For businesses to drive success in a highly competitive marketing landscape in 2024, it is crucial to get the attention of your target audience. A successful marketing plan with effective marketing strategies is vital to capturing the attention of the audience and positioning your company as a market leader.
A well-planned marketing budget is paramount as it empowers marketers with the right tools to execute strategies effectively. If you still haven’t decided how much to spend on marketing in 2024, it’s time you did. Read our ‘Complete Guide to Marketing Spend’ to find out how much you should be spending on your marketing strategies in 2024.
The Basics of Marketing Budget Allocation
Now that you have finalized your budget, it’s time to strategically allocate this budget to the right marketing channels, tools, and initiatives so that you can leverage the best of your marketing efforts, improve ROI, and drive measurable growth amidst a highly volatile market. Staying abreast of current marketing trends is crucial in this context. Businesses that stay on top of marketing trends are highly likely to meet the target audience at the right place and at the right time, ensuring that the budget is optimized effectively and the business meets its marketing goals. To stay updated with the current marketing trends, read our latest blog on ‘Marketing Trends 2024’ and craft your strategies keeping these trends in mind.
Importance of Effective Allocation of Marketing Budget
Effective allocation of the marketing budget ensures strategies that align with the business goals are executed efficiently, helping the business capture the attention of a wider audience. It also helps in retaining existing customers, building brand awareness, engagement, and driving sales.
Key Factors to Keep in Mind for Effective Budget Allocation
Allocating a marketing budget requires keeping in mind different key factors that can directly impact the effectiveness of your marketing strategies. Only after analyzing these factors should any marketer allocate resources to different strategies, channels, and initiatives to maximize ROI.
+ Business Goals.
From increasing brand awareness to becoming a thought leader, improving search engine rankings, driving engagement or sales, or launching a new product, different businesses have different goals that require different strategies. Make sure your strategies align with your business objectives to drive a good ROI.
Pro Tip: Always set SMART (specific, measurable, achievable, relevant, and time-bound) goals to improve resource allocation, time management, and effectively analyze your growth over time.
+ Understanding Target Audience.
“Be where your audience is,” said every experienced marketer. Understanding your target audience, their preferences, and buying behavior is key to achieving maximum ROI from your marketing initiatives. Analyze where your audience spends the most time and allocate resources to those channels to capture the attention of a wider audience.
+ Competition Analysis.
Analyzing the strategies your competitors are working on can help you identify the market gaps and high-performing channels to invest in. Depending on what works for your competitors, you might want to either spend on the same channels or find alternative channels with less competition.
+ Marketing Trends.
Analysis of current marketing trends is also a key factor in allocating budget to strategies that work. Using trending strategies ensures marketing efforts are responsive to the current landscape, helping brands to drive conversion. For example, as per Marketing Trends 2024, personalization will be crucial in attracting new customers and retaining the existing ones. This is the reason brands should focus on personalization with the use of data analysis.
+ Past Performance.
Analyze your past marketing strategies to find the ones that worked for your business. These strategies might or might not be effective in today’s marketing landscape. But, if any one strategy gave higher ROI previously and still works today, consider prioritizing it.
Best Practices for Marketing Budget Allocation
Effective allocation of the marketing budget involves thorough analysis, careful planning, and continuous optimization to maximize ROI and drive business growth. Based on our research and 20+ years of expertise, here are some best practices to ensure the effective allocation of marketing budget.
Allocate to Multiple Channels. Like the saying, “Never put all your eggs in one basket,” never invest all your resources in a single strategy. You should diversify and try out different channels and strategies to reach a wider audience, achieve different goals, and mitigate the risk of depending on a single strategy in case it backfires. Trying out different strategies can also help you explore the ones that work best for your business.
Leverage Data. Data is a marketer's strength considering the current business landscape. Data analysis provides insights into consumer behavior, changing market trends, measuring campaign performance, analysis of past marketing performance, and predicting changing consumer habits for targeted marketing strategies. Smart marketers are utilizing AI to analyze large chunks of data in less time, impacting productivity. As per Invoca, "Businesses that use data-driven strategies drive five to eight times as much ROI as businesses that don’t." Always invest in data analysis before figuring out the channels and strategies that align with your business goals.
Keep it Flexible. Sudden market changes and shifts in consumer preferences require businesses to be prompt enough to allocate resources to the right channels and strategies midway. Always set aside a portion of the budget for adjusting strategies whenever required, ensuring agility and responsiveness in the face of evolving trends and dynamics.
Understanding Customer Journey. Customer journey is one of the key aspects in allocating budget to strategies that work. Understanding how your target audience moves from the awareness stage to the purchase stage plays a crucial role in uncovering what channels and strategies bring the most ROI, what platforms are most effective in reaching and engaging your audience, and where adjustments may be needed along the journey. By mapping out the customer journey and identifying touchpoints, marketers can allocate budget strategically, focusing resources on channels and tactics that contribute most to guiding prospects through each stage of the journey.
