How to Plan Your Marketing Budget?
Author: The CompassBG team
Published:
To plan your marketing budget, analyse your orders and all of your marketing and sales costs, set a measurable goal and split the money between acquiring customers, optimising processes and repeat sales. Check the plan against your margin, seasonality and the cash you actually have available.
At CompassBG we often see the same mistake: a business increases its advertising budget and expects revenue to grow by the same percentage.
In our video we explain why that calculation is not enough. Our approach rests on four consecutive actions that turn the budget into a well-founded growth plan.
Our experience covers 11 years of work and more than 400 completed projects, presented on our About us page. Here we share observations from our practice and our approach to planning marketing costs.
1. When should you start planning your marketing budget?
Start at the beginning of the last quarter, so you can prepare a preliminary budget for the next year. In October 2026 you can already work on the 2027 plan, using the data collected from January to September.
In the video we recommend this moment because Black Friday and the Christmas campaigns can change the average order value, advertising costs and buyer behaviour. Look at them separately. Also compare with the same months of the previous year, especially if your business is seasonal.
The first version of the budget will need updating. After the end of the year, add the last quarter and check whether your initial assumptions still hold.
2. What are the four steps to budgeting correctly?
Our approach is sequential: first the sales analysis, then the costs, then the goal and finally the actions to reach it.
1. Sales
Export all orders for the chosen period, including offline sales.
2. Costs
Summarise your marketing, advertising and sales costs by activity.
3. Goal
Set a specific goal for the next year.
4. Actions
Choose how you will reach it through budget, better processes and work with your existing customers.
This is also the logic of our digital sales system: the website, traffic, communication and repeat purchases work together. If you skip the analysis, you risk funding the most visible channel instead of the most suitable action.
3. What order data should you collect?
For the initial analysis, the export should include the product, first or repeat purchase, source and order value. Add the date, status, customer identifier and margin to make the analysis more useful.
Combine the online store, physical locations and sales made by your sales team. Exclude cancelled orders and account for returns, so you work with realised revenue. Use the same basis throughout, for example all values excluding VAT.
Does the source show the whole customer journey?
The source does not always describe the whole customer journey. A person may see an ad on Instagram, then search for the brand on Google and only then buy. Google Analytics helps you look at the sequence of interactions. Compare the analytics data with your orders instead of treating every attribution as proven causation.
4. Which costs belong in the marketing budget?
Include every activity needed to attract, serve and retain a customer. The calculation has to cover more than what you pay Meta and Google.
Add the fees of agencies and specialists, photos and videos, SEO and AI optimisation, the email platform, the CRM system and the work of your in-house team. If you use trade fairs, billboards or sales representatives, account for them too in the overall marketing and sales plan, while keeping them as separate lines.
Separate one-off investments from monthly costs. Building a website and a software subscription have different payment schedules. Check for duplicated salaries and fees when you combine the reports. For campaign planning, see our approach to online marketing and advertising.
5. How do you set a realistic sales goal?
Write the goal down as revenue for a specific period and link it to orders, average order value and capacity.
"We want more sales" is not enough to build a budget on.
What does the goal look like in numbers?
A goal of €150,000 annual revenue with an average order of €100 requires 1,500 orders. If you plan 400 repeat orders, that leaves 1,100 first orders. Check what share of them can come from organic search, referrals and paid campaigns.
How ambitious can the goal be?
In the video we encourage ambitious goals, including significant growth. But the size of that growth has to be backed by specific actions, stock, team and margin. Prepare a cautious, a base and an ambitious scenario. That way you will know how to act even if demand turns out weaker.
6. How do you measure whether your marketing is profitable?
Assess revenue together with costs and margin. Return on ad spend on its own does not show the profit of the business.
ROAS
ROAS is the ratio between the revenue attributed to advertising and the advertising spend. With €40,000 in revenue and €15,000 spent on ads, it is 2.67. If the margin after direct costs is 40%, you are left with €16,000 before advertising and €1,000 after it, before fees, software and overheads.
Cost of acquiring a new customer
Also track the cost of acquiring a new customer: acquisition costs divided by the number of new customers in the period. Separately, watch the average order, repeat purchases and their contribution to profit. For a subscription product, include retention and cancellations. Choose your metrics based on your business model, not on what is convenient in the ad report.
Acceptable acquisition cost
Also define an acceptable acquisition cost. If the first order leaves €35 after direct costs, acquiring a customer for €40 requires a well-founded plan for future purchases and for financing the difference. Calculate customer value from real purchases over a defined period. An expected repeat sale is not revenue you have.
7. How do you split the budget between channels?
Allocate the money according to the goal, proven results and the specific constraints of the business.
One universal percentage of turnover cannot replace this analysis.
Write down what each line includes, including internal labour and external fees. Then spread the amounts across the months according to seasonality. For AI optimisation, plan for content and measurement, without treating visibility in AI answers as guaranteed revenue.
8. When is optimising processes more useful than more advertising?
Processes take priority when they limit customer service, the accuracy of information or the completion of orders. Extra traffic only adds load on the same bottleneck.
External contractor or someone in-house?
When it comes to creating content, compare an external contractor with a person inside the company. Include the salary, equipment, management time and quality of the result. A lower price per video only makes sense if the material helps sales and the team can sustain the required volume.
9. Why set aside budget for your existing customers?
Repeat sales deserve their own goal, activities and budget. In our practice we have seen analyses in which 75-80% of sales were first purchases. This is our observation from specific cases, not a general market figure.
For a product with a natural repurchase cycle, such a share is a reason to check what happens after the first order. For durable goods or a one-off service, low repeat rates may be expected.
Start with useful follow-up emails, a renewal reminder or an offer for a complementary product. Segment by purchases and interests. In our article on push notifications and online commerce we look at one more communication channel. Our preferred growth lever is working with existing customers, because that is where we often see untapped potential.
Measure repeat purchases for similar groups of customers over the same period. When volume allows, compare the campaign with a group that does not receive it. That way you will assess the additional effect, instead of crediting the email with every purchase that would have happened without it.
10. How do you review and update the budget?
Review costs and results monthly, and reassess the allocation every quarter. With few sales, use a longer period, so you avoid decisions based on random fluctuations.
For each activity, write down the budget, the owner, the goal and the review date. For a test, decide in advance how much you can spend and what result will justify continuing it. Increase funding after checking profitability and capacity, while watching the effect of the additional spend.
Start with the order export and a summary of your costs. They will show where you have grounds to invest and what you need to improve first.
Watch the video "How to plan your marketing budget?" on YouTube (in Bulgarian). We explain the four steps and the three growth levers, so you can prepare your plan for next year. Watch the video now.