4 questions to help build your 2024 marketing budget

Determining the ‘right’ marketing budget is nuanced, depending on how clear your marketing objectives are, and what channels your brand prioritizes. Use the four key questions to guide you toward a data-driven answer.

1. How much are you reinvesting into your company as marketing (versus revenue)?

There will inevitably be a variety of answers here, with professionals claiming that anywhere from 1% to 30% of revenue reinvestment is needed to experience desirable growth.

While there’s no silver bullet, Nielsen found in 2022 that the median brand reinvests 3.8% of its revenue back into advertising, and that at least 1-9% of revenue reinvestment is necessary to stay competitive. This percentage may need to increase if there are brands in your category that have a substantial share-of-mind that you are trying to compete against.

Plus, the maturity of your brand and category will likely impact the budget mix between brand initiatives and performance-oriented marketing.

2. How much are your competitors spending?

A marketing strategy should be far from the ‘copycat game’: ‘My competitor spends $X, so I need to match that’. But it’s important to know what your direct and indirect competitors are spending and where they’re investing those dollars (in channels and placements). If your brand invests $100,000 in marketing, but the category leader invests $10+ million, your brand may struggle for recall among the same audience.

Still, if that’s all the budget you have at your disposal, don’t be disheartened. Consider (now Coca-Cola-owned) sport-drinks brand Bodyarmor, which challenged (PepsiCo-owned) Gatorade with a fraction of the latter’s budget, by targeting niche communities and building brand advocates, tripling its market share over a two-year period.

The key for challenger brands is to identify whitespace to stand out, and avoid saturated space with high competition.

3. Who is your target audience, and on how many channels are you trying to reach them?

Achieving sufficient reach and frequency are key KPIs needed to drive desired outcomes for brands, regardless of where their goals fall in the traditional marketing funnel. Using data-driven planning tools, marketers can start to back into the budgets needed to have the greatest likelihood of reaching their audiences at sufficient frequency (typically, 5-10 cross-channel exposures are needed before brand advertising starts to have staying power).

Planning budgets based on audiences is a dynamic process that requires consistent analysis to understand how your audience is reacting to your ads, compared to the marketing objective. You need a deep connection between the brand and the audience to ensure you’re consistently meeting their needs and expectations. So don’t expect this audience sizing and scaling analysis to remain constant year-over-year. Instead, remain agile to flex with your audience.

4. Do you want an evergreen drumbeat, loud tentpole moments, or both?

Evergreen marketing is needed for brands aiming for consistent presence in front of target audiences, slowly building brand awareness over time and growing share of mind. This is a long-game play. It requires patience to see measurable results, especially when it comes to lower-funnel, sales-related lift. But it often requires substantial budget to be done effectively.

Keeping the lights on for your paid search campaign does not an evergreen marketing strategy make. Instead, it requires building an omnichannel, ecosystem strategy that aligns with the places where your target audiences most often spend time and are most engaged. From there, evaluate incremental improvements in share of voice, and unaided awareness from period to period. This can be a slow burn that shows minor growth when looking at quarterly data, but it might show a bigger story in an annual analysis.

On the flip side, tentpole moments should be considered when deciding your marketing budgets. These are shorter marketing sprints, centered around key events for your business or cultural moments impacting your consumers’ lives. Think trade show season for B2B brands, peak sales season for CPG brands, or smaller-scale moments like local events and festivals drawing in crowds for regional brands.

These activations often require a substantial budget as multiple brands compete for the same promotional opportunities. The reach potential with relevant audiences is substantial.

As you navigate the complexities of budgeting, remember that success often lies in finding the right balance. Reflect on these insights, assess your budget, and be proactive in adapting to the evolving needs of your audience. Always prioritize your business goals and objectives when determining budgets. Your marketing team’s success awaits.