How much money to spend on marketing?

How much money to spend on marketing?

As marketing budgets leveled off last year, chief marketing officers (CMOs) still face several challenges ahead. Here are some tips on determining an annual marketing budget that works for you.

How companies calculate a marketing budget

Traditionally, most companies determine a total marketing budget as a percentage of total revenue. According to the Gartner for Marketers CMO Spend Survey 2018-2019, the average percent of revenue spent on marketing in 2018 was 11.2%,

This calculation will vary significantly depending on the industry and development of a particular company. For example, a start-up company or an established player rolling out a major product will be more likely to incur a higher marketing budget.

Challenges faced by CMOs

Projecting a detailed marketing budget for the future is a difficult task, and justifying an increasing marketing budget to executive leadership is a persistent challenge for CMOs. A successful department must have a beat across the entire organization to ensure that all marketing activities reflect the organization's goals and vision.

Below are three major challenges currently faced by marketing teams across the industry, with recommendations for allocating a marketing budget to address these hurdles.

Rapid changes in marketing technology.

Marketing technology continues to play an increasing role in marketing departments, accounting for 29% of the budget according to the Gartner Report. New tools and technologies that provide new insights and can automate traditional processes are invaluable. However, organizations must realize the true cost of technology lies beyond the purchase price of a new software package.

Marketing teams must think holistically and budget allocations for all levels of information technology integration, including IT infrastructure, external services to develop marketing applications, on-premises marketing applications, and support from internal IT teams. Failing to consider these ongoing expenses will quickly consume a budget.

Unpredictability of staffing needs.


In a field such as marketing, anticipating future staffing volumes is quite a challenge. While major campaigns and organizational initiatives might be in motion for years, most marketing functions must be responsive to evolving needs of the business. This results in uncertainty for correctly staffing the right number of employees.

Analysts, digital content creators, managers, and other marketing specialists are a crucial aspect of your marketing team. However, like all employees, the labor costs of marketing professionals does come with a price. Outsourcing or hiring consultants tends to be an immediate reaction to cutting down on costs. Think strategically about pushing the professional development and skill set of your marketing team to take on a greater volume and complexity of projects before rushing to push out a new job description.

Challenge of balancing costs and impact of paid media.


Advertising is a critical component of marketing and building brand recognition and identity for potential customers. Yet, content creation can eat up a marketing budget when paying for any skilled media service, including video, graphic design, or text content.

With the rise of digital media, a whole new world of media opportunity is open for marketers; some good and some bad platforms. Be sure to carefully monitor the costs and results of paid media such as through URL tracking. From social media campaigns to organic SEO, to traditional advertising, determine which paid media forms are generating the best results for your business. Be open to developing areas such as online video, which is expected to more than double its 2016 investment by 2021.

W. O'Donnell Consulting provides professional assistance to aid the development of a marketing budget and help figure out what is generating the best ROI for your organization. Contact us today to learn more about our professional marketing and digital media services.