How to Create an Annual Marketing Budget That Doesn’t Go Overboard

The key to creating an accurate budget is to overestimate. It’s common knowledge that just about every budget, whether business or personal, tends to go over what’s expected. So, let’s be real.

Marketing budgets help us stay on track. They allow us to analyze and determine ROI, as well as give marketers oversight on what we have to work with and what areas we can improve on financially.

Even though budgets are never as high as we’d like them to be, planning a budget for the upcoming year ahead of time helps to allocate costs appropriately and provide a foundation to go off of for spending.

Learn how to create a realistic budget for the following year with the tips below.

Step 1: Establish a Baseline Budget – And Be Realistic

Determine what the baseline annual marketing budget should be by analyzing costs from a few different factors, and estimating slightly higher:


      Employees are expensive. Salary and full-time employees come with benefits like insurance costs, paid time off, and performance reviews (aka pay increases). Good employees even get bonuses throughout the year, or at least they should. Therefore, give a rough estimate of employee cost for the following year based on the amount of employees you currently have. If you plan on expanding within the next year, add additional room in the budget for growth.

Marketing tools: Tools help to simplify everyday tasks, like the AuthorityLabs SEO tool that helps with keyword research and rankings for SEO’s. Account for any tools that your team uses on a regular basis whether for project management, research, or any other tool that helps with marketing efforts. New tools are released every single year, so you’ll want to leave wiggle room in the budget for any new tool additions.

Overhead costs: Every business has some sort of overhead cost, even “remote” companies. The cost of the space to rent, utilities, tax preparation and filing, accountants, etc. adds up in the budget.
Revenue: How was profit made in the previous year on behalf of marketing efforts? How much profit was made overall for the company? How much revenue is projected for the next year? Have a base estimate of not only what you need to make to survive as a business, but a baseline of what you should expect to profit the following year. This is the only part of the budget that we hope goes over the estimate.

Figuring out what each of the above figures looks like will help you calculate a reasonable baseline budget for the following year. Each year you’ll need to re-analyze a budget for the following due to changes in profit, number of employees, a re-location, and a number of other factors.

Step 2: Give the Budget Extra Wiggle Room

ALWAYS give extra room in the budget for new opportunities and oh sh*t moments. These moments are those very costly mistakes that us marketers, on very rare occasions, make. Like accidentally putting one extra zero on our pay per click spend limit and not realizing it until two days later.

Other reasons for wiggle room in the digital marketing budget are for opportunities. Affiliate and marketing opportunities may come up that you just can’t pass on.

A new way to automate email marketing without being sent to spam folders may be invented. Google may announce a costly and timely update like AMP that needs to be implemented. Employees may totally kick butt and deserve an extra performance bonus.

Whatever the case, there will need to be room in the budget for impromptu items, that way items in your baseline budget aren’t taken away from.

Step 3: Divide the Budget Into Quarterly Budgets

Once the annual marketing budget is determined you can then focus on quarterly budgets. Keep in mind, one quarter may have a larger budget than other depending upon your promotion season and industry. For example, retail and eCommerce businesses should have a larger marketing budget estimated for the fourth quarter to amp up advertising and promotions for holiday sales.

Step 4: Define the Business Goals For the Next Year – And Be Realistic

What does your business need to accomplish in order to have a “successful” year? Is it based on:

  • Conversions
  • Email opens
  • Increased sales
  • Event attendees
  • Engagement and exposure
  • Product manufacturing
  • New clients

Have a clear understanding of what it takes for the business to succeed as well as what it needs to improve on in order to succeed. You’ll need to dip into the marketing budget in order to make this success happen, so define what it will take and how much that will cost.

Step 5: Portion The Marketing Budget Into Specific Marketing Areas

Marketing can’t be classified as a one-size-fits-all budget. Although some business owners may want to throw any and every marketing task into the same bucket, they’re all very different and should have different budgets to associate with.

Budgeting for social media is extraordinarily different than budgeting for SEO and content. With social media, you’re paying for someone or an agency to manage social media profiles and engagement, graphic design for post images (if you’re doing things right), content to share (like infographics and blog posts), and advertising (if you’re doing things right). SEO can easily be covered by hiring an SEO agency to do all the heavy lifting for you, or you can take a hands on approach which may end up being the same cost as an agency in the longrun.

Prioritize your marketing budget based on what kind of marketing you’re currently doing for your business and it’s goals, leaving some room for new marketing opportunities.

ContentSEOPublic Relations

Type Budget For 2016 Actual Spend Estimated Budget For 2017
Social Media
Graphic Design
Affiliate Marketing / Leadgen

Have you put any thought into your 2017 budget? Now’s the time!

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