Budgeting for Marketing Success: Melissa Van Loon’s guide for design firms
Budgeting is the backbone of any successful business, and design firms are no exception. A well-crafted budget isn’t just a collection of numbers—it’s a strategic roadmap that ensures resources are used wisely, projects stay on track, and profitability remains strong.
As 2025 begins, now is the perfect time to fine-tune your budgeting strategy, especially when it comes to marketing—a critical investment that can boost your firm's visibility, strengthen client relationships, and drive sustainable growth. To shed light on this topic, we turned to Melissa Van Loon, a trailblazing expert in design firm operations, financial management, and people strategy.
Melissa’s impressive track record includes transforming top design firms like II BY IV Design, Powell & Bonnell, and MacKayWong. Under her leadership, these firms not only doubled in size and revenue but also secured marquee clients such as RioCan/Allied REIT, Maple Leaf Sports & Entertainment, Saks Fifth Avenue, Marriott Hotels, and Crystal Cruises.
In this interview, Melissa shares her insights on budgeting best practices for architecture, engineering, and interior design firms. From understanding the key elements of a strong budget to streamlining the planning process, Melissa breaks down how thoughtful budgeting can position your firm for long-term success.
From crafting targeted campaigns and boosting your digital presence to strengthening your brand and building client relationships, a marketing budget is far more than just an expense—it’s a strategic investment in your firm’s future. Whether you’re running a boutique studio or managing a large practice, smart budgeting opens doors to new opportunities and keeps your business thriving in a competitive market.
As you plan, make sure marketing and business development are seen as strategic priorities rather than discretionary costs. Like salaries or office technology, they’re critical to achieving sustainable growth. Sit down with your leadership team, define your goals—short-term and long-term—and build your marketing budget as a fixed component of your overall strategy. With clear priorities and a dedicated investment, your firm will be well-positioned to compete and grow.
HOW MUCH SHOULD DESIGN FIRMS BUDGET FOR MARKETING AND BUSINESS DEVELOPMENT?
Basic maintenance
Oomph: First off - let's start with the one question everyone on everyone’s mind: how much should a firm budget for marketing? One hears a range of percentages - anywhere from 4% to 10% of revenue, or “annual turnover”. Please explain these percentages and clarify when it makes sense to aim for the higher end of that range, and when might a firm get by with less?
Melissa: To get started, the common benchmark across the industry is for firms to allocate their marketing budget as a percentage of gross revenue. This approach offers a consistent and accounts for fluctuations in net income caused by variables like unforeseen expenses or market conditions. For most firms, the general starting point typically falls between 3% to 5% of gross revenue.
However, marketing budgets will vary widely based on your firm’s long-term vision, goals and projected revenue streams, and the conditions on a given year, so the key is to align your marketing budget with your practice goals and circumstances. For example, if you plan to open a new regional office or enter a new market, you might budget more aggressively to support rapid growth or market expansion. Conversely, if you are targeting specific sectors, such as healthcare or education, with a new service, focusing on building brand awareness and nurturing client relationships in your existing market, or upgrading your marketing and business development infrastructure, such as a new website or CRM system, you will need to increase your budget and carefully consider where to allocate those funds.
Oomph: So let’s start off with a regular year. Everything is going fine, there are no major changes in the marketplace, and everything looks like it’s going to continue as it is. We don’t need a new website or a new CRM. What is the baseline to maintain what we have? Would that be the 3%, 4% or 5%?
Melissa: To maintain your growth, which is roughly 5% revenue, I would say 5% for marketing and BD would be sufficient.
Updating/upgrading marketing and BD systems
Image by Steve Buissinne from Pixabay
Oomph: Okay, 5% for basic maintenance. Now let’s talk about marketing and BD infrastructure. Let’s say we need to update the website, or we’re getting excellent results from a newsletter or business development outreach program, but we now need a CRM to manage the growing number of names and interactions. To upgrade our systems, what are we looking at? Another 3% or 4%?
