Marketing budget: how to divide it between channels without guesswork

You divide your marketing budget among channels not according to habits, but according to the goal, the role of the channel, and the data from recent periods. Set a goal, divide the money into three baskets, build three scenarios, and test them with simulation before spending the first penny.

Reading time: 10 min · Strategy · Commplace® since 1996

Marketing budget: how to divide it into four steps

The most common way to set a budget is „as much as last year, plus a little bit”. It’s convenient, but it doesn’t answer the question of why you spend. A better way has four steps and can be completed in a few days.

First, define the business goal and its value for the company. Then determine the role each channel plays: some acquire new customers, others maintain relationships, and still others build credibility. Then divide the money into three baskets. Finally, build scenarios and plan when to change the distribution when the data show something different.

If you are just starting to put together an annual plan, take a look at the article 7 decisions of the B2B marketing strategy. It shows which choices precede the counting of money, that is, for whom, with what offer and with what message you will act. A budget without these decisions is just a bill.

1. Step 1: the goal and its value for the company, recorded as a number
2. Step 2: the role of each channel in the customer's journey to a decision
3. Step 3: division into a safe, development and test basket
4. Step 4: Scenarios and checkpoints where you change the division

Division of the marketing budget: three baskets instead of one pool

Breaking your marketing budget down into buckets protects you from two extremes: spending everything on what you’ve always done and throwing yourself into every new thing. Each bucket has a different role and different evaluation rules.

A secure basket is actions that have proven successful in your company and are bringing a steady result. A development basket is channels where you see potential and want to increase it. A test basket is small experiments that may not succeed. There is no one right ratio. It depends on how stable your sales are and how much risk you can take.

Budget allocation: how to evaluate a channel before giving it more money

Budget allocation, or assigning money to channels, should be based on evidence. Ask each channel the same questions: how many inquiries or sales have they generated in recent periods? What was the cost of one such conversation? How does the quality of those inquiries compare with other sources? Does the channel still have room for growth, or is it reaching its limit?

Watch out for channels that look good because they measure well. Paid advertising shows results quickly and accurately. Image actions take longer to work and are harder to measure, but they often mean that advertising is actually profitable. That doesn’t mean you have to spend on them indiscriminately. It means that you evaluate them using other indicators, such as recommendations and company names in search engines.

Finally, remember the hidden costs. To the marketing budget, you need to add not only the media and agency, but also the time of your team, tools, content preparation, and support for requests. A channel that looks cheap can be expensive when it consumes a lot of internal work.

Check questions before increasing spending

Before you start adding money to the channel, check the points below. If you can’t answer any of them, start by gathering the data.

• whether the result grew proportionally to the expenses, or the growth slowed down
• whether the previous increase was the result of actions or the season or the market
• whether the team has the ability to handle more requests
• What will we stop doing if this channel gets more viewers?

Budget scenarios: three variants instead of one number

Budget scenarios are three versions of the plan: conservative, basic, and ambitious. Each has different assumptions about the market and a different distribution of money. Instead of defending one number, you show the management what will happen if the market slows down, remains the same, or accelerates.

Thanks to the scenarios, decisions are made faster. The board doesn’t ask „is this number good?”, but „which scenario do we accept and how do we know we’re moving on to another?”. This changes the conversation from discussions about opinions to discussions about conditions.

Let’s count another simple metric from the example. Assuming PLN 300,000 and a target of 30 inquiries, the average cost of one inquiry is PLN 10,000. If the value of one acquired customer is significantly higher, and every third conversation ends in a contract, the bill will spiral out of control. These are still assumptions: replace them with your own data before you start making decisions.

An illustrative example with explicit assumptions

Let’s assume that a service company has a quarterly net revenue of PLN 300,000 and a target of 30 qualified inquiries. These are sample assumptions, not market data. In the basic scenario, PLN 60% goes into the safe basket, PLN 30% into development, and PLN 10% into testing. In the cautious scenario, testing is suspended, and development receives less funding. In the ambitious scenario, a testing channel with a larger share is introduced.

• Conservative scenario: 75% /25% /0%, assuming a weaker market
• baseline scenario: 60% /30% /10%, assumes a similar market as before
• ambitious scenario: 45% / 35% / 20%, assumes a significantly better market

Monte Carlo simulation in marketing: why and when it is worth using

Monte Carlo simulation in marketing is a way to see the range of possible outcomes instead of just one forecast. The computer randomly generates many times the values of your assumptions, such as conversion or query cost, in fixed intervals and shows how often the goal would be achieved. The result doesn’t read „30 inquiries will be made,” but rather „with these assumptions, we will achieve the goal in about seven cases out of ten.”.

You don't need it with every budget. It makes sense when the stakes are high, the uncertainty is large, and you have at least basic historical data. Without the data, simulation only nicely illustrates your assumptions. Therefore, don't treat it as a dictate, but as a tool for discussing risk.

In practice, it is worth preparing a short note for the management team that includes three elements: the assumptions, the result of the simulation, and the decision that needs to be made. The management team rarely wants to see the model. They want to know what risk they are taking and what we will do if the plan starts to unravel.

1. collect historical data on conversion and cost, broken down by channel
2. Determine the uncertainty margins for each assumption
3. run a simulation for each scenario
4. compare the chance of achieving the goal with the worst possible outcome
5. choose a scenario and save the conditions under which you will change it

How to check if the marketing budget division is working

Correlation is not causation. If the result has increased after the division was changed, it does not yet mean that the change caused it. Before implementing the change, save the baseline from the previous period. If possible, keep a control group, i.e., a region or segment where you do not change anything, to compare it with the rest.

For single channels, A/B testing works well: comparing two versions with similar audiences side by side. Before starting, record the results and evaluate the test and how long it will take. This way, you won’t have to look for reasons afterwards. You can find more information about measuring results in the article. KPIs of a marketing strategy: how to measure implementation in the cockpit.

How Commplace works on budget and channels

Commplace is a PR and marketing agency with 30 years of experience in the industry, dating back to 1996. We work like a doctor: diagnosis, testing, plan, implementation, and control. With a budget, we start with diagnosing what is already working in your company, and with the goal that needs to be achieved. Only then do we propose the division and scenarios.

We describe the services of online marketing on the website. online marketing. We prepare the quotes after a brief conversation and an initial diagnosis. Texts will be added as necessary. marketing plan for the year: template and Marketing strategy for SMEs: where to start.

In the meantime, check whether the sales and marketing strategies are speaking the same language. The money-sharing system only works when the requests reach the team that can handle them. We have developed this topic in a separate text. B2B sales strategy and marketing.

When a simple division is enough

If your budget is small and you have two or three channels, you don’t need simulations or elaborate scenarios. One sheet is enough: a goal, a breakdown into baskets, a checkpoint every quarter, and one person in charge. A simple plan executed consistently beats a complicated one that no one ever looks at.

External support makes sense when there are many channels, the data is scattered, or there is no consensus within the management regarding the direction. In these cases, a neutral perspective and a common calculation model can streamline the conversation. If you are unsure whether this is your case, ask us directly. We will honestly tell you whether it makes sense to engage an agency.

Source: preparation by the Commplace® editorial team. The numerical examples are illustrative and based on explicit assumptions; they do not constitute legal advice or guarantees of results.