Setting a marketing budget is one of the few significant decisions most owners make without anything solid to base it on.
You would not sign off a new hire or a lease on a hunch. Yet ask what a business should spend on marketing and the answer is almost always a percentage plucked from somewhere, with no explanation of where it came from.
It usually does not. The number most often quoted describes businesses with a marketing department, a brand team and a turnover measured in billions.
So here is where that figure actually comes from, why it is close to useless for an owner-managed business, and a way of working out your own number that survives contact with your P and L.
TL;DR: The “spend 7 or 8 percent of revenue” rule comes from a survey of billion-dollar companies, and there is no published UK benchmark for a business your size. Treat every percentage you read as a sanity check, not a target. Build your marketing budget backwards instead: what a customer is worth in gross profit, what you can pay to win one, and how many more you want. Then check the total against your margin, not someone else’s percentage.
Where That “Seven Or Eight Percent” Figure Comes From
It comes from Gartner’s 2026 CMO Spend Survey, which found marketing budgets averaging 7.8 percent of company revenue, barely moved from 7.7 percent the year before.
Read the small print and the picture changes. That figure comes from 401 senior marketers across North America, the UK and Europe, and the vast majority of them work at companies turning over more than a billion dollars.
Those businesses are not solving your problem. They are protecting an established brand across many markets, with internal teams that exist whether or not this quarter goes well. You are trying to win a specific number of customers out of cash you could otherwise take as profit.
Applying their percentage to your turnover is not a benchmark. It is a coincidence.
There Is No Published UK Benchmark For A Business Your Size
This is the part the internet tends not to admit. No robust published dataset tells you what UK small and mid-sized businesses spend on marketing as a share of turnover. When you see a confident UK figure quoted to one decimal place, it has almost always been estimated from American research.
The most-used of those is The CMO Survey in the United States, which at least breaks its numbers down usefully:
- Companies under 50 employees reported around 8.5 percent of revenue, well above the 4 to 6 percent typical of very large firms
- B2B services businesses came in around 9 percent, B2B product businesses around 6.4 percent
- Consumer product businesses spent roughly double their B2B equivalents
The useful lesson there is not the numbers themselves. It is the shape: smaller businesses generally spend a higher share of revenue than large ones, because they are buying awareness that big brands already own. If you have been feeling that your marketing budget looks disproportionate next to a much larger competitor’s, that is normal and not evidence you are doing something wrong.
What UK Companies Are Actually Doing Right Now
For a read on the current UK mood, the IPA Bellwether Report for Q2 2026 is the closest thing we have to a live indicator.
In that quarter, 23.8 percent of UK companies revised their marketing budgets upwards and 16.9 percent cut them, giving a net positive balance of 6.9 percent. Just under 60 percent held steady. UK adspend is forecast to grow around 2.1 percent in real terms across 2026.
What makes that interesting is the mood it sits against. In the same survey, businesses’ view of their own prospects turned negative and industry-wide pessimism deepened to minus 25.1 percent. More companies are raising spend than cutting it while feeling worse about the economy. Read that as a competitive signal: if you are planning to trim, your competitors on balance are not. We have written before about why cutting your marketing budget in a downturn tends to cost more than it saves.
Build Your Marketing Budget Backwards From A Customer
Percentages are a way of avoiding the real calculation, which is short:
- What is a customer worth to you in gross profit? Not revenue. Gross profit, over the realistic life of the relationship. A £40,000 contract at 30 percent margin is a £12,000 customer.
- What are you willing to pay to win one? Most owner-managed businesses land somewhere between a fifth and a third of that first-year gross profit, higher where customers stay for years.
- How many more do you want next year? Not a growth percentage. A number of customers.
- Multiply. That is your growth budget. Add what it costs to hold the position you already have.
Worked through: a business wanting 20 additional customers worth £12,000 each in gross profit, willing to invest a quarter of that to win them, needs roughly £60,000 of marketing budget aimed at growth. Whether that is 3 percent or 12 percent of turnover is beside the point. It is the number the goal requires.
If the answer is uncomfortable, that is useful. It usually means the growth target is unfunded, the margin is too thin, or nobody has measured what winning a customer costs. All three are better known before the year starts than in month nine.
Sense-check Against Margin, Not Turnover
A marketing budget set as a share of revenue ignores the only thing that determines whether you can afford it.
Eight percent of turnover in a business running 65 percent gross margins is comfortable. The same eight percent in a business running 20 percent margins is close to half the gross profit, and no amount of benchmarking makes that survivable. This is the trap we covered in revenue versus profit and how they shape your growth.
Express your marketing budget as a share of gross profit as well as revenue. It is a far better guide to what the business can actually stand.
Holding Position Costs Less Than Taking Ground
These are two different jobs and they deserve two lines in the plan. Maintaining means staying findable to people already looking for what you sell. It is the cheaper of the two and close to a fixed cost of trading.
Growing means reaching people who are not looking for you yet, or taking work from someone who currently has it. That costs materially more per customer, and it takes longer. A business planning to hold steady and a business planning to grow by a third should not have similar marketing budgets, and the gap between them is not proportional to the growth target.
The Review Window Kills More Budgets Than The Number Does
Most marketing budgets that fail were not the wrong size. They were judged too early.
If your sales cycle runs six months, a review at ninety days tells you nothing except that you have spent money. The temptation is then to cut, which guarantees the return never arrives and confirms the suspicion that marketing does not work.
Set the review window to your sales cycle plus the time it takes a new customer to pay back what you spent winning them. In a technical B2B business that can be a year or more. Agree it in advance, in writing, before anyone is under pressure. Then hold to it.
If You Are Currently Spending Almost Nothing
Plenty of profitable businesses have grown on referral alone, and that is fine until the referrals thin out. If you are starting close to zero, work in this order:
- Find out what an enquiry currently costs you. Even roughly. You cannot budget for something you have never measured.
- Fix what is already broken before buying more traffic. If your website turns enquiries away, spending more only buys you more of the same disappointment faster.
- Commit for long enough to learn something. A serious twelve-month commitment beats three months of hedging every time.
- Decide who does the work. A capable in-house marketer is a real salary before anything is spent on actual marketing. We looked at that trade-off in why working with a digital growth agency makes financial sense.
What percentage of revenue should a small business spend on marketing?
There is no reliable published UK figure for small and mid-sized businesses. US research suggests firms under 50 employees spend around 8.5 percent of revenue, and B2B services businesses around 9 percent, but that is American data and only directional. Use it to sanity-check a number you have built from your own customer economics, never as the starting point.
Is it a mistake to cut the marketing budget when trading gets tough?
Usually, though not always. The IPA’s Q2 2026 data shows more UK companies raising budgets than cutting them even as confidence in the wider economy fell, which means cutting hands ground to competitors who did not. If cash really does require a reduction, cut the activity that is furthest from a buying decision first and protect anything reaching people actively looking for you.
Should the marketing budget include salaries and software?
Include everything, then track it in two parts. Separate the money that buys attention, such as advertising and campaigns, from the money that keeps the function running, such as salaries, agency retainers and software. A budget that looks healthy but is 80 percent staff and tools is not funding growth, and the split tells you that immediately.
How long before a marketing budget should show a return?
Set the expectation from your own sales cycle plus payback period, not from a calendar quarter. Paid advertising for an urgent, in-market need can show a return within weeks. Building visibility in a technical B2B market with a six to nine month sales cycle will not show meaningfully in the numbers for a year. Agree the review point before you start.
