Let’s face it…budgets can be tricky!

They are unique, individual.

There are a lot of factors that go into finding that sweet spot that feels comfortable.

And while there is no one right answer that fits everyone, there is a right answer that fits YOUR BUSINESS.

Before we dive into my Four Marketing Budget Modes, let’s start with a few best practices to keep in mind when it comes to allocating your hard-earned money into a marketing budget.

Budget Best Practices

✅ Use SMART Goals

Don’t throw darts at a wall! EVERY tactic you choose should have a measurable goal in mind. The easiest way to make sure you are aligning your marketing with the results you want is to use SMART goals.

Specific – Clearly define what you want to achieve.

Measurable – Include metrics to track progress and success.

Achievable – Set a goal that is realistic given resources and constraints.

Relevant – Ensure the goal aligns with broader business objectives.

Time-bound – Set a deadline for achieving the goal.

✅ Know your audience

Knowing your audience, and more importantly, knowing where to FIND your audience, is key to maximizing your marketing ROI. If your audience isn’t on YouTube, don’t waste your money advertising there! Common sense, I know, but it had to be said 😊

✅ Budget based on the 70/20/10 rule

Depending on how much you have to spend, stick with a simple formula for allocating where that money will go. This means putting 70% of your budget into core tactics (those ones you KNOW work for you), put 20% into new but proven tactics (this could be “new to you” or brand new to market) and 10% into experimental tactics (these are purely testing the waters).

This combination will help you hone in on what works for your business while still staying current and exploring new, potentially beneficial, tactics.

✅ Look at the bigger picture

For a lot of us small businesses, our monthly marketing budgets feel pretty small. But like investing, we are in this for the long game! Don’t forget to take a step back and appreciate the long-term investment those small monthly budgets are building. Every $5 post boost gets more eyes on your business!

✅ Account for subscriptions and software

I am the worst at this, but all those little subscriptions for Canva, ChatGPT, email marketing, etc. really add up. Make sure you factor in all of these costs!

Fantastic. Now let’s talk about how much to spend on marketing!

I use four main budget levels to determine where my marketing budget sweet spot is.

I rarely stay in one budget for the entire year, so don’t feel contained to one level.

Have a big promotion? Move up to a higher budget level for a few weeks (or months) to get your product out to your audience then drop back down once your promotion has ended.

Remember, these are starting points! Trust your gut and do what’s right for your business.

#1   Maintenance Mode

ANNUAL BUDGET: 2%-6% of annual revenue

Use level 1 when you are looking to simply maintain your presence in the market. You have a solid customer base that is engaged and your primary goal is to continue to push important information to those customers and keep building those relationships.

In maintenance mode, focus on low-cost advertising activities like consistent social media posting, email marketing, and SEO.

Traditional advertising can be a bit tricky here because print/radio ads can tend to be more expensive, but if your market is local, this kind of advertising can be very effective.

If your customers are mostly national, swapping out traditional media for pay-per-click digital advertising like Google Search would be my go-to.

#2   Build Momentum Mode

ANNUAL BUDGET: 6%-8% of annual revenue

This level is for when you are ready to kick things up a notch and get in front of some new customers while maintaining the customer base you already have. For seasonal businesses this can also be a great starting point for a pre-season marketing push before dropping back down to maintenance mode when your peak season is over. This is also a great “level up” for holiday promotions, new product launches, or an expansion to your business.

To build momentum while maintaining a solid return on investment, I would recommend putting most of your budget into digital tactics like social media & social media ads, SEO, and pay-per-click advertising.

That doesn’t mean you can’t place a print or radio ad, just make sure it matches the reach you want to achieve and hits the right target audience.

Depending on your audience and budget, this may be a place to start engaging with micro-influencers and putting some funding behind the PR side of promotion.

#3   Ramp It Up Mode

ANNUAL BUDGET: 8%-10% of annual revenue

This level is for when you are ready to kick things up a notch and get in front of some new customers while maintaining the customer base you already have. For seasonal businesses this can also be a great starting point for pre-season marketing before dropping back down to maintenance mode when out of season. This is also a great “level up” for holiday promotions, new product launches, or sales.

To build momentum while maintaining a solid return on investment, I would recommend putting most of your budget into digital tactics like social media & social media ads, SEO, and pay-per-click advertising. That doesn’t mean you can’t place a print or radio ad, just make sure it matches the reach you want to achieve and hits the right target audience.

If your budget allows, add in some “ramped up” digital tactics like ads on streaming radio or streaming television (also called OTT). You can also add in “display” ads via Google’s networks which enable you to include photos and short videos in your digital ads (for a price, of course!).

#4   Get After It Mode

ANNUAL BUDGET: 10%+ of annual revenue

You are wanting to shout from the rooftops about your business. Tell the world you are here and your business is what they have been looking for! If you are in this mode, you are likely new to market or have a new product/service to launch. Keep in mind you don’t have to stay at this budget level indefinitely – adjust over time as you settle in.

To reach the greatest number of people in your specific target market, you are going to have to understand where your audience is and meet them there.

Do you have a national audience? Stick to 90% digital. Do you have a local audience? Put 70% of your budget into digital advertising and then get creative with the other 30%. Can you partner with another local business? Sponsor a local event? Place an ad in a local newspaper? Your ROI may be a bit less with traditional tactics, but the goodwill of the community more than makes up for it!