A Case For Increasing Your Marketing Budget

A Case For Increasing Your Marketing Budget

  • On : January 22, 2020

Determining a marketing budget can be a tricky thing.

More often than not, companies tend to set strict limits to how much they are willing to spend. This decision is usually supported with the unsatisfactory outcomes of previous marketing campaigns.

This fear is justified; however, it is necessary to also consider that decreased funding to marketing in any given company risks it stagnating.

While past unsuccessful campaigns need to be considered, it should not fully determine budget for future campaigns as campaign failure could be attributed to a variety of reasons.

So, how can businesses spend their budget smartly?

Smart Budgeting

Research shows marketing budget allocation is now shifting towards digital channels rather than traditional advertising.

Gartner Research in a 2018-2019 survey reported that 29% of marketing budget is now allocated to technology – two-third of advertising budgets are used on digital channels, which is 22% more than in 2017. Brafton also revealed that digital advertising in the U.S is now 30 billion larger market than TV advertising.

Companies sense these winds of change and are gearing themselves for the competition – one major reason to consider your marketing budget.

Not convinced? Here are a few other reasons why and when you should increase your marketing budget.


Growth is an important factor for marketing, especially for a small business. Knowing which marketing campaigns and channels increase growth is important to determine your business direction.

Spending dollars on marketing should naturally trigger growth in sales or customer acquisition. If there is no upward growth trajectory, maybe it is time to consider your marketing spending. Aspects like target audience, content, marketing channels etc. all need to be considered from a growth perspective.

McKinsey & Company recommends that a company should also consider ROI drivers rather than just market and competitive pressure (e.g. market share, competitive intensity) to better allocate their marketing budget.

Campaign monitor reveals that the biggest potentials for small businesses in building brand awareness and gaining new customers are social media marketing and email marketing as these reap the highest return of investment (ROI).

So, if you are looking to attract and keep customers long-term as a young business, it is best to consider allocating extra cash for the early stages of your business lifecycle because allocation for marketing budget is as important as spending.

But, what about more established businesses?


If your business has established its brand exposure and retained a loyal base of customers, it is probably best to consider an expansion strategy before the company risks stagnation.

After years of repetitive cycles and strategies, business expansion is almost a must an established business. This is not only necessary for current growth but also future. Forbes has advised on the being proactive with marketing plans and adopting new strategies. While there are risks to this strategy, the risk of stagnation and possible decline far outweigh the failure of expansion.

Popular American scent brand, Old Spice risked stagnation by only focusing on an ageing target audience. But smart marketing saw the brand expand itself by repositioning to also include a younger base by adopting a well-executed integrated marketing campaign that was relevant to their new target market.

Businesses might choose to expand in several other ways such as through product development, market development, competitive pricing, and many more; all of which require a great deal of marketing to customers.

Smart allocation of funds here can be determined through a thorough analysis of several factors like customer profile (through segmentation and targeting) and current competitive climate. Adequate preparation in budgeting here is key to the success of the route chosen for expansion.

Work Backwards

Element three suggests another strategy for smart budgeting is to work backwards from the result you are trying to achieve. This may sound confusing since we cannot predict the results. However, if we have clear targets and goals to achieve, we are more likely to set a correct budget.

Many times, companies have huge goals to achieve but create budgets based on previous reports that may not be relevant to current strategies.

Working backwards enable companies to clearly see what is needed to achieve goals, be it growth or expansion, and set a realistic budget for the marketing and advertising activities.