There’s no one-size-fits-all answer to how much a company should spend on marketing—it depends on factors like industry, size, growth stage, and goals.
That said, here’s a breakdown based on common benchmarks and reasoning:
For small businesses or startups, a widely cited guideline is to allocate 7-12% of gross revenue to marketing if you’re aiming to grow aggressively. The U.S. Small Business Administration suggests 7-8% for businesses with revenues under $5 million and margins in the 10-12% range.
If you’re in a competitive industry (e.g., tech, retail, or consumer goods), leaning toward 10-12% makes sense to stand out. New companies might even push higher—20% or more in the first year—to build brand awareness fast.
Established companies, especially B2B, often spend less as a percentage—5-10% of revenue—since they’ve already got traction and rely more on retention or word-of-mouth.
Big players like Coca-Cola or Nike might hover around 10% but flex up to 20%+ for major campaigns, though their scale means millions in absolute dollars.
Industry matters too. E-commerce or SaaS companies might skew higher (15-20%) because customer acquisition is digital-heavy and cutthroat. Professional services (law firms, accountants) might get away with 2-5% if they lean on referrals.
A practical approach:
- Set a goal—are you chasing growth, retention, or survival? Growth needs more fuel.
- Know your margins—if they’re thin, you can’t overspend without bleeding cash.
- Test and measure—start with 5-10%, track ROI (e.g., customer acquisition cost vs. lifetime value), and adjust. If $1 spent brings $5 back, scale up.
What’s your company’s situation—size, industry, goals?
