How much should a company allocate to marketing?

This is one of the most frequently asked questions I’ve received from company managers since I started my consulting practice in 2005.

However, based on my experience with international corporations in the FMCG sector, which have successfully built brands across diverse markets for decades, I can say that a marketing budget typically accounts for 5% to 10% of a company’s annual net revenue.

I would like to emphasize that this is strictly a marketing budget.

What does this mean?

The marketing budget is separate from the sales budget and includes investments in all activities directed at consumers or end users, such as:

• Advertising campaigns (media),

• Production of advertising and marketing materials,

• Sponsorship contracts and events,

• Market and consumer research,

• Development of new products and packaging,

• Consumer promotions, and

• Fees for marketing and advertising agencies.

  
  

Interestingly, the largest portion of the marketing budget—often exceeding 50%—is usually allocated to advertising campaigns, which play a crucial role in building brand and product awareness.