When it comes to allocating your marketing budget, there are several factors to consider. Depending on your business model, you should spend between 1% and 40% of your gross revenue on marketing and advertising. Generally, you should allocate between 2 and 5% of your sales revenue to marketing. This is a reasonable amount, according to many studies.
However, this rule applies to most years, not all. You may need to exceed your 5% budget for certain investments, such as updating your website every three to five years. It's important to have a strong marketing foundation in order to make the most of your day-to-day marketing activities. For example, if you have a website that generates 5,000 visitors per month but only converts 1 in 10,000 visitors into a customer, you're not making the most of your marketing efforts.
An updated website optimized for conversion rates can help you acquire customers with 95% less spending. When allocating your marketing budget, start by determining your objectives for the year and setting measures of success for each goal. Make sure you have the foundations in place to achieve these goals before selecting marketing activities. The percentage of revenue spent on advertising and marketing varies depending on the type of business.
For example, Wal-Mart spends approximately 1 percent of its revenue on marketing and advertising, while companies in the liquor industry generally spend between 5.5 and 7.5 percent.
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