How much should brands reinvest in marketing?

Determining the ideal portion of your revenue to reinvest in your marketing is one of the most popular questions we get and hear a lot of the time.

We know that many CMOs and Brand managers face the challenges when planning budgets for the year. We get it, you have to make sure that your strategies support and lead business growth, sale goals, expand market share and even out perform competition. CEOs and CFOs play a pivotal role in answering this crucial question:

What budget is available to achieve these goals?

I don’t want to have this awkward convo today babes…

The nuances of setting a marketing budget

Finding the 'right' marketing budget is not a one-size-fits-all approach. It involves understanding your marketing objectives and the channels your brand prioritises.

Here are four key questions to guide you towards a data-driven answer:

What are your marketing objectives?

Which channels are most effective for your brand?

How mature is your brand and its category?

What whitespace opportunities exist for your brand to stand out?

The percentage of revenue reinvested in marketing can range from 1% to 30%, depending on various factors. Newer brands might require a higher investment to gain visibility, while established brands may need less but more strategic spending.

Brand maturity and budget allocation

The maturity of your brand significantly impacts how you should allocate your budget between brand initiatives and performance-oriented marketing. If you’re reading this as a established brand, you should have a good understanding and knowledge on what has been done before and data to support the key areas that work for you. Using the data and insights that you have should help support when working on budget allocation.

If you’re a challenger brand, need to identify and exploit whitespace opportunities to stand out. Avoiding saturated spaces with high competition is crucial for these brands to gain traction. Don’t follow what others do/ are doing. Be comfortable with standing out and authentic in your brands tone, voice and image.

Achieving reach and frequency

Key performance indicators (KPIs) such as reach and frequency are essential to driving desired outcomes, regardless of where your goals fall in the marketing funnel. Data-driven planning tools can help you determine the budgets needed to achieve sufficient reach and frequency. Typically, 5-10 cross-channel exposures are necessary before brand advertising starts to have a lasting impact.

Dynamic budget planning

Budget planning based on audiences is an ongoing process. It's essential to consistently analyse how your audience is reacting to your ads relative to your marketing objectives. Maintaining a deep connection with your audience ensures you meet their needs and expectations, making agility crucial. Your audience's preferences and behaviors will evolve, and your budget and strategies need to adapt accordingly.

The role of evergreen marketing

Evergreen marketing is crucial for brands aiming to maintain a consistent presence in front of their target audiences, gradually building brand awareness over time. This long-term strategy requires patience and often substantial budgets to be effective. Although measurable results, particularly lower-funnel sales lifts, may take time, the ongoing investment helps solidify your brand's position in the market.

Importance of paid marketing and activations

Building an omni-channel ecosystem strategy involves aligning your marketing efforts with the places where your target audiences spend the most time and are most engaged. This often requires significant investment, as multiple brands compete for the same promotional opportunities. However, the potential reach with relevant audiences is substantial.

Paid marketing and activations are pivotal for long-term growth and brand building, offering measurable and scalable methods to increase brand visibility and consumer engagement. Recent data supports this according to eMarketer, global digital ad spending is projected to reach £526 billion in 2024, reflecting the high value businesses place on paid advertising for reaching targeted audiences.

Brands utilising paid media can achieve up to 30% higher brand recall compared to those that rely solely on organic methods. Additionally, experiential marketing, a key component of activations, has been shown to bring significant returns; 85% of consumers were more likely to purchase after participating in brand activations. These strategies not only drive immediate traffic and sales but also build lasting brand equity by creating memorable experiences and consistent touchpoints with consumers. In an increasingly competitive market, sustained investment in paid marketing and activations is essential for brands aiming to establish a strong, recognisable presence and foster long-term loyalty and growth.

R final thought 💭

Determining the right marketing budget involves a blend of strategic foresight and flexibility. Assess your budget continually and remain proactive in adapting to the evolving needs of your audience. By using data-driven insights and staying agile, your brand can navigate the complexities of modern marketing to achieve sustainable growth and success.

We understand the intricacies of crafting a tailored marketing strategy that aligns with your brand’s objectives.

Contact us to explore how we can help you optimise your marketing budget for maximum impact.