How Much Should a Growing Business Spend on Marketing in 2026?
The short answer to "how much should a growing business spend on marketing?" is 5% to 20% of revenue, depending on your growth stage, industry, and goals. The better answer requires understanding why that range exists and where you fit within it.
What Do Marketing Budgets Look Like in 2026?
A marketing budget for small business planning starts with understanding what comparable companies actually spend. According to Gartner's 2025 CMO Spend Survey, the average marketing budget sits at 7.7% of overall company revenue, unchanged from 2024. However, this figure includes large enterprises with established brand recognition and mature sales pipelines.
For smaller companies, the picture looks different. Businesses with less than $10 million in revenue allocate an average of 15.6% of their budget to marketing, while companies between $10-25 million spend approximately 12.2%. As revenue grows, that percentage typically decreases because brand awareness compounds over time.
Key insight: Marketing budgets reached 9.4% of company revenues in 2025, up from 7.7% in 2024. Nearly 83% of B2B marketing leaders plan to increase their investment in 2026, signaling that businesses see marketing spend as a growth lever rather than just an expense.
Marketing Budget by Growth Stage
Your company's growth stage matters more than industry averages. A pre-revenue startup validating its market needs a fundamentally different marketing approach than a mature business optimizing existing channels.
| Growth Stage | % of Revenue | Primary Focus |
|---|---|---|
| Pre-product/market fit | 15-20% | Testing and awareness building |
| Early growth (post-PMF) | 10-15% | Scaling proven channels |
| Scaling ($5M+ revenue) | 7-12% | Balancing growth and efficiency |
| Mature ($25M+ revenue) | 5-7% | Optimization and retention |
Why Early-Stage Companies Spend More
Startups and early-stage businesses accept higher customer acquisition costs and longer payback periods to gain market share. That's not wasteful spending, it's strategic investment. The goal is to validate what works before scaling.
As companies mature, they've already identified their most effective channels and can spend more efficiently. A business that's been running Google Ads for three years has data that a new company simply doesn't have.
Industry-Specific Benchmarks
Marketing spend varies dramatically across industries because customer acquisition dynamics differ. A SaaS company with 90% gross margins can afford to spend more than a retailer operating on 30% margins.
| Industry | Typical Range |
|---|---|
| SaaS / Technology | 15-25% of revenue |
| Professional Services | 8-12% of revenue |
| Retail / E-commerce | 8-15% of revenue |
| Healthcare | 6-10% of revenue |
| Manufacturing | 5-7% of revenue |
| Consumer Packaged Goods | 12-18% of revenue |
B2B companies typically allocate 8-11% of revenue to marketing, while B2C companies spend 9-12%. Service businesses generally invest more than product-based companies because they're competing primarily on reputation and relationships rather than tangible features.
The LTV:CAC Framework That Actually Works
Percentage-of-revenue benchmarks provide a starting point, but the smarter approach is building your budget around customer economics. The LTV:CAC ratio compares how much a customer is worth over their lifetime against how much it costs to acquire them.
What the Ratios Mean
The industry standard for a healthy LTV:CAC ratio is 3:1 or better. That means for every dollar you spend acquiring a customer, you should generate at least three dollars in lifetime value. A ratio of 4:1 indicates a strong business model with room for efficient scaling.
If your ratio falls below 3:1, your acquisition strategy may not be sustainable. But if it climbs above 5:1, you might be under-investing in growth and leaving market share on the table for competitors.
Example: If your average customer generates $900 over their lifetime and you spend $300 or less to acquire them, your 3:1 ratio indicates sustainable marketing economics. You can scale with confidence.
Working Backwards from Goals
Instead of picking an arbitrary percentage, work backwards from revenue targets. If you need 40 new customers per month at a target CAC of $150, your minimum monthly budget is $6,000 to test and scale. This approach ties marketing spend directly to business outcomes.
How to Allocate Your Marketing Budget
Once you've determined your total budget, the next question is where to spend it. The 70-20-10 framework provides a useful starting point: 70% to proven high-ROI activities, 20% to promising growth opportunities, and 10% to experimental initiatives.
Recommended Channel Mix for SMBs
For small and mid-sized businesses building their marketing foundation, a balanced starter mix might look like: Meta/social ads at 20-35%, Google at 20-30%, video content at 10-20%, SEO and content at 10-20%, and email/SMS at 5-10%. Reserve 5-10% for testing new channels.
The key is reallocating monthly based on performance. Organic channels like SEO and content marketing consistently deliver higher ROI over time because they don't require paying for each impression or click. Paid channels scale faster but require ongoing investment.
Review and Adjust Quarterly
Build quarterly budget reviews into your planning process. Market conditions shift, channels evolve, and what worked last quarter may underperform next quarter. Companies that maintain flexibility in their marketing analytics and allocation consistently outperform those locked into annual plans.
Need help building a marketing budget that ties directly to revenue goals? We specialize in helping growing businesses develop data-driven strategies that deliver measurable results.
Get a Free ConsultationFrequently Asked Questions
Is 5% of revenue enough for marketing?
For mature businesses with strong word-of-mouth and established brand recognition, 5% can work. However, if you're in growth mode, entering new markets, or facing strong competition, 5% is likely too conservative. Most growing businesses need 10-15% to maintain momentum.
Should I increase my marketing budget during a recession?
Research consistently shows that companies maintaining or increasing marketing spend during downturns gain market share and recover faster. When competitors pull back, your share of voice increases at the same budget. That said, shift toward channels with clearer attribution and faster payback periods.
How do I know if I'm spending too much on marketing?
Watch your LTV:CAC ratio. If it's below 3:1 and trending downward, you may be overspending relative to customer value. Also check your CAC payback period. If it takes more than 12 months to recoup acquisition costs, that's a warning sign to optimize before scaling further.
What's the biggest mistake businesses make with marketing budgets?
Spreading budget too thin across too many channels. You're better off dominating one or two channels than being mediocre across eight. Start with a channel that fits your product and go-to-market motion, prove the ROI, then expand.
Last updated: January 2026