How to Create a Digital Marketing Budget Plan for 2025

Creating a digital marketing budget plan is one of the most important steps for businesses aiming to thrive. With tighter budgets, rising costs, and the increasing need for marketing efficiency, businesses must strike the right balance between cost control and impactful campaigns. 

A recent Neil Patel report indicated that 44% of markers will increase budgets in 2025, but how will this be spent? 

TL;DR

• Businesses spend an average of 14% of their revenue on marketing, the highest allocation since 2008.
• Key areas of investment include paid media, content marketing, SEO, and digital advertising.
• Marketing priorities for 2025 focus on enhancing customer experience (CX) through personalization, AI tools, and Martech optimization.
• Efficient budgeting requires aligning marketing goals with business goals – focusing on high-ROI initiatives, moving from ‘Brand’ to brand with performance metrics aka Brandformance. 
• Leveraging data-driven insights to eliminate inefficiencies.

Source: The CMO Survey

Why is a Digital Marketing Budget Essential?

A well-thought-out digital marketing budget is not just about allocating resources but about investing strategically to meet your business goals. Your marketing budget dictates the success of campaigns, the reach of your brand, and your ability to acquire new customers. 

In 2025, with marketing budgets averaging 14% of company revenue, businesses are prioritizing smarter allocation to maximize their ROI (The CMO Survey).

However, with 71% of CMOs stating they lack sufficient resources to meet their strategic goals (Gartner), it’s clear that careful planning and prioritization are critical.

What is Brandformance?

Brandformance marketing is a hybrid strategy that combines the principles of brand awareness with performance marketing to create campaigns that drive measurable results while building long-term brand equity. 

It’s a forward-thinking approach designed to bridge the gap between branding (focusing on emotional connection and brand recall) and performance (emphasizing tangible results like leads, conversions, or sales).

This innovative methodology acknowledges that modern consumers need more than just exposure to a brand – they demand meaningful experiences and trust before taking action. Brandformance ensures that while campaigns aim for conversions, they also build a brand identity that sticks with the audience.

Why traditionally, brands split paid media budgets 80/20 brand vs performance (depending on company size), these lines will start to get blurred as CFOs and executives alike demand tangible results for investments (ie. attention metrics) over meaningless measurements (ie. impressions). 

How to Create a Budget for Your Digital Marketing Plan

Step 1: Evaluate your current marketing budget and revenue

Before planning your marketing budget, take a detailed look at your current financial performance. Start by assessing:

• Revenue Allocation: Most businesses allocate 9-10% of revenue for B2B marketing and 17-19% for B2C marketing (Gartner).
• Customer Acquisition Costs (CAC): Understand how much you’re spending to acquire a customer and whether this aligns with their Customer Lifetime Value (CLV). 

Whilst this may seem obvious, many marketeers, both paid and field, do not have a foundational understanding of these metrics. According to Marketing Week’s Career & Salary Survey for 2025, 36.9% of marketers identified data and analytics as the biggest skills gap within their teams. 

This number reflects the growing complexity of data usage, information systems, technology infrastructure, engineering, and security in the marketing industry.

Marketing ROI: Understanding the bigger picture

Evaluating the ROI of marketing campaigns can be tricky, especially when considering multiple channels. At first glance, each channel may appear isolated, with its own metrics for success. However, marketing today involves many interconnected digital touchpoints, making it challenging to isolate the impact of a single channel.

For example, a retail customer shared an insightful experience: when they temporarily paused their Outbrain campaigns, they noticed a significant drop in conversion rates across all other acquisition channels. This highlights how one channel can influence the performance of others.

So, when calculating ROI for a single channel, it’s important to also consider how it impacts performance across the entire marketing ecosystem. Multi-touch attribution models can help measure these interconnected effects, offering a more holistic view of campaign performance across channels.

Step 2: Define clear marketing budget goals

Marketers who calculate ROI are 1.6 times more likely to secure higher budgets (Gartner). 

To create an effective budget plan, focus on setting SMART goals:

• Specific: Example: Increase website traffic by 25% within six months.
• Measurable: Use metrics like conversion rates, CPA (Cost Per Acquisition), or LTV.
• Achievable: Align goals with available resources.
• Relevant: Ensure goals support overall business strategies.
• Time-bound: Set deadlines for each objective.

