Most established businesses spend 7-12% of revenue on marketing; high-growth tech and consumer brands spend 15-30%; mature, low-growth sectors spend 3-6%. The right number for your business is the one that hits your CAC payback target inside the cash conversion cycle you can sustain. Below that, you're starving growth; above it, you're burning cash that won't return inside the planning horizon.
Three honest benchmarks for marketing spend
Percentage-of-revenue (the CFO sanity check)
Useful as a coarse benchmark, dangerous as a target. Gartner's CMO Spend Survey has tracked marketing spend as a share of revenue across multiple years. Typical ranges:
- B2B established (manufacturing, professional services, industrials): 4-7% of revenue.
- B2B high-growth (SaaS, fintech, scaleups): 12-25% of revenue.
- B2C established (retail, hospitality, consumer services): 6-10% of revenue.
- B2C high-growth / VC-backed (DTC, marketplaces, consumer tech): 15-30% of revenue.
- Regulated / low-growth (utilities, professional services with referral-led demand): 2-5% of revenue.
These are starting reference points, not targets. A profitable B2B firm with 7% spend and a 12-month CAC payback is healthier than a SaaS firm at 25% spend with a 36-month payback. The percentage tells you nothing about efficiency.
Cost-per-acquisition (the operator's view)
More useful than percentage-of-revenue because it ties spend directly to commercial outcomes. The right CAC depends entirely on your unit economics: customer lifetime value, gross margin, payback expectation. As a rule of thumb:
- B2B subscription: target CAC payback inside 12-18 months, blended LTV:CAC of 3:1 or better.
- B2B services: target CAC payback inside 6-12 months, contribution margin per client covering CAC inside year one.
- B2C subscription: target CAC payback inside 6-9 months, blended LTV:CAC of 2.5:1 or better.
- B2C transactional: blended ROAS that covers gross margin + fixed contribution; payback is measured per transaction, not per customer.
Payback period (the truth)
How quickly the cash spent on acquiring a customer comes back as profit. This is the single most important number for setting a defensible marketing budget — it tells you how much cash you can deploy without breaking working capital, and how aggressively you can scale.
If your payback is short (3-6 months), you can spend more aggressively because the cash returns inside the planning cycle. If payback is long (18-36 months), you need either external capital or much tighter spend discipline because the cash is locked up. Boston Consulting Group has documented the variance in payback patterns across industries — it's the dimension that most often surprises CFOs.
What's actually in a marketing budget
When CFOs and founders ask 'how much should we spend on marketing', they often mean media spend. The honest answer needs to include everything that exists to make the marketing function work:
What's in the marketing budget
Line items most often missed
For a deeper look at the missed line items, see our cluster on the hidden costs of an in-house marketing team.
How to set the budget
Three approaches are commonly used. The third is the one we recommend.
Method 1: percentage of revenue (top-down)
Set marketing spend as a fixed percentage of forecast revenue. Quick, easy to explain to the board, but disconnects spend from outcomes — you can hit the percentage target while losing money on every customer, or starve growth while looking 'on benchmark'.
When it's right: very early stage businesses with no measurement yet, or mature businesses where the marketing function is in maintenance mode and the percentage is a soft cap rather than a target.
Method 2: zero-based (bottom-up)
Build the budget by enumerating everything you want to do, costing each, and totalling. Forces clarity on activity, but anchors on what marketing thinks it needs rather than what the commercial outcome justifies.
When it's right: businesses with strong operational discipline and a clear annual plan. Prone to feature-creep on the marketing side.
Method 3: outcome-anchored (recommended)
Start with the commercial outcome you need: revenue target, blended ROAS or CAC ceiling, payback period. Work backwards to the working spend that achieves it given your conversion economics. Add operating cost (people, agency, tools) on top. The total IS your budget.
This method makes the budget defensible because every line item is justified by an outcome, and it makes underperformance visible quickly because the working spend is set against a measurable target. Use the calculator below to model your own outcome-anchored budget.
Interactive · Cost Calculator
Model your marketing budget against an outcome
Set your current setup, media spend and rough revenue. The calculator shows operating cost vs an alternative model and frames the working spend in payback terms.
Your current setup
Current annual cost (excluding media)
£180,000
People + agency + tools. Media spend is held constant on both sides.
AI-powered agency · annual cost (excluding media)
£85,202
Management fee on £20,000/month spend at 23.0% + your existing tools.
Difference
£94,798/year
£7,900/month freed up. Reinvested into media, that’s an extra 4.7 months of working spend each year.
Indicative only. Loaded cost per head includes salary, oncosts, software seats and overhead. Real proposals model your specific channel mix, attribution and margin targets via the discovery.
