How Much Should a Business Spend on Marketing?
By PWDR MEDIA News Desk
Ask a business owner how much they should spend on marketing and the answers can range from “as little as possible” to “whatever produces growth.” Neither answer is particularly useful when a company is trying to build an actual budget.
Marketing spending is one of the more difficult numbers to determine because there is no universal percentage that works for every company. A mature business protecting an established customer base has different needs than a startup attempting to enter a crowded market. A contractor expanding into neighboring cities faces different costs than an online retailer trying to acquire customers nationwide.
Still, industry benchmarks provide a useful starting point. Gartner's 2025 CMO Spend Survey found that marketing budgets averaged 7.7% of company revenue among the organizations surveyed. The study included 402 marketing leaders, primarily from large companies in North America, the United Kingdom and Europe. https://www.gartner.com/en/newsroom/press-releases/2025-05-12-gartner-2025-cmo-spend-survey-reveals-marketing-budgets-have-flatlined-at-seven-percent-of-overall-company-revenue
The CMO Survey produced a somewhat higher figure, reporting marketing budgets at approximately 9.4% of company revenue in its 2025 research. https://cmosurvey.org/marketers-claim-a-broader-role-and-increased-influence-amid-pressures/
Those numbers provide a benchmark—not a rule.
Start With Revenue, Then Look at the Goal
Using a percentage of revenue is one of the simplest ways to establish a marketing budget because it allows spending to scale with the size of the business.
A company producing $1 million in annual revenue and allocating 8% to marketing would have an annual marketing budget of approximately $80,000, or about $6,667 per month. A $5 million business using the same percentage would allocate roughly $400,000 annually.
But percentages become misleading when they are separated from business objectives.
A company satisfied with its current size might be able to operate with a relatively conservative marketing budget. A company attempting to grow revenue by 30%, enter two new markets and launch a new service will likely require substantially more investment.
The U.S. Small Business Administration has previously emphasized this point in its guidance on marketing budgets, noting there is no single correct percentage and that businesses commonly use revenue as a starting point. https://legacy.sba.gov/blog/how-get-most-your-marketing-budget
The better question is therefore not simply, “How much should we spend on marketing?”
It is, “What are we expecting our marketing budget to accomplish?”
Established Businesses and Growth Businesses Need Different Budgets
A well-established company already has assets working in its favor. It may have repeat customers, referrals, strong reviews, brand recognition and an existing website that generates organic traffic.
A growth-stage company often has to build those advantages.
That means businesses aggressively pursuing growth may need to allocate a larger percentage of revenue toward marketing than companies primarily concerned with maintaining their current position.
The reason is straightforward. Expansion requires acquiring customers who may have never heard of the company.
That can require investment in search engine optimization, Google Ads, website development, content marketing, social media, email marketing, video, photography and reputation management. Companies expanding geographically may also need campaigns and landing pages specifically designed for new markets.
Marketing budgets should reflect the cost of reaching the company's next customer—not merely what the company spent last year.
Digital Marketing Is Taking a Larger Share
Where businesses spend their marketing budgets is changing just as significantly as how much they spend.
Gartner reported in 2025 that digital channels accounted for 61.1% of total marketing spending among surveyed organizations. Paid online channels represented 69% of digital spending, with paid search holding the largest individual share of digital channel investment. https://www.gartner.com/en/newsroom/press-releases/2025-06-02-gartner-survey-finds-digital-channels-account-for-61-point-1-percent-of-total-marketing-spend
The CMO Survey similarly reported that digital marketing spending had increased 7.3% during the prior 12 months and respondents expected digital spending to grow another 11.9% over the following year. Meanwhile, traditional advertising spending showed a slight decline. https://cmosurvey.org/wp-content/uploads/2025/03/The_CMO_Survey-Highlights_and_Insights_Report-2025.pdf
For small and midsize businesses, that shift is particularly important because digital marketing can provide something traditional advertising frequently struggles to deliver: detailed performance information.
Website traffic can be measured. Keyword rankings can be monitored. Leads can be tracked. Advertising conversions can be analyzed.
That makes it easier to determine whether the next marketing dollar deserves to be spent.
SEO Should Be Viewed Differently From Advertising
One common budgeting mistake is treating every marketing channel as though it works the same way.
Paid advertising generally rents attention. Stop purchasing the advertisement and the exposure usually stops with it.
Search engine optimization and content marketing can behave differently.
A useful article, optimized service page or strong local search presence can potentially continue attracting organic website traffic long after the initial work is completed. Over time, a website can build rankings across dozens or hundreds of relevant search queries.
That makes SEO spending closer to building a digital asset.
