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How Much Should You Spend on Marketing?

How Much Should You Spend on Marketing?

How Much Should You Be Spending?

This is a question we get asked frequently by clients who approach us to carry out marketing for their business, so we’ve gone ahead and put together a blog post to answer the all-important question: “how much should I spend on marketing?”


In general, a business should be spending at the very least 5% – 10% of turnover on marketing – but each business and industry is different. Therefore, it’s worth looking at various aspects of your business to calculate the correct marketing budget which is right for you, your product or your service.

What Did You Spend Last Year On Marketing?

A great place to start is working out what you’ve spent previously. This should be a fairly straightforward question to answer, as you will likely have a record of your business expenditure for marketing related activities on your accounting system, or within your company financial accounts. 


With this in mind, you should be able to get an idea of your annual spend on marketing within seconds – but don’t forget to take the following into consideration when calculating your marketing spend:

How Many Sales or Leads Did You Generate?

Marketing a product or service is all well and good. But understanding how many leads you acquired or how many sales you generated from your marketing activities is certainly an important part of any good digital marketing strategy. Equally, marketing a business isn’t just about acquiring leads and sales, it’s also about retaining existing customers. Because let’s face it, if you don’t retain your customers then you’re simply not growing as a business.

How Competitive Is Your Industry?

Depending on how competitive the industry you operate within is, you will be able to find a clear idea of how much effort or revenue you need to put into generating brand awareness and customers. If you’re working within a fairly niche industry then you’ll likely need to spend a lot less when it comes to marketing your services or products.


However if you’re operating within a fairly competitive industry, you’ll either need to spend more than your competitors on marketing, or make more noise than your competitors. Either way, you’ll need to try a lot harder than the competition to generate new business. Ideally, you’ll want to differentiate your business from others through some type of unique selling point.

Do You Want To Grow Faster This Year?

Another good question to ask yourself when calculating your marketing budget, is ‘how quickly do you want to grow?’ If your company increased sales by 15% last year with a marketing budget of £20,000, and you’d like to see an increase of 25% this year – is the same marketing budget going to be adequate for the desired revenue increase? Probably not, which is why it’s worth being realistic when setting expectations and goals for your marketing campaigns and allocating a sufficient budget to them.

What Does Your Sales Cycle Look Like?

For your company to accelerate and grow revenue, you need to do one of three things:
How quickly you can start to increase revenue through marketing within your business, will depend on the sales cycle of your company, products and contracts. For example, if you have a 6-month sales cycle then you’ll likely need to start generating leads or sales 6-months in advance, to ensure that your revenue increases in-line with your predicted growth.


There are various articles out there which will tell you what you should be spending on your marketing activities as a business, however only you can really make the final decision. Based on a CMO Survey, their latest results – published in October 2019 – shows that a business’ marketing spend on average is around 10.5% of revenue.


However, this will of course vary between businesses and industries, but in general we suggest around 5% of revenue at the very least. Or, higher than 10% if you’re a start-up business looking to break into a new industry or market.


If you’re still unsure about what you should be spending on your marketing activities, feel free to get in contact with our dedicated team at Lowaire to schedule a free consultation.


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