Marketing Budget: What Percent of Revenue to Spend

Large surveys put the average marketing budget at about 8 to 9 percent of revenue: 9.0 percent in The CMO Survey's 2026 report on US companies, and 7.8 percent in Gartner's 2026 survey of mostly $1 billion-plus firms. A better budget starts from your margin and what a customer costs to win, then checks against those averages.

This guide gives the averages with their sources, explains why a flat percentage is the wrong place to start, and walks through a budget built from unit economics with our CAC calculator and ad spend calculator. For what each kind of marketing work costs, see our pricing page.

What is a marketing budget?

A marketing budget is the money a business plans to spend winning and keeping customers over a period, usually a year. It covers media (the ads), people (staff, agencies and freelancers), tools and production. When surveys quote marketing as a percentage of revenue, they usually mean all of it, not just the ads: The CMO Survey asks what percent of sales revenue marketing expenses account for.

What percentage of revenue should you spend on marketing?

Two widely cited 2026 surveys put the average at 7.8 to 9.0 percent of revenue. Neither is Australian, and both lean towards companies larger than most Australian businesses, so treat them as a sanity check, not a target.

Sources: The CMO Survey, Highlights and Insights Report 2026, page 53; Gartner press release, 11 May 2026.

The CMO Survey also breaks the figure down, and its own summary is that budgets are higher for smaller and online-heavy companies:

Source: The CMO Survey, Highlights and Insights Report 2026, page 53, fielded 7 to 29 January 2026. US companies. The small-company groups hold only a few dozen firms each, so treat any single figure with care.

A business turning over A$2 million to A$20 million sits in the survey's two smallest revenue bands, which report 13.3 and 17.4 percent. Those are also the least reliable figures in the table.

Why a flat percentage is the wrong place to start

A percentage of revenue tells you what other companies spend, not what you can afford. Three problems:

• Margins differ. A business keeping 70 cents of gross profit from each dollar of sales can afford to spend far more to win a sale than one keeping 20 cents.
• It runs backwards. Revenue is partly the result of marketing. Setting marketing from last year's revenue ties next year's growth to last year's results.
• It ignores what a customer costs. Two businesses with the same revenue can face very different costs to win a customer in their markets.

How to set a marketing budget from margin and CAC

Build the budget from what a customer is worth and what you will pay to win one, then check it against the averages. CAC, or customer acquisition cost, is your marketing and sales spend divided by the new customers it wins.

1. Work out gross profit per customer. Use the first purchase, or the gross profit a customer brings in their first year if they come back. The lifetime value calculator and contribution margin calculator help.
2. Set a target CAC. It must sit below that gross profit. How far below is a business decision: the gap pays for overheads and profit, and decides how long you wait to earn the cost back.
3. Count the customers you need. New customers to hit your growth plan, plus the ones you expect to lose.
4. Multiply. Customers needed × target CAC = acquisition budget. If your CAC includes agency fees, tools and sales costs, that is the whole budget. If it covers ad spend only, add the fixed costs on top.
5. Check it against revenue. Divide the budget by revenue and compare it with the survey averages. If it is far above them, test whether the target CAC or the growth plan is realistic. MER, revenue divided by marketing spend, is the same check from the other side: spending 10 percent of revenue is an MER of 10. Our MER calculator works it out.
6. Split it and review monthly. Divide the budget by channel, keep a share for tests, and compare each channel's CAC with the target every month using your CRM, not the ad platforms' own reports.

Here is the method with example figures for a business turning over $3 million a year:

Example figures, not benchmarks. Setting the target CAC at half of first-year gross profit is the owner's choice here, not a rule.

The answer lands close to the survey averages, but it got there for reasons the business can defend and test. If the CAC comes in at $900 instead of $750, the plan needs more margin, fewer customers or more money, and the owner can see which. Our CAC calculator shows your current CAC and payback period, and the ad spend calculator shows what a month of spend returns after margin and overheads. For margin-based targets by industry, see our break-even ROAS by industry benchmarks.

How much should a small business spend on marketing?

In The CMO Survey 2026, companies with fewer than 50 employees reported marketing at 16.3 percent of revenue, and companies under US$10 million in revenue 13.3 percent, against 9.0 percent overall. The samples are small, but the direction matches the survey's own summary: smaller companies spend a larger share. The useful number for your business is still the one your margin and CAC support, worked out as above.

What are the 70/30 and 70/20/10 rules in marketing?

Neither is a standard. Both are rules of thumb for splitting a budget. The 70/20/10 rule is usually described as about 70 percent on what already works, 20 percent on promising channels and 10 percent on experiments. The 70/30 rule is used for several different splits, so ask what the person quoting it means.

The better-evidenced split is between brand building and sales activation. Les Binet and Peter Field's analysis of IPA effectiveness cases found the most efficient balance for consumer brands was about 60 percent brand and 40 percent activation (IPA). For B2B, their 2019 report for LinkedIn's B2B Institute, The 5 Principles of Growth in B2B Marketing, put it at around 46 percent brand and 54 percent activation, and the authors say the ratio should not be followed too precisely (B2B Institute report).

A simple marketing budget template

Most budgets need only a few lines. Put a monthly figure against each, then check the total against your CAC plan:

For a spreadsheet that works out CPA, ROAS and break-even targets for your ad spend, download our free ad spend spreadsheet.

Get a second opinion on your budget

The free 30-minute profit audit looks at your spend, revenue and tracking and tells you where the budget is working and where it is not. You keep the written findings either way. Our pricing page covers what each kind of marketing work costs, or you can book the free profit audit now.