How Much Should Your Business Spend on Marketing? A Practical Budget-Setting Guide
A practical guide to setting a marketing budget, splitting it across channels, and knowing when it's paying off.
"How much should we actually be spending on marketing?" rarely has a single right answer, but it does have a sensible process for getting to one. This guide walks through setting a starting budget, splitting it sensibly, and adjusting it as real data comes in.
Start With a Percentage of Revenue, Not a Round Number
Picking a marketing budget out of thin air, like a tidy £2,000 a month, is one of the most common mistakes we see. A percentage of revenue scales naturally with the business: 5 to 10 percent is a reasonable range for steady, established growth, and 10 to 20 percent is more typical for a newer business actively trying to build market share.
Factor In Margin, Not Just Revenue
A business with thin margins has less room to spend aggressively on acquisition than one with healthy margins, even at the same revenue. Before settling on a number, it''s worth checking that the resulting customer acquisition cost still leaves a sensible margin once product, delivery and overheads are accounted for.
Splitting the Budget Across Channels
Rather than spreading a modest budget thinly across every channel available, it usually works better to weight spend toward whichever channel matches how your customers currently buy, whether that''s Google Ads for active searchers or paid social for building awareness from scratch, then diversify once there''s a clear read on what''s converting.
- 70-80% to your primary, proven channel
- 15-20% to a secondary channel worth testing
- 5-10% reserved for genuine experimentation
Don''t Forget the Website in the Budget
Ad spend is only half the equation. A budget that ignores the website itself can end up paying to send visitors to a page that isn''t converting them, which is really a hidden tax on every other pound spent. Setting aside a portion of the budget for ongoing site improvements tends to pay for itself several times over.
Review and Adjust Quarterly
A budget set once and left untouched for a year rarely stays optimal. Reviewing spend quarterly against actual cost per acquisition and return on spend allows the budget to flex toward what''s working, rather than sticking rigidly to an initial guess.
Frequently Asked Questions
What percentage of revenue should a small business spend on marketing?
A commonly used range is 5 to 10 percent of revenue for an established business focused on steady growth, rising to 10 to 20 percent for a newer business or one pushing for rapid growth. These are starting points, not rules, and should flex with margins and goals.
Should I set a marketing budget as a fixed amount or a percentage of revenue?
A percentage of revenue tends to scale more sensibly than a fixed amount, since it grows and shrinks with the business rather than becoming disproportionate in a slow month or too small in a strong one.
How do I split my budget across different marketing channels?
Start by weighting spend toward whichever channel matches how your customers currently make buying decisions, then diversify gradually once you have a clear read on what''s working, rather than spreading a small budget too thinly from day one.
What if my marketing budget is very small?
A small, consistent budget on one well-chosen channel, run for long enough to gather real data, generally outperforms the same amount spread thinly across several channels tested only briefly on each.
Should agency fees come out of the marketing budget or be separate?
Most businesses include agency fees within the overall marketing budget, since it''s the total cost of acquiring a customer, whether that cost is ad spend, agency fees, or both, that determines whether the return makes sense.
Want a Second Opinion on Your Budget?
Atlas MKT helps ambitious UK and Australian brands set and manage marketing budgets that actually pay for themselves. Our full-service package brings strategy, channel management and reporting together under one roof.
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