Channel mix and how to allocate
Once total budget is set, the next decision is how to allocate across channels. The honest answer: it depends on your funnel stage, attribution quality and conversion economics. The reference benchmarks below show indicative cost-per-click, conversion rate and cost per primary action by industry, channel and region — useful starting points before calibrating against your actuals.
Interactive · Channel Benchmark Lookup
Paid channel benchmarks for budget planning
Pick your industry, channel and region to see indicative CPC, CTR, CVR and cost per primary action. Useful for sanity-checking your assumed conversion economics.
Cost per click
£3.62
Local currency, indicative
Click-through rate
6.66%
Click rate on impressions
Conversion rate
7.52%
Click → primary action
Cost per primary action
£48
Cost per lead
How to read this
Per-channel benchmarks compiled from public industry reports (WordStream, LocaliQ, Databox, LinkedIn marketing benchmarks) plus Involve Digital portfolio data, in USD baselines. Industry multipliers are applied to search-style channels; social channels get the conversion-rate adjustment only because CPC there is behaviour-driven, not query-driven. Regional CPC multipliers and currency conversion are applied last. High-ticket B2B uses a 0.25× CVR dampener so the click → qualified-enquiry rate stays realistic. These are starting points; real proposals calibrate against your own actuals.
Want benchmarks calibrated against your real account data, not just industry averages? The Growth Discovery models your specific mix.
Run the discovery→Common budget-setting mistakes
Anchoring on industry average
Industry averages combine very different growth models. A profitable software company with low growth and a Series B unicorn in the same vertical have wildly different acceptable spend levels. Use industry as one data point; weight it less than your own unit economics and growth ambition.
Treating media spend as the whole picture
When CFOs see a £200k marketing budget, the £80k of operating cost (people, tools, agency) is often invisible. They assume £200k of working spend is hitting the channels. The result is unrealistic outcome expectations and misalignment. Always present total cost AND working spend, with the gap explicit.
Setting CAC targets without a CRM signal loop
If your CRM doesn't tell you which leads turned into revenue, your CAC is theoretical. The 'cost per lead' the ad platform reports is the cost per form fill, not per customer. Most businesses' real CAC is 2-5x the ad-platform CPL once lead-to-customer rates are factored in.
Cutting in a downturn
The reflex to cut marketing first when revenue dips is well-documented and usually wrong. Cuts that are reversible after the downturn (paid media) recover quickly; cuts that aren't (brand investment, content production, search rankings) take 6-18 months to restore. Harvard Business Review has covered this pattern across multiple recessions — the businesses that hold or modestly increase marketing spend during downturns typically capture share from those that don't.
Where the cost goes — five common spend distributions
Spend distribution
Operating cost vs working spend at typical mid-market scale
How to defend the budget to your CFO
The conversation usually goes wrong when marketing presents a budget without an outcome attached. The conversation usually goes well when marketing leads with three things:
- The commercial target the budget delivers (revenue, qualified pipeline, customer count — whatever ties to the company plan).
- The unit economics that justify the spend (CAC ceiling, payback period, blended ROAS).
- The leading indicators that prove the spend is working before the lagging revenue numbers arrive.
A CFO doesn't need to understand the channel mix; they need to know that £1 going in returns £X within Y months at acceptable risk. Frame the budget in those terms and the percentage-of-revenue debate disappears.
FAQs
Common marketing budget questions
What percentage of revenue should we spend on marketing?
Should marketing budget include salaries?
Is media spend the same as marketing budget?
How much of our budget should be working spend vs operating cost?
What's the right channel mix?
How quickly can we scale marketing spend?
How do we benchmark against competitors?
Should we cut marketing in a downturn?
Should marketing budget be set annually or rolling?
What's the payback period we should target?
Read deeper on this
- In-house marketing team vs agency: full cost breakdown — loaded cost of every operating model, with break-even analysis.
- Hidden costs of an in-house marketing team — the line items that don't show up on the marketing budget but should.
- Why your CAC is climbing (and what to do about it) — five systemic reasons CACs are rising and a diagnostic framework for yours.
- Marketing ROI calculator: model blended return across channels — how to compute and defend a blended ROAS that holds up under CFO scrutiny.
- What is an AI-powered marketing agency? — operating model that meaningfully shifts the operating-cost vs working-spend ratio.
Sources and further reading
- Gartner — CMO Spend Survey — annual benchmarks on marketing spend as a share of revenue, by industry and growth stage.
- McKinsey — Marketing & sales insights — research on growth investment, CAC patterns and channel allocation.
- Harvard Business Review — Marketing — case-led writing on marketing spend through downturns and the cost of cutting brand investment.