Setting the Foundation for Your Marketing Budget

By Rachel Johnson

‍

As the year draws to a close, so does our 2024 marketing budgets. As we all plan for 2025, we have an opportunity to potentially change the model of how we think about marketing spend. 

Before we get into recommendations, first some benchmarks. These benchmarks are from Pavilion’s B2B SaaS performance benchmarks from their 2024 report, they commented that brand planned to allocate more of their marketing spend to demand gen (53%) and less to brand awareness (38%).

  The report also notes that buyers are increasingly prioritizing trust, transparency, and brand when making decisions. 

‍

Here are some other marketing spend benchmarks:

• B2B companies: B2B companies typically allocate 6–12% of their revenue to marketing, but this can vary depending on their growth stage and competitive landscape. 
• Small businesses: Small businesses typically allocate 7–12% of their revenue to marketing. 
• Tech and software companies: Tech and software companies allocate around 12.05% of their total budget to marketing.

‍

Now that we understand the benchmarks, Here are the key questions to ask yourself about your business when building your marketing budget: 

‍

Strategic Alignment

1. Business Goals
   • What are the company's overall revenue, growth, and (new) customer acquisition targets for 2025?
   • How does marketing support broader business objectives like market expansion, retention, or brand positioning? (or are there other initiatives marketing supports?)
2. Market Position
   • What’s our current market share, and what’s our desired position in the industry (TAM/SAM)?
   • Are there new market opportunities or segments we should target?

Customer and Audience Insights

3. Target Audience
   • Who is are our ideal customers (ICP - Ideal Customer Profile), and how have their needs evolved?
   • Are there new personas or industries we should target?
   • Is our ICP the same next year as it was last year? What changes should we consider to make ourselves more relevant to our ICP? 
4. Customer Journey
   • What does the current buyer journey look like, and where do customers experience friction?
   • Are there specific stages (awareness, consideration, decision) we need to invest more in?
   • Should we plan for seasonality in our business cycle? 
5. Retention vs. Acquisition
   • What is our current customer acquisition cost (CAC) and customer lifetime value (CLV)?
   • How can marketing help reduce churn or increase customer expansion revenue (upselling/cross-selling)?

Competitive Landscape

6. Competitor Analysis
   • How much are competitors spending on marketing (approx), and where are they focusing their efforts?
   • Are there gaps in their strategy that we can capitalize on?

Budget Allocation

7. Channel Performance
   • Which channels (e.g., content marketing, SEO, paid ads, events, partnerships) are driving the best ROI today?
   • Are there underperforming channels we should reduce investment in or test for optimization?
8. Experimentation
   • How much budget should be reserved for testing new strategies, channels, or technologies?
   • What new trends (e.g., AI tools, demand-gen techniques) should we explore?

Metrics and Measurement

9. Key Performance Indicators (KPIs)
   • What KPIs will measure success (e.g., MQLs, SQLs, pipeline, revenue attribution)?
   • How will we track and report marketing impact across the funnel?
   • Anything new that we should think about tracking next year that we didn’t track this year?
10. Attribution
    • How effective are our attribution models, and do they accurately reflect the impact of multi-touch campaigns? Any tweaks we should make? 

Operational and Team Capacity

11. Team Resources
    • Do we have the right team size and skill set to execute the strategy?
    • Should we outsource certain functions or invest in team training?
12. Technology Stack
    • Are our current tools, vendors, and platforms (CRM, automation, analytics) sufficient for our needs?
    • Should we invest in new technologies to streamline processes or improve insights?
    • How should we invest in AI in 2025 to drive efficiency into the marketing team? 

Risk Management

13. Economic and Industry Trends
    • How might macroeconomic factors or industry trends affect our market in 2025?
    • What contingencies should we include in the budget for unforeseen challenges?
14. Budget Flexibility
    • What portion of the budget should remain flexible for shifting priorities or unexpected opportunities?

Scaling Considerations

15. Regional Expansion
    • Are we expanding into new regions, and how will this impact budget needs (e.g., localized campaigns)?
16. Partnerships and Collaborations
    • Are there potential partnerships, alliances, or co-marketing opportunities to amplify our efforts?
17. Brand Investment
    • Should we allocate resources toward long-term brand-building initiatives versus immediate lead generation?

By addressing these questions, you’ll develop a well-rounded, data-informed marketing budget that supports both short-term goals and long-term growth for your B2B business.

‍