“How much should we spend on marketing?”
It’s the question every small business owner asks. And the answer is frustratingly unhelpful: “It depends.”
But it depends on specific things. Your industry. Your growth stage. Your goals. Your current position.
Here’s how to calculate a marketing budget that actually makes sense for your business.
The Benchmark: 7–12% of Revenue
The standard recommendation for small businesses is 7–12% of revenue on marketing.
| Business Stage | % of Revenue | Reasoning |
|---|---|---|
| Startup/High-growth | 12–20% | Investing to acquire customers fast |
| Growing SME | 8–12% | Accelerating growth, building brand |
| Established SME | 5–8% | Maintaining position, steady growth |
| Mature/Stable | 3–5% | Retention focus, efficiency |
These are guidelines, not rules. But they provide a starting point.
Example:
- £500k revenue business at 10% = £50,000/year = ~£4,200/month
- £2m revenue business at 7% = £140,000/year = ~£11,700/month
By Industry
Some industries require more marketing investment:
| Industry | % of Revenue | Notes |
|---|---|---|
| Technology / SaaS | 8–15% | High competition, need for awareness |
| Financial Services | 10–14% | Trust-building, lead generation |
| E-commerce / Retail | 8–12% | Advertising costs, competitive markets |
| Professional Services | 5–10% | Referral-heavy, but content/SEO important |
| Manufacturing | 3–6% | Relationship-driven, less marketing-dependent |
| Healthcare | 6–10% | Trust, compliance considerations |
| Restaurants/Hospitality | 5–8% | Local focus, promotions |
Your industry matters because:
- Customer acquisition costs vary
- Competition intensity differs
- Buyer behaviour changes
The 70/20/10 Allocation Framework
Whatever your total budget, allocate it wisely:
| Category | % of Budget | Purpose |
|---|---|---|
| 70% — Proven channels | 70% | What’s already working for you |
| 20% — Adjacent bets | 20% | Expanding what works (new audiences, new creative) |
| 10% — Experiments | 10% | Testing new channels, approaches |
This prevents two mistakes:
- All on one bet — Dangerous if that channel fails
- Spread too thin — Doing everything poorly
By Channel
How should budget split across channels? It depends on your business type:
B2B Services (Consulting, Agencies, Professional Services)
| Channel | % of Budget | Monthly (£5k total) |
|---|---|---|
| SEO / Content | 35–40% | £1,750–£2,000 |
| LinkedIn organic + ads | 20–25% | £1,000–£1,250 |
| Email marketing | 15–20% | £750–£1,000 |
| PPC (Google Ads) | 10–15% | £500–£750 |
| Events / Networking | 5–10% | £250–£500 |
B2B Technology (SaaS, Software)
| Channel | % of Budget | Monthly (£10k total) |
|---|---|---|
| PPC / Paid search | 30–35% | £3,000–£3,500 |
| Content / SEO | 25–30% | £2,500–£3,000 |
| Paid social (LinkedIn) | 15–20% | £1,500–£2,000 |
| Email / Marketing automation | 10–15% | £1,000–£1,500 |
| Events / Webinars | 5–10% | £500–£1,000 |
E-commerce / Retail
| Channel | % of Budget | Monthly (£8k total) |
|---|---|---|
| Paid social (Facebook/Instagram) | 30–40% | £2,400–£3,200 |
| Google Shopping / PPC | 25–30% | £2,000–£2,400 |
| Email / SMS | 15–20% | £1,200–£1,600 |
| SEO / Content | 10–15% | £800–£1,200 |
| Influencer / Affiliates | 5–10% | £400–£800 |
Local Services (Trades, Clinics, Restaurants)
| Channel | % of Budget | Monthly (£2k total) |
|---|---|---|
| Google Ads (local) | 35–40% | £700–£800 |
| Local SEO / Google Business | 25–30% | £500–£600 |
| Social media (organic) | 15–20% | £300–£400 |
| Referral programme | 10–15% | £200–£300 |
| Local sponsorships | 5–10% | £100–£200 |
What’s Included in “Marketing Budget”
Be clear about what counts:
Typically Included
- Agency retainers
- Advertising spend (Google, Facebook, LinkedIn, etc.)
