How Much Should You Spend On Advertising And Sales Promotion?


Coming up with the „right“ marketing budget can be a daunting task, especially if you’re new to the market.

While marketers usually talk about the 5% rule (your advertising budget should be around 5% of the total revenue), you shouldn’t rely on it too much. Each company has its own unique marketing needs, which means they require different budgets as well.

In this article, we’ll discuss the topic in detail to help you determine the right amount of money that you should be spending on advertising and sales promotion.

So, without any further ado, let’s get to the bottom of it!

Startups should be spending more than 5%


Startups should be spending more than what their already established competitors spend when advertising is involved. When you’re new to the industry, your primary goal should be to reach as many potential customers as you can by growing a name for your brand in any way you can. Mere 5% of your total revenue simply won’t cut it. You should aim for somewhere around 12-15%, if possible!

Look at it as an investment towards your future – the better your marketing strategy is, the quicker you’ll achieve your business goals. Focus on digital advertising and sales promotion as it’s usually cheaper and more effective than the traditional marketing approach.

Either way, as a startup, you should invest as much as you can into developing and perfecting your marketing strategy. It’s the only way you can establish yourself on the market nowadays – so don’t neglect it!

Research your industry

Different industries have different marketing needs, therefore requiring different marketing budgets. Make sure you’ve done your research before you came up with your own budget for advertising. This will help you set realistic goals and avoid overspending, which are crucial aspects of a growing business.

According to the CMO Survey, companies in the consumer packaged goods industry spend the most on their marketing budgets (up to 24%), while manufacturing companies spend only around 8%. Either way, this is something that should be carefully considered by every company that’s struggling to come up with an effective marketing plan.

You can find tons of useful information online, so don’t hesitate to check what your competitors are doing – it can certainly help you set clearer goals in the future. This is especially important if you’re running a young business or a startup, but all companies can benefit from it.

Be flexible


Your advertising and sales promotion budget shouldn’t be set in stone. Listen to the market and try answering its demands to the best of your ability.

Again, as your business grows and starts gaining customers, you’ll need to update your strategy. Keeping up with the latest marketing trends is of the utmost importance, especially if you’re doing business in a growing market.

Marketing is a dynamic profession – just because something worked today, doesn’t mean it will work tomorrow. Be prepared to change and update your strategy frequently, including your advertising budget.

Seek professional help

If you’re unable to come up with a proper budgeting strategy yourself, you can always leave it to the professionals. There are many marketing agencies that help small businesses save time and money on advertising by providing them with the tools they need to succeed. Even though you think these services may be too expensive for you, in most cases, they’re the most affordable solution out there.

Besides marketing agencies, you could reach out to branding experts such as those at Brandability to find ways of getting your brand recognized on the market.

Either way, seeking professional assistance is one of the best ways you can come up with the perfect advertising budget without having to spend too much of your precious time.

The clearer your goals, the easier proper budgeting becomes


Setting clear goals is the number one task of every marketing campaign. As long as you know exactly what you want, which channels to invest in, and how to measure your success, you’ll be able to create the perfect budget extremely quickly.

So, sit down and think about it – what are your goals for the next week, month, or year? What’s the best way of achieving it? How will you know whether you’ve been successful or not? Be as specific as you can, and do your research to see how much it all costs.

Again, don’t be afraid to experiment with your budget. If your current campaign is not giving satisfactory results, perhaps it’s time to switch things up a notch.

It all depends on the channels you choose

Promotion on different marketing channels comes with many different prices – some are more expensive than others. Prioritize those channels of communication your target group is most likely to encounter– be it social media, flyers, billboards, or online ads.

It all revolves around your target group and their specific preferences, so don’t overspend on things that will never reach your desired audience. It would be a complete waste of money, which only confirms the importance of getting to know your target group properly before you start budgeting.

Don’t overspend


Know your limits – overspending is as dangerous as underspending, especially when sales promotion is considered. We advise you to consult with an experienced accountant who can help you assess the risks your budget might be carrying.

If an investment can potentially leave you unable to keep your business up and running, it’s simply not worth the risk. Take it slow until you’ve made enough money to boost your campaign to the level you currently desire but cannot afford

The bottom line

All in all, coming up with a perfect marketing budget is not an easy task. It requires tons of research and careful planning. Still, in this article, we’ve tried to help you by providing you with some advice on how to get things started at your own company.

We hope you found it to be useful and we wish you the best of luck in all of your future endeavors.