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How to Maximize Your Small Business Marketing Budget


Agencies understand that start-up founders and small business owners face countless challenges each day: securing funding, staying afloat, growing at the right pace, obtaining leads, and building a solid team. We also understand how some might think that marketing is a luxury best left for large companies — like those that can afford Super Bowl ads and big-budget marketing campaigns.

The truth is that they’re wrong: no matter how small the company, there should always be an integrated marketing strategy and budget to boost awareness, grow your customer base, and increase revenue.

Marketing Drives Small Business Revenue

"If you are marketing from a fairly static annual budget, you're viewing marketing as an expense. Good marketers realize that it is an investment." - Seth Godin

The primary concept here — and this has been proven by experience and research — is that marketing drives revenue. A marketing investment in your small businesses will earn itself back swiftly in increased sales and revenue, brand recognition, and awareness.

Looking for a small business marketing budget recommendation?

The U.S. Small Business Administration recommends that the average small business with annual revenues less than $5 million should allocate 7-8 percent of their revenues to marketing costs.

Here’s a table showing some sample marketing budget ranges according to different revenue estimates:

revenue marketing costs (7%) Marketing Costs (8%) Budget Range
$200,000 (200,000) x 0.07 = $14,000 (200,000) x 0.08 =  $16,000 $14,000 - $16,000
$500,000 (500,000) x 0.07 = $35,000 (500,000) x 0.08 =  $40,000 $35,000 - $40,000
$1,000,000 (1,000,000) x 0.07 =  $70,000 (1,000,000) x 0.08 =  $80,000 $70,000 - $80,000
$2,000,000 (2,000,000) x 0.07 = $140,000 (2,000,000) x 0.08 =  $160,000 $140,000 - $160,000


(5,000,000) x 0.07 = $350,000 (5,000,000) x 0.08 =  $400,000 $350,000 - $400,000


These estimates may seem like a significant investment for businesses new to marketing. However, in our experience from working with hundreds of B2B and B2C companies across multiple industries, we have seen that an average marketing budget as low as 2-3% can go a long way when invested strategically.

Here’s a Tip on Marketing Spend

It can be tough to know how much you should spend, even when you’re well-informed. The trick? Know what you’re trying to do, and spend accordingly. Here’s how much of your annual revenue you should spend on marketing according to what you’re trying to achieve. 

  • 3% to 5% to retain
  • 7% to 9% to grow
  • 12% + to scale

How to Estimate Your Budget Using Cost of Acquisition (CAC)

Some businesses use Cost of Acquisition (CAC)to calculate their current marketing spend as an alternative to revenue.

For example, if you know that each new customer has a CAC of $10,000, then adding 50 new customers will require a marketing investment of $500,000.

While there is no single way to calculate CAC, here is a simple example:

Mark operates an online store selling speciality building equipment. Each week he runs a Facebook campaign worth $1000 and makes 10 sales.

Mark’s CAC is calculated as follows:

$1000 / 10 sales = $100 per new customer.

Therefore, if Mark wanted to grow his business by an additional five customers each week, his budget must increase by $500 per week.

3 Tips for Maximizing Your Small Business Marketing Budget

Tip 1:Choose the right marketing activities.

The first step to choosing the right mix of marketing methods is to set an overall goal with respective timing. For example, if you need a short term win, then paid ads are going to be the way to go because they can provide instantaneous results. And if you actually do need a short win, the paid media template is a serious advantage. Otherwise, you can play the long game and have potential customers find you organically by investing in content development and SEO.

However, if reducing costs is your main goal, there are three main ways to attract new clients or customers (in order of cost-effectiveness):

1. Word-of-Mouth Referrals and Online Recommendations

There is no more effective marketing strategy tactic that beats one person telling someone else how wonderful your business is. Word of mouth referrals will always be the undisputed leader of marketing methods.

So, how do you maximize your referrals? The first part of the equation is to delight your current customers. Focus on providing not only a great product, but also a great experience. Often, providing that kind of experience doesn't cost anything extra, it just takes more effort from your marketing team and a focus on exceptional customer service.

A delighted customer with friends is the single most valuable marketing asset that your small business can possess. The next most valuable is a delighted person with an active online presence or social media following because online reviews have a high “trust” factor among consumers. Putting in the effort to delight your customers is one of the most worthwhile investments you can make.

2. Search Engine Marketing (SEM) and Search Engine Optimization (SEO)

The second priority marketing channel for you to consider with your marketing budget is search marketing. Search marketing, when done right, has the advantage of connecting your business with consumers that are searching for your services or products at the same time they are interested.

Search marketing is usually broken down into two categories: search engine marketing (SEM) and search engine optimization (SEO).

SEM is the practice of paying a search engine, such as Google, to display your website on the results page when people search for targeted search terms that you specify. Most SEM platforms, such as Google Ads and Bing Ads, only charge you when someone clicks on your ad.

SEM provides results quickly. It can take just an hour or two to set up a Google Ads account and get started with search engine marketing. However, when you stop paying, you stop benefitting.

In contrast, SEO is the marketing discipline dedicated to increasing a website's visibility in organic search. Activities associated with SEO include keyword research, content creation, link building, and analysis with tools like Google Analytics.