Melissa: It depends on the size of your firm and the complexity of your existing systems. A smaller firm can use simpler, less costly CRM software, while a large firm might need a custom CRM or ERP system. The same goes for websites. A smaller firm can use a platform like Squarespace, whereas a large firm might need a custom platform that can host a database on the backend. As well, sometimes it’s cheaper to get a whole new website rather than updating an old one. But on the whole, for rough planning, an additional 3%-4% for upgrading systems is realistic.
Entering a new market
Oomph: Let’s talk about a scenario that’s sure to resonate: entering new markets. This is a hot topic right now, with firms from Ontario and the Prairies expanding towards the coasts, opening offices in Nova Scotia, British Columbia, and Victoria. Growing your market share—whether by entering new geographic areas, sectors, or industries, or even launching a new service—is a major budget consideration, isn’t it?
Melissa: Absolutely. Entering a new market is a strategic move that requires a significant investment in marketing and operations. First, you’ll need thorough market research to understand the landscape—local regulations, competitive dynamics, and how to position your strengths to fit local needs. Credibility is everything. If you’re expanding from Toronto to a city like New York or Chicago, for example, you need to show you know the market. What makes you stand out? What’s your differentiator? It’s a big sell.
Image by ThuyHaBich from Pixabay
Building strategic relationships is critical. Identifying local sub-consultants, collaborators, and talent is key to establishing a foothold. While some work can be done remotely, you’ll need boots on the ground for tasks like site visits and client interactions. Relationships with local suppliers and partners are equally important—clients increasingly expect seamless, locally sourced solutions. Relying on suppliers from Toronto for a project in Nova Scotia, for instance, might not cut it.
Engaging an experienced consultant for market entry can help immensely. They’ll provide valuable insights, make introductions, and guide exploratory trips to gather intel and meet the right people.
Expanding into busier, more competitive markets also means investing heavily in brand awareness. PR campaigns, networking events, and other marketing initiatives will be necessary to make an impact and carve out your space.
Finally, if you’re moving into a foreign market like the U.S., you’ll need to consider additional factors such as funding, exchange rates, and hiring regulations. Expansion is exciting, but it’s also a complex process that requires careful planning and a robust budget.
MARKETING AND/OR BUSINESS DEVELOPMENT: WHAT TO INCLUDE IN THE BUDGET – AND HOW?
Balancing the allocation of funds between sales and marketing is a challenge faced by businesses across all industries, not just design firms. Sales promotions and direct marketing activities often take precedence because their immediate impact is easier to measure, while the long-term benefits of brand building and awareness campaigns can be harder to quantify.
Tradition and culture also play a significant role, with some firm leaders reluctant to reallocate business development budgets toward marketing initiatives. This resistance can leave vital marketing efforts—like brand positioning, public relations, and social media—underfunded or inconsistently executed, as resources are instead directed toward selling activities such as proposals, networking, and client entertainment. Finding the right balance requires both a strategic mindset and a willingness to invest in the broader, long-term growth of the practice.
Allocating budget between selling and marketing
Oomph: How do you approach budget allocation between selling and marketing?
Melissa: There is no one-size-fits-all rule for allocating funds between marketing and brand building and selling and business development. The approach will vary based on the type of firm and its areas of specialization. For instance, a hospitality or retail-focused interior design firm may need to allocate more resources to PR and brand awareness to stand out in a visually driven and competitive market. On the other hand, an architecture firm specializing in institutional or healthcare projects may direct more funds toward preparing the detailed and resource-intensive proposals often required in these sectors.
Beyond the type of work a firm does, other factors impact budget allocation for marketing and business development. For example, smaller or newer firms might need to focus more on building their brand and visibility, while established firms often prioritize maintaining client relationships and securing repeat business. Regional conditions matter too—if you’re expanding into a new market or a competitive area, you’ll probably need to invest more in local branding, market research, or partnerships.
Then there’s the question of how much to allocate for Partners and Associates to attend events and build relationships—it’s an important piece, but it needs to tie back to your overall goals and deliver clear value. And of course, things like special projects, shifts in the economy, or even the strength of your in-house marketing team all come into play. It’s about staying flexible and making sure your budget supports where your firm wants to go.
