Growth takes resources, and resources are finite
There are three truths in every business, whatever the industry. Every company wants to grow. Growth requires resources. Resources are limited.
So strategy at this level is about getting the most from finite resources. Marketing for $1,000 a month looks nothing like marketing for $100,000 a month, even with identical objectives. That's why budget comes before goals, objectives and tactics in PB² GOST³, not after them. Too many companies decide to "do digital marketing" and never ask what they can afford to do well.
Budgeting is marketing strategy
In most marketing plans, the budget is an afterthought, decided at the end and defended once a year. That gets it backwards. Marketing strategy is using finite resources to reach your buyers, convince them of your value and turn them into customers. How much you spend, and where, is the strategy. It belongs next to who you’re trying to reach and why they should choose you, not after them.
An investment, not an expense
Many owners and CFOs see marketing as an expense, or as the arts-and-crafts department, and it’s the first thing cut when times get tight. Treat it like a retirement account instead. Ask a financial advisor how much to put in and the answer is: as much as you sensibly can, invested with a plan. No advisor guarantees a fund’s return, and nobody can guarantee a campaign’s. But the long-run pattern is clear.
Warren Buffett’s advice applies here too: be greedy when others are fearful. When competitors pull back in a downturn, every dollar you keep spending buys a bigger share of the conversation.
Budgets matter more than they used to
Les Binet and Peter Field's research makes the case that budgets spent strategically matter more than ever. The reasons are easy to see. It has never been easier to start a business, so every year brings more competitors. Media has exploded, so there are more channels and more noise to break through.
Your budget isn't growing at the same pace. How you spend it matters far more now than when there was one newspaper in town and a handful of TV channels.
Your current budget is what it costs to stand still
Share of voice is your slice of all the marketing in your category. Share of market is your slice of the sales. Over time, the two even out. So what you spend today is roughly what it takes to keep today's revenue.
An airplane has to burn fuel just to stay in the air. Apple doesn't buy billboards in downtown Dallas to grow next month. It buys them so you don't forget. If Apple went dark tomorrow, nothing would happen tomorrow, or the next day. Eventually, sales would fall.
That's why cutting marketing in a downturn usually backfires. When share of voice drops below share of market, brands shrink. Meanwhile competitors pull back and media gets cheaper, which makes a slow economy one of the better times to gain ground.
Budget is more than dollars
Budget includes time and people. A plan that needs weekly videos, daily posts and constant testing isn’t affordable just because the ad spend is small. Count the hours and the skills a plan needs, not only the media bill.
To grow, punch above your weight
When share of voice runs ahead of share of market, brands tend to grow. The gap is called extra share of voice. On average, 10 points of it buys about half a point of market share.
Liquid Death came out of nowhere with less than 1% of its market and roughly 10% of the conversation, and market share followed. Better content, better ads and more of them, sustained over time.
Treat it as an investment, not a guarantee. Nothing promises the half point. But the data points one way, the same way 30 years of data says Texas real estate tends to appreciate.
How much should we spend?
It depends on your stage. A plane burns the most fuel taking off and climbing. A young company pays more to acquire each customer than a known one, simply because nobody knows it yet. There is a penalty for being small.
For a benchmark, the CMO Survey has tracked marketing spend since 2008. Companies put between 6.4% and 17.2% of revenue into marketing, depending on sector and company size. See where you sit against companies like yours in about a minute. If you're below your benchmark, make a three-year plan to meet it, then beat it.
A three-year plan to beat your benchmark
Nobody doubles a marketing budget overnight. Plan it over three years.
- Year one: benchmark, audit, optimize. Find your benchmark, then make the money you already spend work harder. Audit the funnel: bot traffic, messages that miss, landing pages that leak. At the same time, start planting brand building, even in small amounts.
- Year two: reach the category average. Scale toward what companies like yours spend, testing and measuring as you grow.
- Year three: beat it. Spend above the benchmark in a way you can sustain. Do that consistently and share of voice turns into share of market.
How should we split it?
There are two fundamental marketing strategies. Brand-building creates demand for later: broad reach, harder to measure, and it lets you charge more. Sales activation captures the demand that exists today: tightly targeted, easy to measure, and a race to the bottom on its own. Because activation is easier to measure, it tends to win the budget meeting.
You need both. Binet and Field found established brands do best at about 60% brand and 40% activation (closer to 62/38 in their data). New companies and new products flip it.
Brand work keeps working after you stop paying
Turn off paid search and the leads stop the same week. Sales activation has almost no carryover. Brand building leaves something behind: an impression, a feeling, a name people remember. Even after a brand campaign ends, sales stay higher than where they started. That carryover is why the long game wins, and why it’s the first thing to suffer when budgets are judged only on this month’s numbers.
Emotional brand building isn’t only for consumer brands. B2B buyers and buyers of “boring” products are still people, and they still choose the company they remember and trust.
Invest like an investor, not a day trader
Marketing is an investment, and good investors diversify. Putting every dollar into one channel is the marketing version of betting everything on one stock. Spread the budget across what builds demand and what harvests it, and across paid, owned and earned media, then shift money toward what the numbers say is working.
Fix what you own before you buy attention
The most common plan is “buy ads on Google and Facebook and send people to the website.” But so much of marketing happens after the click. If the website doesn’t make a clear claim or make the next step obvious, every ad dollar leaks. Put money into the things you own first, then pay to send people there. The Tactics page explains why.
Marketing is bigger than advertising
You'll run paid ads. But a budget that only buys ads is an expensive way to grow, and it's getting more expensive. Content, your website, reviews and what other people say about you are part of the budget too.
That matters more with AI. You can run all the ads you want, and it won't make AI recommend you. That visibility has to be earned.
All advertising is marketing. Not all marketing is advertising.
Remember geometry class: every square is a rectangle, but not every rectangle is a square. Advertising is the square. For years Tesla spent nothing on paid advertising while competitors spent heavily, yet it was marketing all the time: product placement in films, showrooms in premium shopping centers instead of billboards near them, and a stunt that launched a car into space and earned coverage around the world. Paid, owned and earned work best together, and research from Binet and Field found that campaigns integrating all three outperform those that rely on one. That’s the paid, owned and earned mix on the Tactics page.
The ALS Ice Bucket Challenge is another example. The association could have kept buying banner ads. Instead an idea people wanted to take part in raised awareness worldwide. It still took resources and coordination, just not media spend.
Fund the full entry fee
Every paid channel has a minimum spend before its algorithm learns who converts. Below it, you never get the benefit of the machine learning. You're just burning dollars.
Two channels funded properly will beat five funded halfway. Before you add a channel, check that you can pay its full entry fee.
Nonprofits play by the same rules
In the marketplace of attention, nobody gets credit for being a nonprofit. You compete with every brand and every feed for the same minutes. Apply the same budget discipline as a for-profit, and count volunteers and donated time as part of the marketing resources you have.