Justifying Your Marketing Budget to Your Boss

According to a survey by Gartner, average marketing budgets in 2024 have decreased to 7.7% of total company revenue, down from 9.1% in 2023.

While this decline may raise concerns, investing in marketing remains vital for businesses of all sizes. Strategic initiatives can yield significant returns, helping companies adapt to market conditions, maintain brand visibility, and foster customer loyalty, even amid economic uncertainty.

Still, it isn't easy to justify a marketing spend of over 10% of revenues to many bosses — or even 5%. Keep reading to discover how marketers with adequate budgets are successfully demonstrating the value of their marketing investments to their bosses.

Here are the 12 steps we’ll cover to help you justify your marketing budget:

1. Look at Competitors
2. Prove ROI With KPIs
3. Establish a Conversion Path
4. Project Results
5. Show What Worked
6. Project Revenue Growth
7. Target the Right Audience
8. Explain Opportunities and Why
9. Leave the Budget Open-Ended
10. Use Trends to Propel the Brand
11. Collaborate With Sales
12. Invite Dialogue

Let's dive in!

1. Know What Your Competitors Are Doing

Everything you do can be countered, leveraged, or improved upon by direct competitors, especially if they have a larger budget. It’s crucial to understand their spending and how they allocate those resources, as not doing so could result in wasted efforts and money, particularly if your budget is significantly smaller.

Demonstrating your competitors' marketing strategies is a vital step in justifying your budget to your boss. Fortunately, you don’t need to access their financial documents to gather this information. You can actively track their marketing activities by following their channels and using SaaS tools for competitor analysis, which provide insights into their efforts in:

• Social media
• Search engine optimization (SEO)
• Advertising
• Remarketing
• Email campaigns
• Influencer partnerships

By estimating the costs of these activities, you can determine if your budget aligns with your competitors'. For instance, if you find that a competitor is spending around 12% of their revenue on marketing while your budget is only 5%, that’s a clear issue.

Your boss may not fully grasp the costs associated with a comprehensive marketing plan. While conducting competitive analysis can be time-consuming, it’s essential for maximizing your marketing ROI. Plus, this information will not only help you justify your marketing spend but also give you a head start in developing or refining your digital marketing strategy based on your observations.

Investing time in this analysis is a worthwhile endeavor that will greatly assist you when it comes time to set your marketing budget.

2. Prove the ROI Using KPIs

You need measurable key performance indicators (KPIs) to track performance. This provides the data to back up your marketing decisions.

Set up systems and technology to track KPIs across the buyer's journey. Start making connections (for the boss and yourself) between top-of-the-funnel KPIs (demand generation, brand awareness) and bottom-of-the-funnel KPIs the CFO cares about, like:

• Revenue/sales growth
• Customer retention rate
• Customer acquisition cost
• Lifetime value

They aren't concerned with how many people shared a post this month or the "buzz" you're creating. While you understand that these actions influence revenue, you need to present solid data to back it up.

Make your results irrefutable. Your B2B marketing spending has a direct and indirect impact on the key metrics that CFOs care about most.

Once you start tracking the right KPIs, something astounding happens beyond knowing your numbers. You realize your power to influence those numbers consistently to:

• Increase website traffic
• Generate more leads
• Shorten the sales cycle
• Increase revenue
• Turn the engagement of existing customers into new customers

3. Establish a Clear Conversion Path

One of the best ways to demonstrate how marketing activities impact the KPIs that matter to the C-Suite is by mapping out the buyer's journey and building measurable pathways that align with it. For example:

1. "X" percentage of website visitors convert to Marketing Qualified Leads (MQLs)
2. "X" percentage of MQLs become Sales Qualified Leads (SQLs)
3. "X" percentage of SQLs become customers
4. The average order size generates "X" revenue

You've effectively demonstrated through data how your top-of-funnel activities — such as driving visitors to the website — translate into revenue. Furthermore, if you can consistently illustrate this with data, it reveals a clear path that visitors follow, leading to predictable revenue growth. This brings us to our next point.

4. Project Results Wherever Possible

Ideally, you need to get to the point where you can say give me "X" budget, and I'll generate "X" revenue. That's what your boss wants to hear.

When your CFO sees that you can reliably predict the next quarter's revenue based on what's happening at the top of your funnel today, they'll be more willing to invest in marketing. They’ll trust your judgment because you have the numbers to back it up.

Automate this data analytics process so that as you increase website traffic, the model updates to show your new revenue projections. Now, you're always ready for C-suite meetings and marketing budget discussions. When you talk, your boss and other company leaders listen.

5. Show What Worked Last Year

Learn from your previous budget and the marketing efforts it enabled to guide your upcoming spending.

If last year was disappointing, having a budget comparable to your competitors can help turn things around, provided you have a solid plan in place. On the other hand, if you had a decent year, do you know what worked and how you achieved it? If you tracked KPIs, then you can replicate those successes.