For businesses operating in competitive local markets, allocating part of the marketing budget toward SEO performance, keyword optimization, local search visibility and website content can reduce dependence on continually purchasing every visitor.
Paid advertising can produce immediate traffic.
SEO can work toward producing sustained organic traffic.
Strong marketing strategies often use both.
Do Not Confuse Marketing Spend With Advertising Spend
Another budgeting problem occurs when businesses describe their advertising budget as their marketing budget.
Advertising is only one piece of marketing.
A realistic marketing budget may need to cover website hosting and development, SEO, content creation, photography, video production, graphic design, social media management, email software, customer relationship management systems, paid search, social advertising and other expenses.
If a business allocates 8% of revenue toward marketing but spends nearly all of it on advertisements, there may be little remaining to improve the website receiving those visitors.
That can create an expensive problem.
Driving thousands of people toward a poorly designed website does not automatically produce customers. Marketing needs to fund both customer acquisition and the infrastructure required to convert attention into revenue.
Track Cost Per Lead and Cost Per Customer
Percentage-of-revenue budgeting provides a starting point, but performance should ultimately determine where money continues to go.
Suppose a company spends $5,000 on a campaign and generates 50 qualified leads. Its marketing cost per lead is $100.
If 10 become customers, the marketing acquisition cost is approximately $500 per customer.
Whether that is good or bad depends entirely on the economics of the business.
For a company earning $300 from the average customer, spending $500 to acquire one would obviously be difficult to sustain. For a business generating $10,000 in gross profit from an average long-term customer relationship, the same acquisition cost could be extremely attractive.
That is why successful marketing budgets are tied to customer lifetime value, margins and conversion rates, not arbitrary percentages alone.
Cutting Marketing Can Have a Delayed Cost
When businesses encounter financial pressure, marketing is often one of the first expenses questioned.
That can sometimes be necessary, particularly when campaigns are producing poor results. But indiscriminately cutting marketing can create a delayed problem.
Today's marketing generates tomorrow's pipeline.
Reducing SEO, advertising, content and lead generation may not immediately affect revenue because existing customers and previously generated leads are still producing business. Several months later, however, the pipeline can begin shrinking.
Gartner's 2025 research illustrates the pressure marketing departments are already experiencing. Although average budgets remained at 7.7% of company revenue, 59% of surveyed CMOs said their budgets were insufficient to execute their strategies. https://www.gartner.com/en/newsroom/press-releases/2025-05-12-gartner-2025-cmo-spend-survey-reveals-marketing-budgets-have-flatlined-at-seven-percent-of-overall-company-revenue
The lesson is not that businesses should spend recklessly.
It is that marketing cuts should target activities that are not producing results rather than automatically reducing the entire growth engine.
So, What Should Your Business Spend?
For many companies, using roughly 7% to 10% of annual revenue as an initial marketing benchmark is reasonable when compared with current industry surveys. Businesses primarily maintaining an established market position may operate below that range, while aggressive growth companies, startups and businesses entering new markets may need to invest substantially more.
The final number should depend on margins, growth targets, competition, customer acquisition costs and the strength of the company's existing digital presence.
More importantly, the budget should be measurable.
Businesses should know which keywords are generating organic traffic, which advertisements are generating qualified leads, which landing pages convert customers and which marketing channels ultimately produce revenue.
The goal is not to spend the largest percentage possible.
It is to create a marketing system where SEO performance, keyword strategy, digital advertising, content and conversion optimization produce more economic value than they cost.
When that happens, marketing stops looking like another expense on the income statement.
It becomes an investment in acquiring the company's next customer.
Sources
Gartner — 2025 CMO Spend Survey
https://www.gartner.com/en/newsroom/press-releases/2025-05-12-gartner-2025-cmo-spend-survey-reveals-marketing-budgets-have-flatlined-at-seven-percent-of-overall-company-revenue
Gartner — Digital Channels Account for 61.1% of Marketing Spend
https://www.gartner.com/en/newsroom/press-releases/2025-06-02-gartner-survey-finds-digital-channels-account-for-61-point-1-percent-of-total-marketing-spend
The CMO Survey — 2025 Marketing Budget Findings
https://cmosurvey.org/marketers-claim-a-broader-role-and-increased-influence-amid-pressures/
The CMO Survey — 2025 Highlights and Insights Report
https://cmosurvey.org/wp-content/uploads/2025/03/The_CMO_Survey-Highlights_and_Insights_Report-2025.pdf
U.S. Small Business Administration — How to Get the Most From Your Marketing Budget
https://legacy.sba.gov/blog/how-get-most-your-marketing-budget
