

The more assets a business possesses, the lower the external cost. However, when these are insufficient or outdated, the budget must also cover this deficiency.

What type of marketing activities does the strategy require?

The critical question that follows is what kind of activities are outlined in the annual plan. This clarifies the “character” of the strategy. Will the focus be on content, advertising, brand building, or purely performance-driven, direct-response actions?

• Content requires continuous production, creative teams, photography, video, and graphic design support.
• Advertising requires proper targeting, testing, continuous optimization, and a stable media budget.

The important thing to understand here is that marketing is not a “campaign of the month,” but a marathon. The budget must be sustainable over time, not just for one impressive burst.

How to select the right promotional channels

The selection of promotional channels falls within the same framework. One of the most frequent and costly mistakes is the “we need to be everywhere” mentality. In practice, this fragments the budget without substantial return.

Channel selection must be based on where the target audience is located, their stage of readiness, and whether the business addresses consumers (B2C) or other businesses (B2B). Different channels work better for direct sales, others for brand awareness, and others for relationships and repeat purchases.

For example, a B2B consulting firm looking for executives and decision-makers is likely to invest more in LinkedIn and thought leadership content than on Instagram. Conversely, a fashion e-shop might allocate a large part of its budget to Instagram and TikTok, where the audience is ready to be inspired and purchase.

Advertising budget and performance measurement

One of the most stressful points for the business owner is the advertising budget and measuring success. This is often where the fear arises: “I’m afraid to invest without a guarantee.” And indeed, no marketing investment comes with absolute certainty.

However, that doesn’t mean it should be blind. The budget should never be defined without clear KPIs (Key Performance Indicators). In simple terms, these are the numbers that show us whether what we are doing is working or not.

• How many leads do we need?
• How much is each lead allowed to cost?
• What ad performance is sustainable?
• What percentage of visitors can realistically convert into customers?

Imagine a simple scenario: A business invests €5,000 a month in advertising, sees increased website traffic, but has no clear idea if those visits are converting into sales. The numbers show activity, but not results. That’s where insecurity is born: “Is this working, or am I just burning money?” Without measurement, the budget is not an investment. It is hope.

The term ROAS (Return On Ad Spend) falls into the same category, essentially showing how many Euros return to the coffers for every Euro spent on advertising. It is the simplest answer to the question, “Is what I’m doing bringing money back?” When such metrics are missing, there is only impression, not insight.

What percentage of revenue do companies allocate to marketing?

This is where the classic question heard at every meeting comes in: “That’s all well and good, but what percentage of revenue should I actually allocate?”

The honest answer is that there is no golden rule. However, certain indicative limits are observed internationally:

• B2B companies typically move between 2% and 5% of their turnover.
• B2C companies typically move between 5% and 10% of their turnover.

Businesses in a phase of aggressive growth, launching a new product, or entering a new market often temporarily invest significantly higher percentages. The right question is not “what are others spending,” but “how much do I need to achieve my own goals?”

What many forget in the marketing budget

Finally, there is what is often forgotten in the budget: the unexpected. Failed campaign tests, algorithm changes, new tools, CRM systems, automation, the need for continuous optimization. Marketing is not a static process. It is a living mechanism that is constantly changing.

Defining a marketing budget is not a technical action. It is a purely business decision for growth. The clearer the goals, the more realistic the view of resources, and the more strategically structured the plan, the greater the likelihood of success.

Marketing is not a cost. It is a growth lever. And its budget is the way a business declares how seriously it takes its future.

Key takeaway: If you cannot explain why you are investing an amount in a specific action, then you are not investing it. You are simply spending it.