How Much Should You Spend on Marketing? (2024)

This question is a bit like how long is a piece of string. To help you answer this question, here is a compilation of recent data.

What Various Sources Say

Survey results show that budgets have recovered somewhat, with the average marketing spend increasing from 6.4% to 9.5% of company revenue across almost all industries.

The typical marketing budget as a percentage of revenue for a $2 billion dollar company can vary widely depending on the industry, business model, and marketing strategy of the company. According to Gartner, the average B2B marketing budget as a percentage of revenue is around 11.2%.

A common rule of thumb is that B2B companies should spend between 2 and 5% of their revenue on marketing. For B2C companies, the proportion is often higher—between 5 and 10%. This is because B2C companies typically need to invest in more marketing channels to reach various customer segments.

B2B product industries allocate, on average, roughly 7.8% of revenue to marketing. This is similar to B2C services (6.5%) and B2B services (5.9%). B2C Product allocates the highest amount at 15.1% of total revenue. Small businesses are also spending.

According to The Marketing Spend Decision:

Benchmarks for B2B Companies survey by the CMO council, B2B companies spend on average 7.5% of their revenue on marketing.

According to a Leading VC Firm

Companies in their portfolio with >$100mn in revenue spent 23% of revenue on sales and marketing. Companies with 25% YOY growth spent 29% of revenue on sales and marketing.

A Deeper Dive on the Gartner Report

Gartner's The State of Marketing Budget and Strategy 2022 is well worth getting hold of. You can download it here.

Some Highlights

• Marketing budgets have recovered post-pandemic, increasing from 6.4% of revenue to 9.5%. This is still below pre-pandemic levels.
• Tech Product CMOs reported the largest increase in budget year over year, jumping from 5.0% in 2021 to 10.1% in 2022.
• FYI, another Gartner study that surveyed 500 hardware, software, and service companies reported average tech marketing as 8.5% of company revenue.
• Digital accounts for 56% of marketing spending, but offline channels rebound as CMOs balance awareness and performance.
• Most (61%) of CMOs report that their in-house teams lack the capabilities to deliver their strategy.

Spending Allocations

So if you work for a tech company with $10 million in revenues, your marketing budget should be $1 million, according to Gartner (i.e., 10%). This would break down as follows:

• Agencies and Services: $240,000
• Paid Media: $260,000
• Labor: $250,000
• Marketing Technology: $250,000

I am very curious to know if this benchmark makes any sense. To be honest, the labor cost seems too low.

Leave a comment or DM me with what you think.