How Much Should You Invest in Marketing?

The general rule is to allocate 5–10% of your company’s revenue to marketing.
 However, when planning investments for your specific business, several key factors must be considered.

  1. Your Business Life Cycle Stage
     If you’re at the startup stage, you’ll likely need to invest a much higher percentage of your revenue — and in some cases, your marketing investment may exceed your current turnover.
     If you’re operating in a stable market and already have some market presence but aim to grow, your investment should exceed 10%, depending on your desired market share.
     If your company is already a market leader and you’re focused on maintaining your position, a lower percentage of your revenue can be allocated to marketing just to sustain your current share.
  2. Sources of Funding
     If you’re reinvesting profits into marketing, it’s critical to account for this percentage in your profit margins.
     In this case, your product pricing must reflect the required marketing and promotion costs.
     If you have external funding, you are not constrained by current revenue and can leverage investment capital to pursue aggressive market growth.

To accurately plan your marketing investment, you need to define clear market share targets.
 If your goal is to expand your market share, you must calculate the investment required to support that growth.
 The general principle here is:
 The more market share you want to gain, the greater your share of voice in advertising must be.
 If you’re aiming to maintain your current share, your ad spend should match your market share proportionally.
 It’s important to note:
 If your share of voice is lower than your market share, you will likely begin to lose market share in the medium or long term — which is not a desirable outcome.

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