How Much Should You Spend on Marketing?

The Answer is More Than You Think

One of the most common questions business owners, CFOs, and internal marketing teams ask is, “What percentage of my revenue should be spent on marketing?” And as with most things in business, the answer isn’t as simple as a one-size-fits-all number.

The short answer? It depends.

The long answer? Well, that’s what we’re about to dive into.

The Standard Marketing Budget Rule of Thumb

If you go by the U.S. Small Business Administration’s recommendation, businesses generating less than $5 million in annual revenue should allocate 7-8% of their gross revenue to marketing. This assumes they’re maintaining net profits of 10-12%.

Seems straightforward, right? Not so fast.

There are a few key things to consider here:

• Industry Variability – Different industries require different levels of investment.
• Business Maturity – Are you an established company or a startup?
• Market Competition – The more competitive your industry, the more you may need to spend.
• Marketing Definition – What exactly are you counting as “marketing”? Some companies should be adding sales efforts into this category.

In reality, most businesses end up spending less than the SBA recommendation, but should spend more if they want to compete and grow aggressively. According to Gartner Research, the average across all industries is closer to 9% of revenue.

It’s the old saying that you have to spend money to make money, but it’s so hard to do, especially if wallets are tight.

And if you’re in a startup or high-growth phase, it can be significantly higher—sometimes 20-50% of revenue. That’s a huge chunk of change, but in those early years, marketing is essentially fueling the entire sales engine.

This is where being strategic about stockpiling cash at certain times, helps ensure you can strike when you need to. But at no time should you be pulling marketing back altogether.

Why You Should Think of Marketing as Sales

Too many businesses treat marketing as a “nice to have” when, in reality, marketing is sales and has been evolving this way for quite a while. If your company doesn’t have sales, it doesn’t have revenue, and if it doesn’t have revenue, well… you get the point.

We’ve seen this mistake over and over again: A company pours money into marketing, builds momentum, gets leads, closes deals, and then—suddenly—decides to pull back on marketing because they assume they’ve “made it.”

That’s when reality hits. This is a YoYo effect of trying to figure out and time when you do marketing.  Marketing is ongoing, there are short wins and there are longer wins.

Then there is the market that does not have any control.

Slowing down marketing means fewer leads, which eventually means a sales slump. And then the panic mode kicks in—“We need more marketing!”—but by then, it takes months to rebuild that lost traction.

Marketing isn’t a “set it and forget it” game. It requires consistent investment and optimization to maintain and grow revenue.

What’s the Right Percentage for Your Business?

If 7-8% is the “standard” and 9% is the “average,” what’s the right number for you? Let’s break it down.

1. If You’re a Small Business ($5M or Less in Revenue)

• Recommended Spend: 7-10% of revenue
• Why? You’re still building brand awareness, lead generation, and customer acquisition.
• Potential Risk: If you go too low, you might struggle to scale.

2. If You’re a Mid-Sized Business ($5M – $50M in Revenue)

• Recommended Spend: 6-9% of revenue
• Why? You likely have some brand equity and existing customer base, but you still need marketing to stay competitive.
• Potential Risk: Scaling requires continued investment—don’t get complacent.

3. If You’re a Startup or High-Growth Business

• Recommended Spend: 20-50% of revenue
• Why? You need to capture market share quickly before competitors get ahead.
• Potential Risk: High spending needs to translate to high growth. Be strategic.

4. If You’re in a Highly Competitive Industry

• Recommended Spend: 10-15% (or more)
• Why? If you’re in a market where competitors are flooding digital advertising and content marketing, you have to keep up.
• Potential Risk: Spending without a clear strategy will waste money fast.

Beyond the Percentage: What Are You Spending On?

Here’s the thing: It’s not just about the percentage—it’s about how that budget is spent.

A company that spends 7% of revenue on random, ineffective marketing is wasting money. A company that spends 7% on data-driven, high-ROI marketing efforts will see serious growth.

That’s why we loved the idea of “valuable marketing”—it’s not just about how much you spend, but how strategically you invest those dollars.

A smart marketing budget should include:

  Brand Awareness (content marketing, SEO, PR)
   Lead Generation (paid ads, email marketing, social media)
    Sales Enablement (CRM, automation, sales materials)
   Customer Retention (loyalty programs, customer experience, community building)

It’s not just about throwing money into ads and hoping for the best. It’s about creating a machine that drives consistent sales.

Should You Adjust Your Marketing Budget?

There’s one more factor to consider: Market volatility.

We’re seeing:

• Rapid changes in technology (AI, automation, digital privacy laws)
• Increased competition in digital marketing
• Shifts in consumer behavior and purchasing habits

What does this mean for businesses? You may need to spend more than before.

Cutting marketing spend often means falling behind competitors who are staying aggressive. Whether it’s investing in SEO, digital ads, video marketing, or much more, the businesses that double down are the ones that win.

How Much Should You Spend?

If you want a simple answer, start with 7-10% of revenue. If you’re in a competitive or high-growth phase, bump that up to 10-15% (or even higher).

But the most important takeaway?

➡ Don’t just spend—spend wisely.

If your marketing efforts aren’t bringing in qualified leads and sales, you’re not investing in marketing, you’re wasting money.

So the real question isn’t just how much to spend on marketing—it’s how effectively are you spending it?

If you’re not sure whether your marketing budget is working for you, let’s talk. We eat, sleep, and breathe marketing—and we’re here to help you spend smarter, not just more.