Right Percentage of Gross Revenue to Invest in Marketing (March 2026)

What Companies Actually Spent on Marketing Last Year

Two major surveys track marketing budgets every year. They produce different numbers, and understanding why matters more than memorizing either one.

Gartner’s 2025 CMO Spend Survey surveyed 402 CMOs, mostly at companies with $1 billion or more in revenue. Their finding: marketing budgets held flat at 7.7% of overall company revenue, unchanged from 2024. Half of the CMOs surveyed reported budgets of 6% or less.

That last detail gets buried in most articles. The “average” is 7.7%, but the median CMO is working with considerably less.

The CMO Survey from Deloitte, Duke University, and the American Marketing Association tells a different story. Their latest data showed marketing budgets at 9.4% of company revenues, up from 7.7% in 2024. Marketing also claimed 11.4% of overall company budgets, up from 10.1%.

Why the gap? Methodology. Gartner surveys large enterprises. The CMO Survey includes a broader mix of company sizes. Since smaller companies tend to spend a higher percentage of revenue on marketing, their inclusion pulls the average up. Both numbers are valid. Neither is universal truth.

Forrester added a third data point for B2B specifically: 8% of annual revenue, with European B2B marketers reporting 9%. So depending on which survey you read on any given Tuesday, the “right” number is somewhere between 7.7% and 9.4%.

The U.S. Small Business Administration cuts through the noise with a simpler guideline. For businesses with revenues under $5 million, the SBA recommends allocating 7-8% of revenues to marketing, assuming margins in the 10-12% range. That margin caveat matters. A business running on 5% margins cannot spend the same percentage on marketing as one running on 15% margins and expect to stay solvent.

Why “Average” Marketing Budget Benchmarks Are Misleading

MIT Sloan Management Review published a piece in 2024 titled “The End of Averages for Marketing Budgets” that should be required reading for anyone asking this question. Their core argument: marketing budget averages mask systemic sector differences so large that the average itself becomes meaningless.

B2C budgets average 13.9% of revenues. B2B budgets average 9.3%. Within those categories, the spread gets even wider. A consumer packaged goods company spending 18% of revenue on marketing operates in a completely different reality than an energy company spending 3%.

The variation between company sizes is just as dramatic. The CMO Survey data shows a negative correlation between total sales and marketing budget as a percentage of revenue. Bigger companies spend a lower percentage. This is why enterprise-heavy surveys like Gartner’s consistently produce lower averages than surveys that include small and mid-sized businesses.

If you run a $2 million home services company and compare yourself to Gartner’s 7.7% average, you are benchmarking against Fortune 500 companies with fundamentally different cost structures, brand equity, and customer acquisition dynamics. That comparison helps no one.

Marketing Budget Percentage of Revenue by Industry

Industry-specific data is the hardest to find and the most useful. Here is what the research shows.

At the top of the spending spectrum, consumer packaged goods companies allocate 18.09% of revenue to marketing. Communications and media companies sit close behind at roughly 18%. Technology and software companies spend 11-15%, driven by competitive SaaS markets where customer acquisition costs run high and switching costs keep dropping.

In the middle of the pack, healthcare and pharmaceutical companies land between 6% and 14%, the widest range of any industry. The gap reflects the enormous difference between pharmaceutical companies running national TV campaigns and healthcare services companies relying on local referral networks. Financial services firms spend 7-10%.

At the conservative end, manufacturing and industrial sectors allocate 5-7.5%. Energy companies bring up the rear at 3.21%.

The gap between the highest and lowest spending industries is nearly six to one.

That range, from 3% to 18%, is a six-fold difference. It makes the idea of a single “right” marketing budget percentage almost laughable. A SaaS founder benchmarking against a manufacturing average would starve their growth. A manufacturing CEO matching SaaS spending levels would torch their margins.

For home services contractors specifically, the data points to 8-12% of annual revenue. Highly competitive markets push that to 12-15%. For a plumbing company doing $1 million in annual revenue, that translates to $80,000-$150,000 per year in Google Ads, SEO, and local search optimization.

B2B vs B2C: The Budget Gap Most Articles Ignore

The B2B versus B2C split is well-known. What most articles miss is the product versus services dimension within each category.

According to the CMO Survey, B2C product companies allocate 15.5% of revenue to marketing. B2B product companies spend 6.4%. B2B services companies land at 9%. That means a B2C product company spends nearly 2.5 times what a B2B product company does, as a percentage of revenue.

As a share of total company budget (not revenue), the ranking shifts slightly: B2C product companies lead at 17.2%, followed by B2C services at 11.6%, B2B services at 9.6%, and B2B product companies at 8.5%.