Non-specific goals are not goals – they are dreams

Setting vague objectives like “drive business revenue” or “increase engagement” can lead to frustration and stagnation. These are more visions than actual goals. Without clear, measurable metrics, it’s impossible to gauge if these visions are being achieved. As the saying goes, “What gets measured, gets managed”.

For example, instead of saying “drive business revenue,” a clear goal might be: “Increase revenue by 15% within the next quarter through targeted paid media campaigns.” This provides both a direction and a clear metric to measure progress.

Research by McKinsey & Company shows that organizations with clearly defined KPIs are more likely to exceed their target-specific goals enabling businesses to track progress and make necessary adjustments based on real-time data. Without these, even the best strategies can fail because there’s no clear way to understand if they’re working.

Step 3: Align marketing goals with business strategy

Marketing budgets should reflect your company’s overarching strategy. Whether you’re launching new products, entering new markets, or increasing brand awareness, your digital marketing activities should directly contribute to these goals.

For example:

• A business launching a new product might allocate more budget toward paid media and social advertising for maximum visibility. Whilst organic reach on socials is decreasing dramatically, paid media is the only way to reach your target audience. 
• A business focusing on customer retention might prioritize email marketing and personalization tools.
• A business with growing revenue should invest more heavily in marketing to further increase demand. 
• Businesses with decreasing or stagnant revenue should consider their marketing investments and align with company revenue goals that are SMART. They should not continue to invest good money after bad based on a feeling or personal opinion. 

Step 4: Allocate budget across channels

With paid media accounting for 25-34% of marketing budgets in 2025, digital channels remain a cornerstone for marketers. The decline of organic reach has made paid media an essential strategy for marketers looking to maintain visibility and achieve measurable results. 

Paid media allows brands to directly target their audience with precision, leveraging tools like demographic segmentation and behavior-based targeting. This targeted approach ensures that marketing budgets are focused on high-impact initiatives rather than spread thin across less effective organic efforts. 

Ad platforms like Outbrain utilize contextual targeting to predict user intent and deliver content at the right moment. This synergy between precision targeting and performance tracking ensures campaigns maximize engagement while balancing costs. 

Keep in mind that better ROI is achieved through paid media. Organic reach is highly unpredictable. If you’re already creating content, ensuring that content reaches your target audience is critical. 

Furthermore, paid influencer campaigns allow brands to track, optimize, and refine efforts with precision. This eliminates guesswork and maximizes ROI. By amplifying content through paid channels, brands gain control over targeting and performance, ensuring their message reaches the right audience while driving measurable results. 

Here’s a breakdown of the key areas to allocate your marketing budget:

Paid media

Paid media, including Outbrain Ads, plays a pivotal role in digital marketing strategies. 

Leveraging AI tools and automated bidding strategies ensures campaigns are optimized for performance, reducing costs while maximizing reach and conversions. According to Gartner, paid media accounts for up to 34% of B2C marketing budgets, reflecting its critical importance in driving visibility and engagement. Platforms like Outbrain are particularly effective for native advertising, delivering 8-10% higher click-through rates compared to traditional display ads, while Google and Facebook remain dominant for audience targeting and scale.

With limited opportunities outside walled gardens like Google and Facebook, Outbrain offers a platform that enables precise audience targeting at the right moment by leveraging predictive technology. This approach forecasts user actions and intent, ensuring that brands can connect with engaged audiences in brand-safe environments. By delivering content when users are most receptive, Outbrain helps drive meaningful interactions and improve campaign ROI, making it a valuable tool in the open web landscape.

Content marketing

Content marketing includes blogs, infographics, videos, and white papers, driving SEO, thought leadership, and lead generation. 

Engaging content must be discoverable or distributed effectively – content that no one reads is wasted effort. With 93% of marketers using content marketing, its role remains pivotal in building authority and offering value to consumers (Content Marketing Institute). 

Remember, content is king – providing valuable insights tailored to your audience is the key to success. Utilize SEO strategies, repurpose content for multiple channels, and focus on delivering meaningful information to engage readers and generate leads effectively. 

For maximum impact, ensure consistent quality and relevancy.

Search Engine Optimization (SEO)

Investing in SEO is essential for improving organic visibility, brand awareness, conversions, and brand perception. 

SEO is often underfunded, with only a small portion of marketing budgets allocated due to its longer time-to-results compared to paid media. Despite this, its long-term benefits are unmatched. 

