Daisy Warner

Daisy Warner


September 9, 2023

Marketing budget for startups

This article looks at what a startup needs to consider when allocating its marketing budget, best practices and some common mistakes.

Marketing budget for startups

Understanding the dynamics of a startup's needs and potential returns is crucial to determining an appropriate marketing budget.

What to consider when allocating the budget

When allocating the marketing budget for a startup, it is important that founders consider the following:

Market fit

If the product-market fit has already been established and you know which channels to work with, you can confidently pour your marketing budget into these channels and move straight ahead. 

For most startups, it takes time to test the effectiveness of different marketing channels in acquiring new customers. Initially, you will need to experiment cautiously and carefully with your budget. For example, starting with email marketing before investing more may be most cost effective. 


The industry of your startup can also significantly influence how your budget is. B2C businesses usually spend more on marketing than B2B companies, as they typically have to reach a larger, broader audience. Alongside this, if your startup operates in a highly competitive industry, it might require a more substantial budget to stand out from the crowd. 

Target audience 

Knowing your target audience and their behaviour is another important component. Different demographic groups have varied preferences for communication channels. Your marketing budget should take into account the cost of reaching your audience through their preferred channels. With this in mind, marketing budgets for startups can vary considerably.


It is important not to overlook what you can potentially learn from the competition. A competitor’s marketing activities across different channels should provide you with a clear picture of what marketing efforts are working for them.

Best practises

Below are some common best practices during the budget allocation phase:

Set clear objectives

Before allocating a marketing budget, establish clear, quantifiable goals. From brand awareness to customer acquisition, you must set out clear KPIs so you can see what is working and what is not.

Develop a marketing strategy

Once you have set your objectives, develop a marketing strategy that will help achieve these goals. This strategy will guide spending decisions and align with ambitions.

Track & measure results

Track the effectiveness of your marketing efforts. Use metrics such as:

  • return on investment (ROI)
  • customer acquisition cost (CAC)
  • lifetime value of a customer (LTV)

Be flexible

Be prepared to make adjustments based on the results of your marketing efforts. If a particular strategy is not working as expected, do not hesitate to shift your budget elsewhere and pivot quickly.

Invest in organic growth

While paid marketing is crucial, it is recommended to not neglect organic growth. Invest in hiring SEO professionals, content marketing, and social media marketing, which can provide sustainable results over the long term.

Hiring an expert

Establishing a marketing budget for a startup is challenging, it may be helpful to consider hiring someone with a track record of successfully allocating budgets in the industry.  

An example may be to hire an experienced CMO (Chief Marketing Officer). They will have the necessary expertise to make informed decisions on how to allocate your budget and squeeze as much value from your resources as possible.

Common mistakes  

Below are some common mistakes made during the budget allocation phase:

Spreading the budget too thin

The last thing you want to do is try and tackle all marketing channels at once. This can dilute the effectiveness of your efforts. Concentrate your budget on channels that bring the best ROI.

Ignoring long-term growth

Startups often focus on quick wins and neglect long-term growth strategies. While short-term results are crucial, investing in long-term strategies like SEO and brand building can pay dividends in the future.

Not tracking ROI

It is important to track the effectiveness of your marketing efforts. Always measure the return on your marketing spend to ensure you are making a sound investment.


Adopting best practices while avoiding common mistakes is crucial for efficient allocation. While the process is somewhat complex, with diligent planning and strategic execution, startups can maximise their marketing budget for optimal results.


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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.

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