How to set a realistic marketing budget

A marketing budget isn’t about spending more. It’s about spending on purpose. I see the same two mistakes constantly: owners who underspend and wonder why nothing’s happening, and owners who pour money into ads while their website and Google profile quietly let them down. Both come from picking a number out of the air. Here’s how to set one you can actually defend.

Set a realistic marketing budget by basing it on a percentage of your revenue, not a random round number: spend roughly 5-10% to hold your position and 10-20% to grow, then split that amount across your website, local search, content and paid ads according to where your customers actually find you.

Start with a percentage of revenue

Pick your budget as a share of revenue, then sanity-check it against what you want to achieve:

• Maintaining (steady business): 5-10% of annual revenue.
• Growing (gaining ground): 10-20% of annual revenue.
• Brand new (no reputation yet): plan for the higher end, you’re buying awareness you don’t have.

Quick example: £200,000 in revenue, aiming to grow, at 12% = a £24,000 yearly budget, or £2,000 a month. Use revenue you can rely on, not your best month ever.

Split the budget across channels

Once you’ve a total, divide it. There’s no single correct split, but most service businesses do well with something like the table below. The golden rule: fund the foundations first, because they make every paid pound work harder.

Notice that paid ads aren’t the whole budget. Sending paid clicks to a slow or unconvincing website is filling a leaky bucket. Fix the bucket first.

Don’t skip the cheap, high-impact basics

Some of the highest-return marketing costs almost nothing but time:

1. Google Business Profile, free, and often the single biggest source of local enquiries.
2. Customer reviews, free to request, and they influence both buyers and search rankings.
3. A clear homepage, one that states what you do, where, and how to contact you.
4. Branded email, cheap, and it makes you look like a real business.

Do these before you spend a penny on ads. For the full list, the online presence checklist covers it.

Balance fast wins against slow compounders

Different channels pay off on different timelines, and a smart budget funds both:

Fund only ads and you rent your traffic forever. Fund only SEO and you wait months for results. Split the difference: use ads for cash flow now while content compounds in the background. The trade-offs are in SEO vs paid ads.

Track it, then adjust

A budget’s a starting hypothesis, not a contract. Review it monthly against real numbers, not vanity metrics:

• Cost per enquiry, spend on a channel divided by enquiries it produced.
• Cost per customer, the same, but for closed sales.
• Payback, how long until a customer earns back what you paid to win them.

If a channel costs more to win a customer than that customer’s worth, fix it or cut it and move the money. For the wider set of numbers worth watching, see metrics every business should watch.

Setting the number’s the easy part; spending it well across a website, Google profile, content, reviews and ads is where most owners run out of time. We handle the whole online presence on one predictable monthly plan, so your budget covers the foundations and the growth work without juggling five suppliers. See what each plan includes on the pricing page, or get in touch to talk through a budget that fits your revenue.

Set the percentage this week, split it by channel, and put a monthly review in the diary. A budget you actually track will always beat a bigger one you don’t.