How do you arrive at marketing budget for your D2C brand?
Most brands still set marketing budgets using folklore:
Spend 5–15% of revenue.
Match what the competitor spends.
But there’s much more nuance to arriving at your marketing budget.
It’s dependent on your category, your own business and your objective for the year -
✅ Your Category
What’s your Share of Voice relative to your Market Share?
SOV = your media spend share in the category.
SOM = your market share in the category.
eSOV (Excess SOV) = SOV – SOM.
eSOV thumb rule: every +10% eSOV typically delivers ~0.5% SOM gain per year.
What’s the Purchase Cycle & ATV dynamic for your category?
In high-ticket, low-frequency categories (real estate, automobiles), even 1% of revenue can be overkill.
What’s the # of visible brands in your category?
More brands = higher spend needed to stay salient. In a duopoly, your budget works harder.
✅ Your Company
Are you in the 0–1 stage, 1–10 scaling phase, or 10–100 growth phase?
Is your CAC sustainable relative to LTV?
Is your CAC ≤ 30% of LTV?
✅ Your Objective
Are you launching, gaining share, or sustaining this year?
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There’s a lot more to defining a marketing budget than % of revenue or CAC × target customers. More on this in the next post.
How do you arrive at your marketing budget? Drop a comment.
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I write regularly on D2C brand building, growth, and marketing insights.
#runningmarketer