However, if you weren't effectively tracking KPIs, you're left with uncertainty about why your marketing worked. In that case, your achievements may seem unrepeatable and unsustainable. This lack of clarity could lead the CFO to attribute the company's success solely to the outstanding sales team and leadership, dismissing the role of marketing.

To prevent this, it's crucial to know and showcase your numbers. Having data that demonstrates how your marketing budget impacted revenues last year makes it easier to justify a larger budget for the upcoming year. The impact of your effective marketing budget usage is undeniable.

6. Project Relative Revenue Growth

If your ROI is 3X or 4X your budget, then increasing the budget should lead to proportional revenue growth, even if it means entering new markets.

7. Make Sure You're Reaching the Right Audience

The competitive analysis you performed in step one likely sparked a eureka moment: Are you delivering the right marketing messages but to the wrong audience or in the wrong places?

If so, you're fighting an uphill battle to show your boss that your B2B marketing budget is delivering results. Worse, much of your marketing spend may be wasted. More money won’t fix the issue if you’re targeting the wrong leads on the wrong channels. So, how can you be sure you're reaching the right people?

B2B decisions are made by specific business decision-makers, not just a faceless company. You need to know who these decision-makers are, what they need from you, where they spend time, and what will convince them you're the right choice. For larger businesses, there may be up to six decision-makers involved, making precise targeting even more critical.

To get on track:

• Update your customer data: Ensure accuracy, as 10% to 30% of customer data is often duplicated, leading to inefficiencies and a poor customer experience.
• Create/refine data-driven buyer personas: Use insights from your current customers to identify your ideal buyers and their decision-makers.
• Unify your messaging: When targeting multiple decision-makers from one company, ensure your messaging addresses them cohesively.
• Align content with personas: Tailor content for all stages of the buyer's journey to guide decision-makers toward a sale.
• Monitor audience response: If engagement is low, the issue likely lies in your audience targeting, message, timing, or platform. Use this data to refine your approach.

8. Explain the Opportunity and Why It's Worth It

Your boss is far more interested in the "why" and "what" rather than the "how much." If the opportunity (the why) is compelling, the cost becomes secondary.

Be ready to present data that clearly shows what your company stands to gain by increasing the budget, such as:

• Growing market share
• Improving profit margins
• Driving engagement, which, as you've demonstrated through data, leads directly to increased revenue.

By showing the anticipated ROI, you can shift the focus away from costs. Provide a clear, visual summary — this is what you want them to remember after the meeting.

9. Leave the Budget Somewhat Open-Ended

Your marketing budget should outline where funds will be allocated. Common expense categories include:

• Website
• Marketing and advertising (labor, ad fees, content creation, email campaigns, etc.)
• Consulting/marketing agency retainer
• Social media management
• Marketing software and technology (automation, analytics, content creation, CRM, etc.)
• Traditional advertising (print, TV, radio, streaming, etc.)
• Events and special promotions

Most of these expenses are predictable, but not always. Unexpected opportunities or economic shifts may arise, and you need the flexibility to respond.

With a data-driven budget, it's easier to return mid-year or mid-quarter and request additional funds. Even better, aim for a somewhat open budget that allows you to seize new opportunities as they arise, accelerating revenue growth.

10. Show How You'll Use Trends to Propel the Brand

Marketers must stay on top of trends to achieve the best results. Even if you can’t predict the next viral TikTok challenge, your marketing strategy should show that you track, measure, and adapt to changes, rather than recycling last year's approach.

Regularly review your marketing plan to ensure it aligns with current trends.

11. Collaborate With the Sales Team

It's challenging to demonstrate how marketing spend drives sales without actively collaborating with the sales team. You need access to their numbers and insight into how your efforts are influencing them.

Aligning marketing with sales creates a seamless path for decision-makers, moving them from prospects to customers and eventually brand advocates.

Best practices for marketing-sales collaboration include:

• Developing shared goals
• Creating mutual Service Level Agreements (SLAs)
• Defining and agreeing on what qualifies as a SQL
• Implementing a lead-scoring system
• Aligning messaging across both teams
• Automating the transition from marketing to sales
• Marketing providing sales enablement content to prime leads and help close deals
• Re-engaging existing customers to drive upgrades and renewals

12. Create an Invitation for Dialogue

Data is a powerful tool, but it's not the final word. People can interpret the same data in different ways, so it's essential to stay open-minded. Be humble enough to consider other viewpoints, even when you're confident in your data.

Show that you're open to feedback and flexible if your ideal marketing budget isn't approved in the first round. By keeping the conversation open, you'll make it easier for your boss and key decision-makers to see the value you bring.

Continue tracking KPIs and refining your conversion pathways to show the direct impact of your marketing on business goals. Build predictable sales forecasts and treat the sales department as the ally they are, fostering a culture of collaboration.

For more tips, check out our B2B marketing budget checklist.