Shopify Ecosystem

Data Snacks Video — Marketing Budget



What is up, awesome eComm people? So, today, we’re going to talk about marketing budget.

A marketing budget is any amount of money that a company plans to spend on marketing and growth initiatives for their business. Having this really dialed-in understanding allows a company to understand how much they can afford to grow their business.

Where this gets really important, especially for eCommerce brands, is understanding what you should set your marketing budget at every year — and how you should really define success through that. What we typically see is that eCommerce brands set their marketing budget as a percentage of the previous year’s top-line revenue.

Only the earlier stage (and side) for early, scaling startups, we typically see that their budget is somewhere around 20% of last year’s top line. As a brand grows more and becomes bigger, their marketing budget typically is around 10-15%. This all varies based on priorities, where the company is in their life cycle, and how they want to continue to grow.

It’s super important to dial that in to understand what you can afford to continue to grow your brand, what does profitability look like, and how much profitability are you willing to sacrifice for growth.

Understanding that balance will help you grow your business faster. And by tracking that, you can get granular on how effective all those dollars that are going out of your business are as far as whether they are coming back as new customers and new revenue growing the overall business.

Special thanks to our friends at Daasity for their insights on this topic.
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