Evaluate Strategies for Further Adjustments. Businesses must analyze the effectiveness of their ongoing marketing efforts to identify areas for improvement. This helps in the prompt optimization of strategies and allocating resources to the most efficient ones. Analytics tools and robust tracking tools are of great use in tracking the performance of every campaign and channel. This evaluation also helps in the efficient allocation of the marketing budget in the future.
Marketing Budget Allocation By Channel
Allocating marketing budget by channel requires a complete analysis of different channels that align with the business goals and can help reach the target audience. A thorough analysis of software, technology, and tools is also crucial considering the challenging marketing landscape and marketers’ productivity. Here is the breakdown of different channels, technologies, and tools you can utilize as a part of your marketing strategies per your goals.
But before that, here’s a basic breakdown of different channels along with average spending per channel:
Component | Average Spend Range of Overall Marketing Budget | Examples |
Digital Advertising | 20-30% | Google Ads, Facebook Ads, Display Ads |
Content Marketing | 15-25% | Blog posts, videos, infographics |
Social Media Marketing | 10-20% | Sponsored posts, influencer collaborations |
Email Marketing | 10-15% | Campaigns, newsletters, automation |
Events and Sponsorships | 10-15% | Conferences, trade shows, local events |
Public Relations | 5-10% | Press releases, media outreach, interviews |
Marketing Technology | 5-10% | CRM software, analytics tools, automation |
Print and Offline Ads | 5-10% | Brochures, direct mail, print advertisements |
Market Research | 2-5% | Surveys, focus groups, competitive analysis |
Miscellaneous Expenses | 2-5% | Contingency, unforeseen costs |
Content Marketing
Content marketing is one of the most crucial channels for brands to generate awareness, establish thought leadership, and drive organic traffic. It involves creating and distributing valuable content tailored to the target audience's needs and interests. This content can be created in the form of blogs, case studies, eBooks, videos, podcasts, or guides. As per NYT Licensing, content marketing costs 62% less than traditional marketing and leads to about three times as many leads.
On average, companies allocate around 25% of their marketing budget to content marketing, recognizing the importance of organic search and content in driving long-term engagement and leads.
Search Engine Optimization
SEO reinforces your marketing efforts by improving the ranking of your web pages in search results. From on-page optimization to technical SEO, link building, and guest blogging, SEO involves various elements that impact any brand’s ability to attract organic traffic, generate leads, and conversion. As per a B2B marketing report by Sagefrog, SEO is the most implemented marketing tactic by B2B brands.
Image: Growfusely
Depending on your business goals and industry type, SEO can cost hundreds to thousands of dollars per month. Defining your business (long-term and short-term) goals, assessing the role of SEO in your marketing mix, and current SEO performance, and reviewing industry benchmarks are some of the elements to assess before finalizing the percentage you can allocate to this channel of marketing.
Digital Advertising
Looking at the stats above, allocating to Google ads and display ads is particularly effective for brands in 2024. Digital advertising should cover costs for setting bid strategies, ad placement, and A/B testing. When allocating budget, businesses should align strategies with their goals, focus on platforms where their audience is most active, and utilize past and current performance data to guide decisions.
Email Marketing
Email marketing may be a more traditional form of marketing, yet it's still effective today as you are reaching out to people who are already interested in your services. When brands make $36 for every dollar spent on email marketing, it would not be wrong to say that a whopping 93% of B2B marketers trust email marketing to bring a good ROI. On average, businesses allocate 10-15% of their overall budget to email marketing.
Social Media Marketing
Platforms like LinkedIn, Instagram, Facebook and X (Twitter) can be valuable for companies to share content, engage with audiences, and build brand awareness. You need to analyze which social channels work for your business depending on your business goals and target audience. As per Neal Schaffer, running ads on social media can see an average return of $2.80 for every dollar spent. Social media marketing can take anywhere around 10-15% of your overall marketing budget.
Besides marketing channels, businesses need to allocate a certain portion of the budget to tools and technologies, depending on their needs.
Marketing Automation Tools - To schedule content posting, funnel comments and messages into one social hub, generate shareable reports, and track brand mentions.
Analytics and Reporting Tools - To gather insights into marketing campaign performance, website traffic, and customer engagement.
CMS (Content Management Systems) - Platforms to enable the creation, management, and optimization of digital content.
Social Media Management Tools - To schedule posts, engage with audiences, and analyze social media metrics.
Generative AI - To analyze chunks of data, create personalized content, and optimize marketing campaigns in real-time. Also great for predictive analysis, brainstorming, and enhancing marketers’ productivity.