- Content production (writing, design, video)
- Marketing tools and software
- Email marketing platforms
- SEO tools
- Marketing automation
- Freelancer fees
Sometimes Included
- Website hosting and maintenance
- CRM costs
- Sales enablement materials
- Trade shows and events
- Sponsorships
- PR
Usually Separate
- Sales salaries
- Website redesign (capital investment)
- Brand/visual identity projects
Clarity prevents arguments about whether you’re “over budget.”
Building Your Budget
Step 1: Determine Total Budget
Choose a percentage based on your stage and industry:
Revenue × Percentage = Annual Marketing Budget
Example: £1.5m revenue × 8% = £120,000/year = £10,000/month
Step 2: Split Strategy vs. Execution
If you’re using a fractional CMO or marketing director:
| Component | % of Budget |
|---|---|
| Strategic leadership (CMO, strategy) | 20–30% |
| Execution (agencies, content, ads) | 70–80% |
Don’t spend it all on strategy with nothing left to execute.
Step 3: Allocate Across Channels
Use the 70/20/10 framework:
| Category | Amount (£10k example) |
|---|---|
| Proven channels | £7,000 |
| Adjacent bets | £2,000 |
| Experiments | £1,000 |
Step 4: Plan for Flexibility
Keep 10–15% as contingency for:
- Unexpected opportunities
- Campaigns that need more investment
- Testing that works and should scale
Budget Template
| Category | Monthly | Annual | % of Total |
|---|---|---|---|
| Strategic leadership | |||
| Fractional CMO / Consultant | £ | £ | % |
| SEO & Content | |||
| SEO agency/retainer | £ | £ | % |
| Content production | £ | £ | % |
| Paid Advertising | |||
| Google Ads spend | £ | £ | % |
| Google Ads management | £ | £ | % |
| Paid social spend | £ | £ | % |
| Paid social management | £ | £ | % |
| Email & Automation | |||
| Email platform | £ | £ | % |
| Email design/copywriting | £ | £ | % |
| Social Media | |||
| Social management | £ | £ | % |
| Social tools | £ | £ | % |
| Tools & Software | |||
| Marketing tools | £ | £ | % |
| Analytics/reporting | £ | £ | % |
| Contingency | |||
| Reserve/flexibility | £ | £ | 10–15% |
| TOTAL | £ | £ | 100% |
Common Budgeting Mistakes
1. Spending Everything on Ads
Paid advertising without content, SEO, or email is renting traffic. When you stop paying, traffic stops.
Fix: Balance paid with organic. Build assets, not just campaigns.
2. Underinvesting in Strategy
Spending £8,000/month on execution with no strategic direction is expensive guessing.
Fix: Allocate 20–30% to strategic leadership — even if it’s part-time.
3. No Measurement Budget
Spending on marketing without tracking ROI is flying blind.
Fix: Budget for analytics tools, tracking setup, and reporting time.
4. Cutting Marketing in Downturns
When revenue drops, marketing is often first cut. But that’s when you need customer acquisition most.
Fix: Cut inefficient spend, not all spend. Shift to higher-ROI channels.
5. Spreading Too Thin
£5,000/month split across seven channels means each channel is underfunded.
Fix: Focus on 2–3 channels well before expanding.
Adjusting Based on Results
Review quarterly:
If ROI is strong:
- Consider increasing budget
- Double down on winning channels
- Test new opportunities
If ROI is weak:
- Audit what’s not working
- Cut or pause underperforming channels
- Investigate why (strategy, execution, or market)
If you don’t know ROI:
- That’s your first problem
- Invest in measurement before adding spend
FAQ
What’s the absolute minimum marketing budget?
Below £1,500/month, professional support is difficult. At that level, focus on DIY with tools, organic social, and content. Add paid when you can afford £500+/month in ad spend.
Should I include staff costs in marketing budget?
It varies. If you have marketing employees, some include their cost in the marketing budget, some don’t. Be consistent and know what’s included when comparing to benchmarks.
How do I justify marketing budget to stakeholders?
Focus on ROI. Track cost per lead, customer acquisition cost, and revenue influenced by marketing. Present budget as investment with expected return, not just expense.
When should I increase marketing budget?
When you have more demand than you can handle, you might reduce. When you have capacity for growth and marketing is delivering positive ROI, increase.
What if I can’t afford the recommended percentage?
Start where you are. Even £500/month focused on one channel is better than nothing. Build from there as revenue grows.
Related: Digital Marketing for Small Business: The No-BS UK Guide | SEO vs PPC for Small Business: Where to Start
