How Large Should Your Marketing Budget Be?

Marketing is the engine that fuels your company’s growth. But how much should you spend every year?

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The best marketing budget for your company may vary, but these are the approximate rates depending on your size and industry:

  • Small business: ~5% of annual revenue
  • Mid-sized business: ~10% of annual revenue
  • Aggressively-growing business: ~15% of annual revenue
  • Special industries: 20% to 50%

Of course, these rates are just approximations, and will vary based on your revenue and overall growth strategy.

Call 888-601-5359 to speak with a strategist about your company's marketing strategy, or keep reading to learn more about setting an appropriate budget for your marketing needs.

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Small businesses

Small businesses include everything from mom-and-pop stores to local industry powerhouses. But by definition, a small business doesn’t make as much money as other companies. That’s why if you’re a small business owner, you shouldn’t spend as much on marketing.

Percentage-wise, 5% is a safe chunk of your overall revenue that’ll steadily improve your company’s customer base. It’s an excellent starting point for your company’s long and prosperous future — you just need to manage your budget effectively.

Search engine optimization (SEO) is just one way a small business can make the most of a tight budget. You can also invest in pay-per-click advertising (PPC) for an affordable alternative to traditional marketing.

It may not sound like much, but just using those two marketing strategies can help your business grow safely and steadily.

Mid-sized businesses

Mid-sized businesses have a couple hundred employees and typically seek long-term, sustainable growth that’ll make them a major industry player. If you’re marketing a mid-sized business, you should be willing to scale your marketing budget upward, even by percentage, to make sure you can keep up with your industry.

Naturally, the exact percentage will vary depending on how competitive your field is. But 10% is generally a safe bet when you want to grow without risking your company’s financial security.

Mid-sized businesses should also use SEO and PPC, and can typically afford to use some traditional marketing strategies, too. The cost of advertising is definitely higher, but if you’re shooting to generate brand awareness in a competitive industry, it’s a great way to achieve your goals.

Aggressively-growing businesses

If your business has a specific strategy for short-term, explosive growth, it can be considered an aggressively-growing business.

While this kind of growth may not always be sustainable, it can definitely be profitable. That’s the allure for entrepreneurs who want to lay the foundation of a company and then sell it off for a nice profit.

Intentionally aggressive businesses can easily overstep their boundaries when they first start their marketing strategies. With a “whatever-it-takes” mentality, you can quickly find yourself low on cash with debt piling up.

That’s why even aggressive businesses should stick to the 15% range. It’s important to establish a business’s foundations before shooting for the stars. And even if your marketing campaign is great, it won’t do much good if you divert money from your other departments. After a while, your lapse in company-wide support will show, especially to customers.

Our digital marketing campaigns impact the metrics that matter most!

Over the past 5 years, we’ve generated:

1.5 Billion

in client revenue

4.6 Million +

leads for our clients

1.8 Milion

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This is especially true for product development. Moving money away from the company’s heart to fund marketing is a surefire way to disappoint customers and weaken the company as a whole.

Still, aggressive growth isn’t always bad. If you want to meet short-term goals quickly, a boost in marketing can help you do so.

SEO and PPC are great marketing strategies for these companies, but are often accompanied by less orthodox “growth hacking” strategies. Since you want to grow fast, you basically have to use every marketing avenue at your disposal to get the results you want.

Make the most of your marketing budget

Regardless of how much you choose to spend on marketing, you'll want to make the most of that budget — and today, the best way to do that is with online channels. Contact us today to speak with a strategist about how WebFX can help you get the best possible results for your business.

Special industries

Special industries are certain commercial sectors that require more marketing investment than others.

These industries include:

  • Pharmaceuticals
  • Retail
  • Consumer goods

There are more special industries than just these, but these are the major industries that require significant marketing investments to succeed.

The reason is that so many companies in these industries have already heavily invested in marketing. So if you’re starting a pharmaceutical or retail company, you have an uphill battle to get brand recognition.

Pharmaceuticals are marketed mostly in the United States. The industry is highly competitive since drugs like Lipitor single-handedly yield billions in revenue. Every pharm company is looking to make the next big pill, and every time they try, they have to spend millions on marketing campaigns.

Retail is one of the biggest industries in the world, and it’s saturated by companies who offer practically everything you could ever want to buy. Regardless of the products your company sells, you’re bound to have stiff competition. That means you’re up against industry giants and startups that all want to earn billions from retail, so you have to spend more on marketing.

Last, consumer goods is possibly the most competitive industry in the world because of how broad it is. Everything from food to home appliances qualifies as a consumer good, and some of the biggest brands in the world earned their fortunes on consumer goods. If you want to break into packaged goods, appliance manufacturing, or most other physical products, your competitors are spending as much as they can to make you fail. It’s up to you to fight back.

The way you fight back is by using every kind of marketing you can. That includes SEO, PPC, television, newspapers, reputation management, social media marketing, and more. You have to constantly fire on all cylinders so you stay at the forefront of your industry.

WebFX knows budget management for all companies

WebFX is a full-service Internet marketing agency that’s been around since 1997. That means we know how to use SEO, PPC, and more to effectively grow your business. With us, you’ll have a dedicated marketer to help you choose marketing strategies, plan your budget, and bring in more revenue than ever before.

Want to grow your company? Contact us today to lay out a custom marketing strategy that’ll fit your budget!