How Much Should I Actually Spend on Marketing?

Short answer: The benchmark is 7.7% of revenue, and it is the wrong place to start. The more common mistake is not overspending. It is spreading too little across too much. Nielsen found half of media plans are underinvested, by a median of 50%. The real question is whether each channel you fund is funded enough to work.

The tension: efficiency versus sufficiency

Finance asks marketing to spend less. Growth targets ask it to deliver more. The usual compromise is to keep every channel alive on a thinner budget. It feels prudent. It is often the most expensive option available, because a channel funded below the level where it can perform returns almost nothing.

What the data shows

The benchmark is flat, and most leaders say it is not enough. Gartner's 2025 CMO Spend Survey of 402 marketing leaders put average budgets at 7.7% of company revenue, unchanged from the prior year, with paid media taking 30.6% of that. Fifty-nine percent of CMOs said the budget is insufficient to execute their strategy. The benchmark describes what large companies have, not what they believe works.

Underinvestment is the norm. Nielsen's ROI Report found 50% of media plans were underinvested, by a median of 50%, and that closing the gap could improve return by 50%. The typical plan is not wasteful. It is too thin to reach the point where spend begins to pay back.

Narrow funnels leave return on the table. The same report found that adding upper-funnel marketing to an existing plan raised overall ROI by 13% to 70%. Budgets cut back to bottom-of-funnel activity alone protect this quarter at the cost of the next.

The pattern: the threshold problem

I call this the threshold problem. Every channel has a minimum level of investment below which it cannot produce a reliable result. Under that line, spend generates too little reach to move outcomes and too little data to learn from.

A business that divides a modest budget across six channels can put all six below threshold. Each one then appears to underperform, the conclusion drawn is that marketing does not work, and the budget is cut again. The percentage of revenue was never the issue. The allocation was.

What this changes

Fund fewer channels to sufficiency. Two channels run properly will outperform six run thinly. Concentration is a strategy, not a limitation.

Set the budget from customer economics. Work out what a customer is worth over their lifetime at your margin, decide what you can afford to pay to win one, and multiply by the customers you need. That figure is your budget. A percentage of last year's revenue funds the business you were, not the one you are building.

Protect a share for demand creation. Capturing existing demand is measurable and finite. Creating new demand is slower to show up and is what keeps the pipeline from running dry. Ring-fence it before the quarter starts.

The resolution

Efficiency and sufficiency stop competing once the channel list is short enough. A benchmark tells you what others spend. Your customer economics tell you what you should spend. Your thresholds tell you where to put it.

The question to ask: If you cut your channel list in half and doubled the spend on what remained, which channels would you keep?

If the answer is not obvious, reach out and we can run the numbers together.

Sources

Gartner, 2025 CMO Spend Survey. 402 CMOs and marketing leaders, surveyed February to March 2025.

Nielsen, ROI Report: Underspending in 50% of Media Plans. Published July 2022.