Marketing Budget Allocation By Industry
Marketing budget allocation requires taking a multifaceted and tailored approach considering different characteristics, challenges, and priorities of each industry and their unique goals. Let’s take a look at budget allocation for different industries.
Professional Services
Professional services firms like legal practices, consulting firms, accounting firms, HR firms, and marketing agencies require effective budget allocation that helps maximize visibility, build credibility, and generate leads. These companies should prioritize channels that resonate with the decision-makers and work on establishing themselves as thought leaders. By strategically allocating resources, they can enhance marketing efforts and achieve sustainable growth in a competitive landscape.
As per CMO Survey, professional services firms must dedicate 22% of their overall budget to marketing efforts. Firms in professional services can benefit majorly by establishing themselves as industry leaders with in-house experts as the face of the firm. Besides, these firms should allocate marketing budget to
A good website with SEO-optimized content.
Content marketing will help professional services firms establish credibility and attract potential clients organically. Allocate resources towards creating high-quality blog posts, whitepapers, and case studies optimized for SEO and share them via email marketing and social media platforms. As per Hinge Marketing, “more than 50% of buyers would read articles or publications to learn more about a topic important to them professionally.”
Speaking engagements is a great way to build a reputation and generate leads.
LinkedIn is an excellent platform to engage with professionals and share relevant content.
Paid advertising on platforms like Google Ads and LinkedIn allows professional services firms to target specific keywords, industries, or job titles, ensuring their ads reach relevant audiences interested in their services.
Below is the illustration of top 10 lead sources for businesses in professional services.
Image: Hinge Marketing
Wellness
The wellness industry needs optimum allocation of marketing budget to attract potential new clients and retain the existing ones. Experts suggest focusing on content creation and distribution, SEO tactics, email marketing, and paid advertising.
The wellness industry should dedicate around 5-10% of their total revenue towards marketing efforts, out of which a significant amount should be allocated towards inbound marketing strategies like content marketing, SEO, and email marketing.
Investing in building and nurturing an email list is crucial in the wellness industry as it puts your business in direct contact with your audience, allowing for enhanced relationship building and long-term sustainability.
Wellness businesses should consider allocating about 20-30% of their marketing budget to paid advertising (Google ads and social media ads), adjusting based on the effectiveness of campaigns and business goals.
While in-house marketing can be cost-effective, investing in professional marketing support can offer higher ROI through expert insights and scalability.
Businesses in the wellness industry must establish authority with consistent quality content creation and distribution, and engaging with the audience on various platforms. The marketing budget should be allocated keeping in mind long-term investment in thought leadership and trust-building activities.
Nonprofit
Like any other industry, nonprofit organizations should focus on channels and strategies that have the highest return on investment (ROI). As a general rule of thumb, nonprofits should spend around 5 - 15% of their overall budget on marketing, whereas smaller organizations should spend a larger amount.
They should focus on:
A good SEO-optimized, user-friendly website with clear information.
Nonprofits should invest in content marketing to generate organic traffic by creating and distributing information about the industry while sharing stories and updates on their initiatives. According to a survey by Content Marketing Institute, 86% of nonprofit marketing professionals believe content marketing is an effective way to raise awareness for their organization.
Social media is great for nonprofits to share their stories, causes, behind-the-scene videos, event live streaming, and Q&A sessions. Paid social media ads should be a part of nonprofits’ marketing budget. As per 2023 M+R Benchmarks Report, nonprofits spend $126 on social media ads for every new donor acquired.
Paid ads should be a part of nonprofits’ marketing budget in 2024. Since Google provides up to $10,000 per month in search ad grants to nonprofits, and it is free to set up an account, these organizations must focus on capitalizing on Google ads, and target audiences with custom and tailored messages to generate leads.
Email marketing is another channel nonprofits should utilize to keep their supporters informed and updated with the latest happenings. Personalize messages and communication with donors. Make sure to appreciate them for their continued support.
70-20-10 Rule
If you are still unsure how to allocate your marketing budget, either follow the below 70-20-10 rule or reach out to us to help you effectively allocate the budget to strategies that work and align with your business goals.
70% of your budget is allocated toward strategies you know work well.
20% of your budget is allocated toward new strategies aimed at helping you grow.
10% of your budget is allocated toward experimental strategies.
Conclusion
Effective marketing budget allocation is crucial for maximizing ROI and driving business growth. By strategically investing in high-performing channels, consistently analyzing performance, and staying adaptable, businesses can ensure their marketing efforts resonate with their audience and sustain competitive advantage in the ever-evolving marketing landscape.
Need help allocating your marketing budget? We got you! Reach out to us or schedule a discovery call.