Best practices for allocating your marketing budget

Building a marketing budget is one of a marketing leader’s most important–and often most daunting–responsibilities. The money in your marketing budget is finite and how you allocate each dollar can make the difference between a thriving marketing program and a failing one. According to Econsultancy, marketing budgets have been steadily rising since 2011. With more money to spend and more ways to spend it, it’s easy for marketers to get overwhelmed budgeting. Thoughtful evaluation, ROI tracking, and accurate data are key to taking the guesswork out of allocating your marketing budget.

Set your goals.

The very first step to determining how to allocate your marketing spend is establishing revenue goals and the strategy that you will use to reach those goals. Regardless of the industry that you’re in, your purpose as a marketing team is to reach or exceed a revenue goal as efficiently as possible. Every decision that you make should be driven by your goals, and this is especially true when it comes to allocating the finite amount of money in your marketing budget.

While the importance of marketing and revenue goals remains the same across any industry, the strategy that you use to achieve that goal may differ.

For example, if you’re planning a marketing budget for a brick and mortar shoe store, your goal is to reach a certain amount of shoe sales by the end of the year. As a brick and mortar luxury shoe store, you likely employ salespeople who play a part in generating sales so you can spend a bit less on pure marketing efforts. On the other hand, an e-commerce shoe store will allocate their marketing budget very differently. There still needs to be a certain amount of shoes sold to reach their revenue goal, but they may choose to spend a greater amount on programmatic marketing or email marketing since there are no salespeople to make the sale. While the strategy will vary from business to business, revenue is always top of mind when determining marketing spend.

Here’s a calculator we built to help you set a PPC budget. 

Identify what’s working.

When planning your marketing budget, you’ll want to evaluate the success of each of the marketing channels that you allocated money for in the previous year’s marketing budget. Which expenditures generated good leads for your sales team? Which channels didn’t help to move the needle towards your revenue goals? Is there marketing technology that you can cut? Ask yourself these questions as you explore the line items in last budget.

While it’s helpful to evaluate last year’s budget at a high level, it’s important to look closely at the number of leads or sales that each marketing campaign generates in relation to the cost of the campaign. Let’s say that you run advertisements on a podcast and on a radio program. The podcast generated 1,200 leads and the radio program generated 2,000 leads. At first glance, it seems as though it would be wise to allocate more money for running advertisements on radio. However, when you look closer at the data, you see that you spent $8,000 on the podcast ad placements and $15,000 on the radio placements. This means that each lead from the podcast cost you $6.60 and each lead from the radio ad cost you $75. Knowing the cost efficiency of each channel, you’ll likely choose to allocate marketing dollars to podcast advertising in your next marketing budget. This is the thoughtful approach that you should take when examining each of the marketing campaigns that you invested in.

Evaluate your budget throughout the year.

Now that you’ve examined your marketing goals, evaluated last year’s marketing efforts and taken into account current marketing trends, you should be ready to implement an airtight marketing budget. During the course of the year, make a concerted effort to monitor the success of your marketing campaigns so that you make changes when needed and be well-equipped to allocate next year’s marketing budget.

There are a number of tools available to help you measure ROI. Google Analytics and Ads (formerly Adwords are essential for marketers who want to measure the success of their organic traffic and online campaigns. CRM software such as HubSpot and Salesforce gather information about your leads and customers to help you determine which marketing efforts yield the greatest results for your business. Finally, call tracking software uses online and offline campaign tracking to help determine which are leading to phone calls and conversions, allowing you to focus your strategy on what drives high converting calls. Call tracking features like CallScore help to automate your data analysis by quickly identify which marketing campaigns are leading to sales.

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Make data-driven decisions.

In addition to looking closely at the data in your own marketing department, it’s important to take into account marketing trends that occur industry-wide. Here are some of the marketing budget trends that we’re seeing across the industry.

  • Digital marketing spending has been steadily increasing for years and there are no signs of this slowing down. In fact, Forrester Research predicts that marketers will spend at least 42% more on each digital marketing channel this year.
  • According to Forrester, search marketing will make up the largest chunk of online marketing budgets. 71% of respondents to an eMarketer survey said that they expect to increase their spending on Google Ads, confirming Forrester’s prediction about increased search marketing spending. Display advertising will take the second largest share of online marketing spend as more companies adopt online video and interactive banner ads.
  • Once seen as a content afterthought, video will become increasingly more important in the years ahead. Forrester Research found that including video in emails resulted in 200% to 300% increase in click-through rates.
  • While search marketing and video continues to make up increasing shares of marketing spending, eMarketer reports that social channel marketing spending is slowing down, with the exception of Facebook. Less than half of respondents to an eMarketing survey plan to increase spending on Instagram, Twitter, or Snapchat.
  • As in years past, content marketing is still a key part of a successful marketing strategy and although it is one of the most effective marketing tactics, it consumes a fair share of marketing budgets as a result. The Content Marketing Institute reported that B2B marketers spend on average 28% of their marketing budget on content.


Trends and best practices in marketing budget allocation vary from industry to industry, from year to year. As with many aspects of marketing, part of the budgeting process will likely always involve a bit of uncertainty and informed guesses. However, the key is to rely on as little guesswork and gut intuition as possible so that your marketing dollars are spent efficiently. If your marketing team is data-driven and has a tight marketing strategy, allocating your marketing budget should be a relatively straightforward process.

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