While social media content often fades in under 25 hours, NPDigital reports that SEO-optimized blogs can remain effective for up to 2 years. Furthermore, SEO has the highest impact on traffic and is second-most impactful to shoppers after paid media. 

This longevity makes SEO a valuable long-term strategy for driving sustained traffic and engagement.

With high-quality content optimized for user intent, businesses can rank higher in search engine results, enhancing their credibility and organic reach. Prioritize foundational SEO strategies to ensure consistent results over time.

Email marketing

Email marketing is crucial for nurturing leads and driving customer retention through automated campaigns. Newsletters are effective for staying top of mind with your audience, sharing product updates, and providing limited-time offers, all of which can increase Lifetime Value (LTV).

Focus on using email to drive action, such as re-engaging inactive users or promoting upsells. A well-executed email strategy can deliver an ROI of $36 for every $1 spent (Litmus 2023).

This ROI showcases email as one of the most cost-effective channels for driving revenue, emphasizing the importance of well-optimized and targeted campaigns.

Social media marketing

Investment in social media should not be underestimated. It’s easy to post content about your company, but the real challenge lies in providing value to your audience. 

Instead of focusing solely on promoting products, shift your approach to deliver engaging, meaningful content. This includes advertainment, educational posts, and authentic stories that put the customer at the center. 

Social media is not just a platform for brand promotion, but a space for building genuine connections. By offering value-driven content that speaks to your audience’s needs, you’ll build trust and loyalty, and ultimately drive better conversions.

Combine organic and paid strategies to maximize audience engagement and conversions. While organic reach has steadily declined, the rate of this decline is accelerating and is expected to continue through 2025. As platforms prioritize paid content and competition for organic visibility intensifies, relying solely on organic methods is no longer sufficient. 

To effectively reach your target audience, integrating paid media – such as paid search, native advertising, and social ads – is essential. This approach enables precise targeting, real-time adjustments, and scalable growth, complementing organic efforts to maintain a strong online presence. 

Gartner reports that paid media now accounts for up to 34% of marketing budgets, further highlighting its importance in today’s competitive landscape. Outbrain native ads generally have 8-10% higher CTR compared to traditional display ads​. Research also shows that 62% of B2B marketers say content marketing, which includes native ads, is an effective strategy for lead generation​. By allocating a larger portion of the budget to native platforms like Outbrain, marketers can improve brand awareness and increase conversion rates, ultimately leading to a higher ROI.

Source

Step 5: Use industry benchmarks – Key trends for 2025

Stay informed about industry trends and benchmarks to guide your budget allocation. Some key trends for 2025 include:

Artificial Intelligence (AI): According to Accenture, 80% of CMOs plan to increase their spending on AI tools for data-driven marketing. This shift reflects the growing reliance on AI to enhance personalization, predict customer behavior, and optimize marketing strategies for better ROI. AI tools allow for smarter, more efficient campaigns by providing deeper insights into audience preferences and behaviors. 

Customer Experience (CX): As businesses increasingly prioritize personalized and seamless experiences, investments in Customer Experience (CX) are rising. A study by Gartner indicates that 80% of businesses intend to improve CX through enhanced personalization in 2025. Brands are focusing on creating tailored, user-centric experiences that not only boost customer satisfaction but also drive long-term loyalty. 

Voice Commerce: Voice-activated marketing is quickly gaining momentum as a new way to engage customers. With the rise of smart speakers and voice assistants like Alexa and Google Assistant, voice commerce is transforming how brands interact with consumers. According to Forrester, the global voice commerce market is expected to reach $40 billion by 2025, offering brands a new avenue for customer interaction and sales. 

Step 6: Understanding your target customer

In digital marketing, knowing your target customer is essential to cutting through the noise. To reach the right audience, you must first identify who they are.

By understanding your ideal customer, you can tailor your marketing tactics for optimal results. Buyer personas are a powerful tool for this. A buyer persona helps you understand the demographics, behaviors, and pain points of your target audience, enabling you to adapt your editorial calendar and content creation to speak directly to them.

Buyer personas also help refine your marketing strategy – whether in social media, email campaigns, or content marketing. Crafting customized content boosts engagement and improves your chances of a positive ROI. Studies show that customer personas can improve content effectiveness by 60%​. 

