Marketing budgets have been shrinking in recent years, but expectations continue to rise. Marketers are now expected to accomplish more with fewer resources—optimizing campaigns, improving customer service and experience, and boosting overall performance—while facing tighter financial constraints. This is a difficult challenge, but it also underscores the importance of strategic planning.
For marketers, it’s essential to plan the budget strategically. Focus on channels that help achieve key performance indicators (KPIs) for marketing and the overall business. Identify campaigns that raise brand awareness, generate leads, or drive traffic, while using organic strategies to complement paid ones.
Artificial intelligence (AI) can be instrumental in optimizing your marketing budget. It can assist in areas like forecasting, competitor analysis, audience targeting, and scenario testing.
In this article, we’ll explore the current state of marketing budgets and provide actionable steps for planning and executing a budget that aligns with your objectives.
1. How Marketing Budgets Have Evolved
According to Gartner’s CMO survey, marketing budgets have fallen from 9.1% to 7.7% of overall company revenue in 2024, marking a 15% decrease. This contrasts with 2020, when marketing budgets made up 11% of revenue, and a sharp decline to 6.4% during the peak of the COVID-19 pandemic in 2021. While there was a slight rebound in 2022 and 2023, the 2024 figure marks a noticeable reduction.
So, what’s driving this decrease? While paid media investments increased to 27.9% of the budget in 2024, spending on marketing technology, labor, and agencies has dropped, and technology investments have reached their lowest point in a decade.
A survey of senior marketers revealed that 20% of respondents identified delivering better ROI on their marketing budgets as their biggest challenge. Additionally, the rise of AI in marketing platforms is seen as a valuable tool in times of budget constraints. Many believe AI can help marketers achieve greater results with less, offering data-driven insights and optimizing campaign performance.
2. Eight Steps to Effectively Plan Your Digital Marketing Budget
To maximize your marketing budget, you need a solid plan that aligns with your business goals. This involves reviewing past performance, identifying what worked, and determining which tactics will help you achieve your objectives.
Here are 8 key steps to help you create an effective and realistic digital marketing budget:
3. Evaluate Past Performance
Start by analyzing past marketing campaigns. Look at data like lifetime value (LTV), customer acquisition cost (CAC), and the performance of paid versus organic channels. Identify the successful campaigns and understand why they worked, as well as why others didn’t. This analysis is crucial for efficiently allocating your resources.
AI Tools to Help Evaluate Past Performance:
- Google Looker: Visualizes and analyzes campaign performance.
- Mixpanel: Provides insights into user behavior.
- Domo: Aggregates data from multiple sources for a comprehensive evaluation.
4. Set Clear Goals
Set clear and measurable objectives to avoid spreading your resources too thin. Your goals might include:
- Increasing brand awareness
- Generating more leads
- Boosting revenue
- Improving conversion rates
Each goal will require different strategies and budget allocations.
AI Tools to Help Set Clear Goals:
- Funnel.io: Aggregates data for goal-setting and tracking.
- Klipfolio: Builds dashboards that align goals with KPIs.
- Databox: Automates goal tracking and provides actionable insights.
5. Allocate Budget Based on Success
Allocate your budget based on past performance rather than cost alone. Focus on the channels that have delivered the best ROI—whether through paid media, social media, SEO, or email campaigns—and allocate funds accordingly. For instance, if organic social media is performing well, consider investing in paid ads to amplify those efforts.
AI Tools to Help Allocate Budget:
- Singular: Automates cross-channel ROI tracking and budget allocation.
- Madgicx: Optimizes ad performance and reallocates funds based on real-time data.
- Allocadia: Helps align budget allocation with marketing objectives.
6. Break Down Your Requirements
Identify the resources needed to execute your plan—both tools and personnel. Whether you need paid advertising, content creation, social media management, or analytics tools, outline everything necessary and ensure your budget can support them.
Consider content creation costs, team members, platforms, and software licenses as key elements for execution.
AI Tools to Help Break Down Requirements:
- Asana (AI features): Organizes and allocates marketing resources.
- Monday.com: Manages AI-driven workload for teams.
- Smartsheet: Organizes resources, costs, and timelines.
7. Plan Your Content Creation
Content is essential to your marketing strategy. Plan the types of content you will create based on your objectives—whether it’s blog posts, videos, case studies, or social media content. Account for costs like content creation tools, freelancers, or in-house teams. The quality and type of content will depend on your target audience and goals.
AI Tools for Content Creation:
- Claude, ChatGPT, Jasper, Gemini: AI-driven copywriting tools for generating content.
- Canva (AI features): Creates visuals and graphics.
- Descript: AI tools for editing video and audio.
8. Choose the Right Platforms
Selecting the right platforms is crucial for the success of your marketing strategy. Your budget should account for both advertising and content creation on platforms where your audience is most active, including:
- Search engine ads (Google, Bing)
- Social media ads (Instagram, Facebook, LinkedIn)
- Content platforms (YouTube, TikTok)
- Email marketing tools
9. Monitor Your Results
Monitor the performance of your marketing efforts and track key metrics like conversion rates and ROI. Analytics tools will allow you to adjust your strategy in real-time and optimize your budget for maximum impact.
AI Tools for Monitoring Results:
- HubSpot: Tracks campaign performance and integrates with CRM.
- Supermetrics: Aggregates data across platforms.
10. Plan for the Future
Stay on top of emerging trends, especially in AI and new marketing technologies. Being aware of these developments can give you a competitive advantage and help you adjust your budget and strategy accordingly.
AI Tools for Trend Monitoring:
- Trend.io: Tracks emerging marketing trends.
- Zyro AI Website Builder: Adapts to new digital marketing needs.
- Futurepedia: A directory of the latest AI tools for marketers.
By following these steps and utilizing AI tools to refine your planning and execution, you can efficiently manage a lean marketing budget while still achieving strong results. Stay adaptable, test different approaches, and focus on channels and tactics that align with your long-term strategic goals.
Conclusion
As marketing budgets continue to shrink, the need for strategic, data-driven planning has never been more critical. By evaluating past performance, setting clear goals, allocating resources wisely, and leveraging AI tools, marketers can maximize the impact of every dollar spent. While budget constraints present challenges, they also offer opportunities to optimize campaigns, improve customer engagement, and drive business growth in smarter, more efficient ways.
By following the steps outlined in this article—whether it’s refining your content strategy, selecting the right platforms, or monitoring results—marketers can navigate this evolving landscape and achieve significant results without compromising their objectives. Embracing AI technologies and staying agile will be key to staying ahead of the competition, even with tighter financial constraints.
Ultimately, effective marketing is not about having the biggest budget, but about making the most of what you have. With careful planning, the right tools, and a commitment to innovation, it’s possible to achieve impactful results—no matter the size of your marketing budget.