The channel mix differs just as sharply. B2C companies now direct 61.4% of their marketing budgets to digital channels. B2B companies allocate 54.8%. B2B firms still invest 15-20% of their marketing budget in trade shows and industry events, where face-to-face relationships carry weight that no retargeting pixel can replicate.

B2C companies push 40-50% of their marketing budget into paid advertising and social media, chasing volume and conversion speed. The shorter sales cycle rewards aggressive spend on direct-response channels. B2B companies play a longer game, building trust through content, case studies, and relationship marketing over months or years.

How Your Company’s Growth Stage Changes the Math

A startup in year one and an established company in year fifteen face different marketing problems. Their budgets should reflect that.

Startups (years 1-2) typically need 12-20% of gross revenue allocated to marketing. Nobody knows your name. You have no customer testimonials, no referral network, no brand recognition. Every dollar has to work harder because you are building awareness from zero. That starts with a website that actually converts visitors into leads. Growth-stage startups backed by venture capital often push well beyond 20%, sometimes hitting 30-50% of revenue. The math makes sense when your customer lifetime value supports aggressive acquisition spending and your investors are betting on market share over short-term profitability.

Early-stage B2B SaaS companies routinely dedicate 20-30% of revenue to marketing. Mature SaaS firms in efficiency mode drop to 5-7%. That is a four-to-six-fold range within a single industry, driven entirely by growth stage.

Growth-stage companies (years 3-5) that have proven product-market fit usually settle into the 10-15% range. You know your audience, your messaging is tighter, and you are scaling what already works rather than experimenting with everything. The focus shifts from “get noticed” to “capture more of the market you’ve already identified.”

Established businesses (5+ years) with recognizable brands can operate effectively at 6-12% of revenue. Brand equity and word-of-mouth referrals carry more of the load. Your marketing dollars stretch further because potential customers already have some awareness of who you are and what you do.

New home services contractors face a particularly steep curve. Without established reputations or referral networks, contractors in their first 3-5 years typically need 12-20% of revenue for marketing. A plumber who has been in business for twenty years and gets half their work from repeat customers and referrals operates in a different universe than one who hung their shingle last year.

What Happens When Companies Cut Their Marketing Budget

Marketing is the first line item that gets slashed when revenue tightens. The CMO Survey found that 44.6% of the time, executives cut marketing expenses before any other department. And 59% of CMOs in Gartner’s 2025 survey reported that their current budget is insufficient to execute their marketing strategy.

The instinct to cut marketing during downturns feels logical. Revenue is dropping, so reduce expenses. The data says that instinct is wrong.

Harvard Business Review analyzed 4,700 companies across multiple recessions and found that companies which increased advertising spend during a recession saw up to 17% higher growth post-recession than those that cut. Only 9% of the 4,700 companies emerged from recession in better shape than they entered it, and continued marketing investment was a defining characteristic of that 9%.

McKinsey’s research reinforces this finding with even longer time horizons. Companies that drove growth during the 2008 recession achieved above-market total shareholder returns for the following decade, with cumulative returns growing 150 percentage points more than their sector peers. Ten years of outperformance, rooted in a decision to keep investing when everyone else pulled back.

The companies that kept investing during downturns reaped the rewards for years after.

The structural decline is already visible in the data. Before the pandemic, average marketing budgets ran at 11% of overall revenue across the four years from 2016 to 2019. In the four years since, that average dropped to 8.2%. A 25% structural decline that shows no signs of reversing.

This creates an opportunity for companies willing to swim against the current. When competitors cut back, the cost of visibility drops. Ad auctions get cheaper. Ranking in search results gets slightly easier when competitors stop publishing content. The businesses that recognize this pattern invest counter-cyclically, and the research suggests they are rewarded for it.

Where Marketing Dollars Go: Channel Allocation in 2026

Knowing your total budget is step one. Knowing where to put it is step two.

Online channels now account for 61.1% of total marketing spend, the highest percentage since Gartner began tracking this metric over a decade ago. Paid media takes the largest single slice at 30.6% of marketing budgets, which translates to roughly 2.4% of total company revenue.

For context on the broader market, U.S. digital advertising revenue hit $258.6 billion in 2024, a 14.9% year-over-year increase. Search advertising alone accounted for $102.9 billion of that total, according to the IAB/PwC Internet Advertising Revenue Report.

Within a typical digital marketing budget, search engine marketing (PPC) commands 25-30%. The intent behind search ads is high, and the returns tend to be measurable and immediate. Content marketing and SEO get 20-25%, a longer play that compounds over time as your content library builds authority. Social media advertising claims 15-20% in B2C, less in B2B. Email marketing sits at 5-10%, one of the most efficient channels available with average returns of $36-42 per dollar spent.