SEO takes much longer to see results, but the advantages are longer lasting.

You should invest in both. Allocate as much money as necessary into SEM to drive the minimum desirable result today, and put the rest to SEO efforts that can exponentially pay off in the future.

3. Advertising

Ads are found almost everywhere on the internet. Typically, if there is a connection taking place online, marketers eventually find a way to place an advertisement in a location that is difficult to ignore!

Some common ways to advertise online include:

Display Ads

Display ads are a basic form of advertising typically composed of text and images. They are available in multiple formats, including pop-ups, banners, and services like Google Adwords.

Native Advertising

Native advertising is the integration of ads directly into feeds, recommendation widgets, and promoted listings on search engine results pages.

Social Media Advertising

Social media sites like Facebook have social media marketing tools that let B2B companies target their ideal customers with social media ads that can be inserted directly into news feeds. Other options include in-feed ads on Instagram and LinkedIn, and video ads on Youtube.

Keep in mind that digital advertising can produce a high marketing ROI if done correctly, keeping it well within a small business advertising budget. However, this does not mean that you should just go and spend your entire marketing budget with anyone who claims to be an expert on social media marketing

To create an effective marketing budget, you need to develop a solid marketing plan that aligns with your marketing goals. Not all marketing activities suit all businesses.

For example, if you have a fishing equipment store that sells fishing rods and bait to tourists, you should probably direct your marketing efforts into local SEO and tourism-related sites If you’re in a business that does both B2B and B2C sales, you’ll need to balance your messaging across each of your social channels according to your audience. For example, your B2B messaging should live on LinkedIn while TikTok advertising and Instagram can be used for B2C messaging.

The key is to know your customer and focus on their needs, which takes us to the next tip.

Tip 2: Know your customer inside-out.

Optimizing your marketing strategy requires that you know precisely the type of customer most likely to purchase your products or services. Everything else is easier when you know exactly who you are targeting because today’s marketing tools and platforms help you narrow down your search to the exact characteristics you are looking for.

The first step to identifying your ideal customer is to define a specific customer segment of your business. For example, if you own a toy store, you may have multiple segments according to gender or age. In contrast, if you have a business that sells bathing suits to pregnant women, that probably counts as only one segment.

After choosing your segment, you can then identify the characteristics that define your ideal customer. This information includes:

  • Age range
  • Marital status
  • Income
  • Education and employment
  • Job title, roles, and responsibilities
  • Family type/size
  • Household income
  • Budget, buying habits

Along with identifying these demographic characteristics, you can also dive deep into the possible psychology of your ideal customer. Here are some questions to ask:

  • What are my ideal customer’s pain points?
  • What keeps them up at night?
  • Where do they turn to for advice on the internet?
  • What websites and social media platforms do they use?
  • How can my products and/or services improve their lives?

Your online advertising budget will have much better results when you know exactly who you are targeting. Defining your buyer persona also helps you create better content on your website that speaks to their needs and builds trust in your products and services. The key to making it work is to use an inbound marketing strategy that attracts customers to your website, which brings us to the next tip.

Need to figure out how much to spend on paid media, and where to spend it? 

At BridgeRev, we reach all kinds of audiences across channels. Download our complimentary worksheet to map your paid media spend. 

Get the Worksheet

Tip 3: Maximize the power of inbound marketing.

Outbound marketing uses aggressive sales techniques to convince you to buy a product or service. Inbound marketing works in the opposite direction by creating a “pull” factor that leverages a targeted content marketing strategy to bring customers to you.

Using inbound marketing is more cost-effective because it helps you zero in on ideal customers while they are in the process of searching for the products and services you are selling.

Some key components of an inbound marketing strategy include:

Audience Engagement

The first step in any inbound marketing strategy is to engage your audience. You can think of this stage as what happens on the dating scene: the first goal is to establish attraction, but you need to start a conversation to keep someone interested. The same goes with audience engagement!

Lead Generation

The next step in inbound marketing is to generate leads. With so much content on the internet, this can be challenging at first. The key is to know your customer inside-out, and to create blog posts, videos, guides, and other content that speaks to them. Selling on the internet lacks a “human factor”, so you need to establish a feeling of trust by creating content that connects with them in an authentic way.

This is the stage where you start the conversation with your leads. It’s an opportunity to ask questions, take notes, and refine your content strategy. Use quizzes and surveys on social media to get your audience to open up and give you valuable insights. It's a chance to learn about them and respond with informative content that demonstrates you are a trusted voice in your specific industry.

Conversion into Satisfied Customers

Once you have your audience engaged, your next task is to convert them into customers and delight them with your offerings and after-sales service. This is also an opportunity to transform your customers into delighted fans that will leave reviews and comments on your website, social media, and on third-party review sites.

Remember Tip 1 earlier, where we mentioned that “a delighted customer with friends is the single most valuable marketing asset that your small business can possess”? This is the part of the marketing process where you can increase that pool of customers that will promote your products for you!

Looking for more ways to stretch your marketing budget further?

This quick guide just scratches the surface of how an agency can make every marketing dollar count. At BridgeRev, we can show you how to make the most of any budget with laser-focused marketing tactics that attract the most ideal customers to your products and services.

Book a complimentary assessment, and we’ll show you how!

Get a Free Assessment


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