Marketing Budget: How Much Should You Spend

Content: Forget Percentages – Think Expenditure | Why marketing starts slow | How to approach your budget | How budgeting changes over time | Key takeaways

One of the biggest challenges for business owners is deciding how much to spend on marketing. You’ll find plenty of theories suggesting you should allocate 5%–10% of revenue to marketing. While that might work for established businesses, it’s not always realistic for new businesses or businesses just starting marketing efforts.

Forget Percentages — Think in Terms of an Expenditure

For a business just starting out with marketing, focusing on a fixed monthly amount makes more sense than a percentage of revenue. The key question to ask is:

Marketing campaigns often take time to produce results, and in the early stages, you are essentially buying data to see what works. Instead of expecting a positive return right away, treat it like an expense, just like rent or utilities, until your strategy is optimized.

Why Marketing Often Starts Slow

It’s important to set the right expectations. When you first launch a marketing campaign:

• You don’t know what will work yet. Ads, keywords, and targeting need adjustments.
• Your brand is new to potential customers. They may need multiple interactions before converting.
• Data collection is crucial. The longer your campaign runs, the better you can optimize it.

Many small businesses stop their marketing efforts too soon, thinking it’s not working. In reality, they just haven’t given it enough time to collect data and refine their approach.

How to Approach Your Marketing Budget

1. Set an Initial Monthly Amount

• Choose an amount you can afford to spend without expecting an immediate return.
• Even $500–$1,000 per month can generate valuable insights.

2. Run Campaigns & Collect Data

• Track performance: Which ads, keywords, and audiences are responding best?
• Identify underperforming areas and make adjustments.

3. Optimize for Better ROI

• Use the data to refine your targeting and messaging.
• Shift budget toward the strategies that are working.

4. Scale Once You See Positive ROI

• Once you start getting a return on investment (ROI), increase your budget strategically.
• Reinvest profits from successful campaigns to scale up.

How Budgeting Changes Over Time

New Business (0 – 1 Year)

• Budget Approach: Fixed expenditure amount
• Goal: Test, collect data, and refine strategy.

Growing Business (1 – 5 Years)

• Budget Approach: Budget based on performance
• Goal: Optimize campaigns and scale effective strategies

Established Business (5+ Years)

• Budget Approach: Percentage of revenue
• Goal: Maintain consistent marketing and expand brand reach

Key Takeaways