How to Allocate a Demand Generation Budget: Breakdown & Examples

Last updated: May 2, 2024

This article will discuss the ideal allocation for a demand generation budget, taking into consideration industry and company size. 

We begin by introducing the factors one must consider in creating their demand generation budget, including what percentage to put towards lead generation vs lead nurturing. We then provide an example budget for several company sizes, broken down by marketing channel. Finally, we breakdown the role of each marketing channel to which companies typically allocate a part of their budget and discuss its advantages and disadvantages.  

Creating a Demand Generation Budget

Before creating your ideal budget, it’s important to understand where your financial strategy falls in the demand gen process. Demand generation encompasses the first two steps of the customer acquisition funnel: lead generation and lead nurturing, as shown in the graphic below:

Finding the right balance between lead generation & lead nurturing depends on your company size, sales cycle length, and audience. In determining what percentage of your budget to allocate to lead gen vs lead nurturing, a good place to start is with the size of your company. The table below lists key demand generation budget allocation considerations for startups, SMBs, midsize businesses, and enterprises. 

Company Size	Budget Allocation Considerations	Lead Generation Percentage	Lead Nurturing Percentage
Enterprise	Enterprise-level companies have name recognition and a flow of leads, but are typically battling a few key competitors.  Investing in thought leadership content is particularly important as (a) gaining a perception as the industry leader has outsized impact; and (b) the content can be used on most other channels Social media marketing should make up a higher percentage of budget for companies with shorter sales cycles. Webinars, podcasts, and other long-form lead nurturing strategies are an excellent bet without making up too high a % of budget	35%	65%
Mid-to-large Business	Established companies benefit from security and recognition allowing them to evenly prioritize lead generation and nurturing. Investing in multiple channels allows for reduced per-channel content creation costs.	50%	50%
Small to Midsized	Smaller businesses have fewer existing leads, and will need to allocate a greater proportion of their demand generation budget to lead generation. Paid lead generation such as PPC and traditional advertising costs should be kept low, with most of the budget allocated to higher long-term ROI organic channels. Organic social media creates potential for high return with relatively low cost.	70%	30%
Startup	With no history or preexisting leads, startups must invest the majority of their budget in lead gen. Email marketing is a low cost way for startups to nurture the leads they generate	80%	20%

Dedicating a significant portion of your budget towards prioritizing existing leads over generating new ones becomes more imminent as a company expands. As the table implies, enterprise-level companies are typically known entities to their customers, requiring only 35% of their budget to be dedicated to lead generation material. That leaves 65% of their budget to nurture existing leads. It is far more costly to generate new customers than to retain current ones. By allocating the majority of your budget towards lead nurturing, you create more opportunities for returning customers.

Example Demand Generation Budgets

The table below discusses different marketing channels and how they can be used for companies of varying sizes.

Annual Demand Generation Budget by Company Size & Channel

Channel	Company Size
	Startup	Small to Midsized	Mid to Large	Enterprise
Thought Leadership SEO	$130,000	$180,000	$250,000	$475,000
Linkedin Advertising	$25,000	$60,000	$75,000	$100,000
Linkedin Organic	$15,000	$35,000	$30,000	$50,000
Email Marketing	$30,000	$50,000	$80,000	$125,000
Webinars	–	$100,000	$150,000	$250,000
Podcasts	–	–	$75,000	$150,000
SEM/PPC	$50,000	$75,000	$140,000	$250,000
Traditional Advertising	–	–	$200,000	$600,000
Total Demand Generation Budget	$250,000	$500,000	$1,000,000	$2,000,000

It should be noted that we did not include Account-Based Marketing (ABM) on this list due to its nature as a highly industry and use-case dependent channel. Companies that operate in industries with a few very large players will invest heavily in ABM, often reducing their PPC and advertising spends accordingly.

Demand Generation Channels and Their Role

Determining how much of your budget to distribute toward lead generation vs. lead nurturing helps you find the right marketing channels to distribute materials. The most valuable channels depend on knowing where your customer base already exists. For example, a B2B SaaS company would likely want to consider specialized tech-oriented channels like webinars to target audiences already interested in that topic. 

The chart below displays common demand gen channels and the average costs and time necessary to achieve the listed results.  

Channel	Average CAC	Time Until Results	Use Case	ROI
Thought Leadership SEO	$650	4-6 months	Lead Generation	748%
LinkedIn Advertising	$1000	3-4 months	Lead Generation	192%
PPC/SEM	$800	1 month	Lead Generation	36%
Webinars	$600	2-4 months	Lead Generation/ Lead Nurturing	430%
LinkedIn Organic	$650	6-8 months	Lead Generation/ Lead Nurturing	229%
Podcasts	$1,450	12-18 months	Lead Nurturing	307%
Email Drip Campaigns	$500	3-6 months	Lead Nurturing	312%
Account Based Marketing (ABM)	$4,650	4-8 months	Lead Nurturing	240%

Every demand generation strategy will combine multiple channels, increasing both the overall reach of your campaigns and allowing for operational efficiencies in content creation.

1. Utilizing multiple channels of the same type to speak to prospects in different industries. SEO can be used to target leads in one industry (and keyword topic) for long-term growth, while PPC provides short-term lead gen from other markets.
2. Use marketing automation software to track leads and nurture them based on the lead gen channel they originated from. For example, email drip campaigns used to nurture PPC leads should be customized to discuss the topics of the ads that leads clicked on.
3. Content created for one channel can be used as the basis for other channels to increase budget efficiency. Thought leadership created for an SEO campaign can serve as a starting point for webinars, LinkedIn posts, and emails.

Finding the right combination of marketing channels to suit your needs can be a challenging process. We suggest starting by reading our in-depth article on the topic here. 

Executing On a Demand Generation Budget

While the tables above provide readers with a high-level overview of how to allocate a demand generation budget, execution is much more complicated. Few companies have the resources necessary to run every aspect of their demand gen in-house, and must choose which channels to outsource to an experienced firm.

Thought leadership SEO is one such channel that is particularly suited for outsourcing due to the expertise and time necessary to implement effectively. The content generated from a partnership with a thought leadership marketing firm such as ours also provides a foundation for email drip campaigns, LinkedIn articles, and webinars. Contact us here if you’d like to learn more.