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How your marketing budget affects the success of your business

Marketing budget Redline Company


A good marketing plan can either make or break a business. Not convinced?  Well, you might be more receptive to this fact if you knew that more than 90% of small businesses fail within the first three years of launch.

According to Forbes Coaches Council member, Chris McIntire, a 22-year study into entrepreneurial success rates in Texas (USA) found that the unsuccessful businesses managed to hang on for just under 3 years before closing. These figures are also representative of the rest of the US and Europe.


Plan, invest and improve

So, the big question is…what can you do to make sure your business does not fail and become just another statistic.

We’re all familiar with Benjamin Franklin’s wise words, “By failing to prepare, you are preparing to fail” and it couldn’t be more appropriate.  The solution is forward planning, marketing and intelligent budget allocation.


Set your marketing budget

The size of your marketing budget will depend upon your goals and also the amount of money you have to spend.  However, as a rule of thumb, when starting a new business, you should expect to allocate between 12-20% of your gross estimated revenue for marketing, as you need to establish the brand and also work towards gaining loyalty.

Whereas a more established company would expect to spend between 6-12% of gross revenue. Marketing is still needed but may not be such a hard push, as your target market most likely already know your brand and loyalty has been established.

5 steps for calculating your marketing budget

Calculate revenue (gross and estimated revenue).

Company size.

New – 1-5 years or 5+ years with brand equity and market share.

New companies – between 12-20% of gross revenue.

Established companies – between 6-12% of gross revenue.


Set marketing goals

No matter the size or type of business, it is important to plan ahead and to set goals. This is crucial to the success of your marketing and subsequently your business. By the end of 2021, you should already be drilling down on your long-term strategy for 2022. To a large extent, the size of your budget will determine your strategy and the channels used.


Create a long-term marketing plan

Now you have your budget and you have set your goals you need to consider your target market. You need to understand the buyers’ journey. You need to understand how will your marketing activity will reach potential clients and how it will affect their perception of your company. In other words, how will your marketing drive them from first discovery through to becoming loyal to your brand. 


Returns on Investment (ROI)

Working within the confines of a relatively small budget requires a savvy marketing plan, as you need to put your money where it will work most effectively. Choose the activities that will provide the best ROI, which could be SEO, PPC, your website, email marketing, social media etc.  Don’t worry there is an accepted guideline of the ratios for marketing budget allocation: 70/20/10.

70% - proven strategies

20% - new strategies to help business grow

10% - emerging and experimental strategies


Calculating ROI

To measure the effectiveness of each channel, the first step is to estimate costs and ROI. This calculation must include all costs, including professional marketing fees, third party costs and marketing channels that haven’t converted (delivered any results).

Industry benchmarks can be used to estimate the ROI, for example, Google Ads on mobile search is around 3.48% across all industries (2018). Obviously, this varies depending upon the nature of a business, but it provides a useful benchmark. 

Here is an example of how you may want to split your budget based on the 70/20/10 calculation:

  • You have a fully functioning website but would like to improve the quality of the leads, so you increase your conversions (make more sales).
  • 5,000€ monthly budget.
  • Proposed activity:
    • 3,500€ PPC
    • 1,000€ Conversion rate optimisation (improving the site for a better conversion)
    • 500€ SEO to improve ranking


KPI - Reporting

Once you have implemented your marketing strategy, it is essential to track the activity and this is done using Key Performance Indicators, such as increase in revenue, higher spend, lower cost per lead, higher ranking or increase in unique visitors to your website, to name a few.

Of course, this is just the tip of the iceberg, every business is different and every marketing plan and budget must be tailor made to suit specific requirements.  The takeaway has to be, if you believe in your business, you need to invest in your marketing.

If your business, real estate or otherwise, needs help preparing your budget for 2022, get in touch with Redline Company for a free business clinic. In one hour, you can get advice and ideas to boost your marketing activity. Contact


About Redline Company

Established in 2004, Redline Company is an award-winning marketing agency staffed by a talented, creative team of international professionals with expertise in marketing, graphic design, website design, copywriting, PR, social media and much more.