One counter-intuitive trend: marketing technology spending fell to 22.4% of marketing budgets its lowest level in ten years. Down from 25.4% in 2023 and 23.8% in 2024, and still falling. Despite the AI hype, CMOs are actually spending less on MarTech, not more. Some of that reflects AI tools consolidating functions that previously required separate platforms. Some of it reflects buyer fatigue after a decade of MarTech sprawl.

Meanwhile, AI integration in marketing has doubled in recent years, now powering 17.2% of marketing efforts with projections to reach 44.2% within three years. And 22% of CMOs reported that generative AI has enabled them to reduce reliance on external agencies for creative and strategic work.

The 60/40 Rule That Separates Growth Companies from Stagnant Ones

Les Binet and Peter Field analyzed over 30 years of marketing effectiveness data from the IPA Databank, covering thousands of campaigns. Their conclusion: the optimal marketing budget split is approximately 60% brand-building and 40% performance marketing.

Brand-building means broad-reach, emotional campaigns that make people think of your company when they eventually need what you sell. Performance marketing means direct-response campaigns designed to generate immediate clicks, calls, or purchases.

Most companies over-invest in performance marketing because it produces visible short-term results. The Google Ads dashboard shows conversions today. Brand advertising shows results over quarters and years. The pressure to justify spend monthly pushes budgets toward performance channels, even when the long-term math favors brand investment.

Binet and Field’s research also quantified the relationship between spending and market share. Brands that set their share of voice above their share of market tend to grow. Specifically, an excess share of voice of 10 percentage points drives 0.7% annual market share growth in B2C and 0.6% in B2B. That might sound small until you compound it over five or ten years.

The practical takeaway: if your total marketing budget is $200,000, roughly $120,000 should fund activities that build your brand’s presence and reputation, things like search engine optimization, content marketing, and community involvement. The remaining $80,000 should fund direct-response campaigns designed to capture demand right now.

Beyond Percentages: CAC, LTV, and the Metrics That Actually Matter

Revenue percentages give you a starting point. Customer acquisition cost and lifetime value tell you whether your spending is profitable.

A healthy CAC-to-LTV ratio sits at 1:3. If you spend $300 to acquire a customer who generates $900 in lifetime revenue, you are in strong territory. If that same $300 brings in a customer worth $400, you have a problem regardless of whether your marketing budget is 5% or 15% of revenue.

For SaaS companies, the CAC payback period matters as much as the ratio. You want to recoup acquisition costs within 12 months. An 18-month payback period ties up capital and limits your ability to scale, even if the lifetime numbers eventually pencil out.

McKinsey found that 15-20% of marketing spend can be freed through better MROI (marketing return on investment) measurement. Companies that invest in proper attribution report efficiency gains of up to 30% and incremental top-line growth of up to 10%, without increasing their overall budget. Spending more is one path to growth. Spending better is another. Often, the second path delivers more.

Forrester’s data illustrates the gap between headlines and reality on budget growth. While 87% of B2B marketing decision-makers planned budget increases for the current year, only 35% expected increases above 5%. The majority, 47%, planned increases of just 1-4%. “87% increasing budgets” sounds bullish until you realize most of those increases barely keep pace with inflation.

When and How to Adjust Your Marketing Budget

Your marketing budget should not be a number you set in January and forget. Quarterly reviews with annual planning cycles give you enough runway to see campaign results while staying responsive to changes in the market.

Specific triggers that should prompt reallocation: your customer acquisition cost shifts by 20% or more in either direction. A well-funded competitor enters your market and starts flooding it with ads. You are launching a new product or service line. Your marketing intelligence data shows a channel that was performing well has plateaued or declined.

Keep 10-15% of your budget uncommitted for opportunities. A speaking slot opens at a major industry conference. A partnership emerges that needs co-marketing dollars. A competitor stumbles and creates a window to capture their customers. Having dry powder lets you move fast when the moment arrives.

The worst budget strategy is the one that never changes. Markets shift. Competitors adjust. Channels rise and fall. The companies that treat their marketing budget as a living document, informed by real performance data rather than last year’s spreadsheet, consistently outperform those that set it and forget it.

One of our clients was recently acquired by a venture capital firm, and the new ownership immediately decided to 10x their Google Ads budget. The VC cared less about short-term capital efficiency than the time required to dominate their market. That is an extreme example, but it illustrates a truth that applies at every scale: the right budget is the one that matches your growth ambitions and your willingness to invest in reaching them.