Additionally, creating detailed personas makes it easier to fine-tune your strategy and resonate more with your audience. A well-targeted marketing message leads to better results. For a quick guide on building a buyer persona, choose a free template here.

Step 7: Leverage technology for efficiency

A martech stack is crucial for businesses aiming to scale their marketing efforts, but 42% of companies still don’t fully utilize their tools, a decline from 58% in 2020 according to Gartner. To maximize efficiency, consider the following steps:

1. Invest in new tools: Don’t hesitate to invest in new tools for CRM, marketing automation, and predictive analytics. While dealing with budget owners, MIS, and security concerns may seem daunting, the right tools will drive results if you remain agile and adaptive.
2. Train your team: Transitioning to new tools can be challenging, but it’s essential. Change is uncomfortable, but it’s necessary for growth. Consider hiring external experts to bring fresh perspectives and new methodologies to the team.
3. Audit your martech stack: Regularly assess your existing Martech tools and eliminate redundancies to streamline operations. This ensures that your team isn’t overwhelmed by underused or ineffective tools, allowing you to focus resources where they can make the most impact.

Step 8: Stay agile

While annual budgets provide structure, digital marketing thrives on agility. 

Here’s how to remain flexible:

• Reallocate funds to high-performing campaigns in real-time. Waiting until the end of the year or even quarter to evaluate impact is already too late. Use data as a compass to navigate your way to success. This is where Brandformance will play a greater role in 2025 and beyond rather than promising results from campaigns today in 2 years’ time. 
• Adjust spending based on seasonal trends, such as higher competition in Q4. Certain campaigns will be always on, building trust, value, and awareness.  But understand your customers and when they are more likely to be in a position to spend. 
• Keep a portion of the budget unallocated to respond to unforeseen opportunities or challenges.

Step 9: Always measure ROI and optimize

Tracking ROI is critical to understanding which campaigns yield the best returns. Focus on KPIs like CPA (Cost Per Acquisition), ROAS (Return on Ad Spend), and LTV (Lifetime Value).

Cross-channel conversions: Assess how each channel impacts others in omnichannel or multi-touch campaigns. Experiment with budgets across channels and optimize for maximum ROI.

Advanced analytics: Use multi-touch attribution tools to track how each channel contributes to conversions. This data helps identify high-performing touchpoints and areas for improvement.

Regular audits: Regularly audit campaigns to eliminate underperforming strategies. Not every metric can be measured, but key indicators of success can guide adjustments for continuous improvement.

Common Mistakes to Avoid in Your Marketing Budget

Ignoring data-driven insights

Avoid relying on assumptions. Always use data to guide decisions. Relying on assumptions in marketing can lead to wasted resources and poor results. Data-driven insights are crucial for decision-making. For instance, businesses using data-driven strategies are three times more likely to see higher ROI compared to those that don’t (Accenture). 

Additionally, personalization driven by customer data improves engagement, with 80% of consumers more likely to buy from brands offering tailored experiences (Epsilon). In 2025, success depends on using data, not assumptions, to guide marketing strategies.

Overlooking long-term marketing metrics

Overlooking long-term metrics like Lifetime Value (LTV) can harm marketing strategies. While short-term wins drive immediate results, focusing solely on them limits profitability. Businesses using predictive analytics for LTV achieve higher ROI, as noted by Gartner. 

Brandformance marketing bridges short-term performance and long-term brand growth, ensuring campaigns boost both conversions and customer loyalty over time. Balancing both metrics creates sustained growth and maximizes customer value.

Spreading marketing media budgets too thin

Spreading budgets across too many initiatives can dilute impact and reduce efficiency. Focus on a few high-ROI strategies to maximize results. Platforms like Outbrain and other paid media channels rely on sufficient data volume to optimize campaigns effectively. 

Without enough impressions or conversions, algorithms struggle to deliver accurate targeting and performance. This is especially critical for platforms using AI and predictive analytics to refine campaigns.

By concentrating your budget on fewer channels with higher data flow, you can achieve better optimization and ROI. 

To optimize event budgets, companies should strategically assess their event goals and focus on ROI, ensuring that investments are directed toward high-impact events. For example, event organizers with budgets over $500,000 often see better results when they focus on a select few impactful initiatives rather than spreading funds thinly across many smaller events​. (Banzai)

Consult your marketing team (they know better than you)

If you’re a VP or CMO, rely on your digital marketing team. They know the nuances of digital strategies better than anyone. For buyers, ensure you’re involved in budget planning. Don’t let others decide without you.