Ultimately, flexibility and regular reassessment are key. Allocations should be reviewed annually (if not more frequently) to ensure they align with the firm’s evolving priorities and external market dynamics.
THE IMPORTANCE OF MEASUREMENT AND TRACKING
Oomph: What is your approach to managing and measuring the effectiveness and ROI of marketing and BD activities?
Melissa: All marketing and business development spending—whether managed by dedicated teams or allocated to other members of the firm—needs to be part of the overall budget. Every dollar should contribute to the firm’s growth, so focusing on areas with the best return on investment is key.
That said, some marketing initiatives, especially long-term brand-building efforts, are harder to measure. This is where a solid marketing and BD plan becomes essential. A clear plan not only lays out objectives and targets but also helps you review and benchmark every initiative against current conditions and anticipated challenges. It ensures that long-term strategies, like brand and practice building, get the attention they deserve—even when their effectiveness isn’t easily quantifiable.
With a strategic plan, every tactic has a purpose and objective, eliminating the “we’ve always done it this way” mindset. Plus, it allows you to set parameters for measuring success, even for initiatives that are harder to track directly. By tying your efforts to clear goals and outcomes, you can make smarter decisions and ensure your marketing and BD investments drive meaningful results.
Oomph: How often do you review progress and budget effectiveness?
Melissa: I recommend monitoring progress on an ongoing basis. tor. Each month, revisit your goals, track where you are, and make sure nothing slips through the cracks. Flexibility is key too—sometimes you need to adjust as things change.
FORECASTING
Forecasting is always a challenge, even in stable times, but it becomes particularly daunting during periods of significant uncertainty and change. Over the past four years, the architecture, engineering, and construction industries have faced numerous disruptions—from the COVID-19 pandemic to skyrocketing construction material costs and unprecedented increases in interest rates. These factors have had a profound impact on activity levels and demand, making it more difficult than ever to plan for the future.
Oomph: In times like these, without the benefit of a crystal ball, how can firms forecast effectively? And what kind of data and info would you base your forecasts on?
Melissa: There are various approaches to forecasting.
Forecasting using secured and potential revenue streams
One way to approach forecasting is by analyzing both secured and potential revenue streams. Start with work-in-progress (WIP)—these are your current projects. Break them down by phase (concept, design development, construction documents, etc.) to project revenue over time. Calculate the project burn rate to see how much revenue each project will generate monthly based on its completion percentage, which also helps forecast cash flow. Don’t forget to include pipeline projects—those that are secured but haven’t started yet—and estimate their timelines and contributions.
Next, focus on upselling to existing clients, as repeat business is often a steady revenue source. Identify clients with upcoming needs, like expansions, retrofits, or additional project phases. You can also offer specialized services or propose retainers for long-term planning or consulting, ensuring a consistent revenue stream.
Finally, tackle new business development. This involves closing the gap between WIP and upselling revenue to hit your growth target—say, a 5% increase. Invest in marketing, networking, and proposals to bring in new clients and opportunities to meet your goals.
Forecasting using project and service types
Another approach is to forecast using project types and services. For example, an architecture firm active in higher education might review the past five years and estimate one new build, three additions, and two renovation or retrofit projects for the upcoming year. Similarly, the firm could analyze historical data for services like planning, architecture, interior design, retrofitting, and consulting to project revenue by discipline.
When forecasting by typology or service, it’s important to consider the variations in project scope and duration across disciplines. Architecture projects, especially new builds, often span 3 to 6 years or more, while multi-unit residential projects are typically fast-paced but highly competitive, while institutional and higher education projects are longer-term and revenue-heavy. Heritage projects, though smaller in budget, often provide higher margins due to their specialized nature. Corporate commercial projects strike a balance, offering steady opportunities for repeat business. Forecasting for a higher volume of shorter projects adds complexity, as it requires more dynamic management of timelines, client needs, and resources compared to long-term projects.
