Whether the past year was a raging success or a bit of a fizzle, there’s nothing quite like the excitement of starting a new marketing year. Potential for both short-term gains and long-term growth hinges on the actions you take next, and the decision that will either bolster or plague you most throughout the year is your B2B marketing budget.
It’s a far-reaching decision. If you set your budget too high, or allocate it to the wrong area, your company will have to make do with less to spend on operations, research & development, and other necessary departments. If you fail to allocate enough funds or prioritize spending in unproductive areas, your company can become less visible, lose customers, lengthen sales cycles, stunt growth, and limit your company’s ability to participate in key marketing initiatives. In order to set your budget up for success, a good place to start is deciding what you’re planning to do with it.
In this article, we’ll cover best practices for setting a B2B marketing budget, considering factors such as revenue allocation, marketing channels, and strategic priorities to guide your decision-making.
If your sales process were simple and direct, your budget would be easy to calculate. But because B2B companies usually have a range of stakeholders with varying priorities, pain points, and criteria, you need a nuanced approach that engages decision makers across multiple marketing channels for longer sales cycles.
Strategic budgeting takes out the guesswork, using analytics and performance data to find the channels that deliver the highest ROI for your business and cut spending on initiatives that aren’t delivering.
Creating a well-structured marketing budget should help your company:
Why reinvent the wheel when you can find a time-proven method that’s already been tested? There are a variety of ways to plan your B2B marketing budget for the coming year. Three of the most common models are percentage of revenue, historical data, and goals-based budgeting. Let’s take a closer look at each of these.
The most common method of creating a B2B marketing budget is to take a flat percentage of last year’s revenue. This method is the most popular because it’s easy to calculate and is sure to fit within your budget. The disadvantage of using this method is that it’s based on past performance and may not give enough latitude to allow for changing priorities and market opportunities. B2B companies typically dedicate 5–10% of their annual revenue to marketing, but if you’re trying to grow your reach you can increase this range to 12–15%.
Do you have clearly defined objectives for your business you want to achieve? Goals-based budgeting is the most direct B2B marketing budget method for achieving them. Finding a specific dollar value for your budget involves breaking down your objectives into measurable goals, such as quantified lead generation or brand awareness, and estimating how much it will cost to achieve them. This technical method of budgeting requires detailed analysis and forecasting but can have big payoffs in specific outcomes when done right.
This data-driven approach to calculating your B2B marketing budget is similar to Percentage of Revenue in that it directly relates your budget to revenue, but there’s an important difference. While Percentage of Revenue is a straight-forward calculation based on past income, Customer Acquisition Cost (CAC) and Lifetime Value (LTV) Analysis uses historical data to assess the cost of customer acquisition relative to long-term revenue potential. This method balances acquisition costs with the value each customer brings over their lifetime, so you can predictably match your marketing investment with sustainable growth and profitability.
Once you’ve determined your overall budget, your next step is figuring out the best way to spend it across the various marketing channels.
Here’s a typical B2B marketing spend allocation:
Manufacturers will likely get the best results from blending digital strategies with traditional marketing tactics, such as trade shows.
Marketing strategies shouldn’t exist in a vacuum. They need to directly align with your overall business strategy. The best way to accomplish this is to create specific marketing goals with measurable outcomes.
Goals for B2B manufacturing companies may include:
Prioritizing high-ROI activities, such as SEO, taking advantage of data and analytics, and using low-cost channels will make the most of your budget.
Search Engine Optimization (SEO) is still one of the most cost-effective ways to connect with high-intent leads. Do your keyword research to find out what potential customers are looking for, create valuable content that addresses their needs, and make sure that your website loads quickly and reliably without errors and broken links that can detract from the customer experience.
Take advantage of Google Analytics and other tools that can help you track your return on investment (ROI), tweak campaigns to make them more effective, and provide valuable insights that you can use in setting next year’s B2B marketing budget.
Low-cost marketing channels, such as social media and email marketing, give additional opportunities to engage and nurture your target audience without breaking the bank.
With new platforms and technological advances constantly emerging, you can stay on top of the changing market by adding some flexibility into the mix. Set aside 10–15% of your budget to give you the wiggle room to take advantage unplanned opportunities and overperforming channels.
Creating a B2B marketing budget should ideally be more science than art, based on your company’s unique position and goals. Whether you decide to allocate your resources using a percentage of revenue, a goals-based model, or analytics, focusing on how to best serve your target audience will set your company up for a successful 2025.