As Gartner’s 2023 survey shows, 25.6% of marketing budgets go to paid media. Executives often fail by crafting budgets without consulting the teams handling the actual spend. Don’t make the mistake of bringing them in at the last minute.

Give the budget time for revisions. Share it with the team – it’s not a secret. Get feedback from the people who know best.

Stop investing your budget in things that don’t work 

When putting together a marketing budget, the phrases “We’ve always done this” or “We need more budget to make it work this year” are often the most frustrating. 

If a strategy isn’t delivering results, don’t be afraid to end it. Collaborate with your core team and stakeholders, use data to guide your decisions, and align the budget with your key performance indicators (KPIs).

Failure isn’t a setback; it’s a learning experience. 

Transparency about what’s not working builds trust within the team. Own the failed activity, learn from it, and share those insights to improve future strategies.

Incorporating a budget for experimentation is essential. Try new trends, explore emerging channels, or test innovative tactics. But don’t continue with activities just because they’re familiar. If something doesn’t show results, no matter how loved the event is by the team, it’s time to stop.

To make informed decisions, gather customer feedback through surveys and interviews. Ask questions like, “What do you remember most from this event?” or, “Did this event increase your likelihood of purchasing?” This data is invaluable for refining your strategy. Use Self-Reported Attribution for customer acquisition – just ask your customers, “How did you hear about us?”. The insights will surprise you.

How to Be Action-Oriented for Marketing Budget Planning

Planning a digital marketing budget for 2025 requires a blend of strategic focus, data-driven insights, and adaptability. Here’s a quick summary of what we’ve covered and how to take action to create a marketing budget that works for you:

• Involve your team early: Collaborate with your digital marketing team during the budget planning. They know which channels work. Don’t involve them last minute.
• Use data: Base decisions on data, not assumptions. Use tools like Google Analytics, surveys, and KPIs to prioritize high-ROI campaigns. Cut ineffective campaigns quickly.
• Transparency is key: If a campaign fails, analyze it and move on. Be transparent, share learnings, and adjust strategies accordingly.
• Budget for testing: Allocate funds for new trends and technologies. If something works, invest more. If not, stop and reallocate.
• Balance short-term and long-term: Track both short-term metrics (conversions) and long-term goals (LTV). Align your budget with both.
• Use attribution: Uou wouldn’t build a house with a single tool. Likewise, use multiple models to measure attribution. Don’t rely solely on data-driven attribution; ask customers how they found you, what was memorable this year, did this campaign increase the probability of action? 
• Stay flexible: Monitor campaigns in real-time. Reallocate funds based on performance. A flexible approach is always the smartest approach to marketing budgeting.

FAQ

What are the most effective strategies for allocating a digital marketing budget to maximize ROI?

Treat your budget like an investment portfolio – prioritize tactics with proven ROI. Use data insights from past campaigns to identify the most effective channels and content types. Double down on high-performing platforms while cutting underperforming strategies to minimize waste.

How can companies uncover inefficiencies in their digital marketing budget?

Perform a comprehensive marketing audit. Evaluate which campaigns and content types deliver measurable results and eliminate those that don’t. Assess your platforms, tools, and processes for redundancies or inefficiencies. Leverage AI and automation to streamline workflows and make your budget work smarter.

What are the best practices for measuring ROI in digital marketing campaigns?

Start with clearly defined, measurable goals. Focus on advanced analytics tools to track meaningful KPIs such as customer acquisition costs (CAC), lifetime value (LTV), and multi-touch attribution. Regularly review campaign performance through ROI audits to identify and adjust underperforming strategies.

How can businesses optimize their digital marketing budget during economic uncertainty?

Shift focus to high-performing digital channels where results are trackable and immediate. Eliminate low-ROI tactics and experimentations. Prioritize evergreen content, retargeting campaigns, and automation tools to increase efficiency while reducing costs. Lean into actionable data to make every dollar count.

What high-impact strategies help maximize the ROI of a digital marketing budget?

Focus on highly targeted, data-driven campaigns. Invest in personalized content that aligns with audience needs and behaviors. Develop evergreen content for long-term ROI and partner with influencers or affiliates for broader reach without excessive spending. Continuous testing and optimization ensure ongoing improvements.