How Much Should You Spend on Marketing?

Most companies decide their marketing budget by looking backward. Last year’s number becomes this year’s number, adjusted by sentiment: a little more when times feel good, a little less when they don’t. This feels safe. It’s also the reason so many companies struggle to grow.

There are two fundamentally different ways businesses set their marketing budgets:

1. The ambition-based approach:
Budgets are tied to growth targets and treated as an investment engine.

2. The competitor-based approach:
Budgets are tied to what rivals are doing and treated as a defensive expense.

These two paths lead to very different numbers — and very different results. Understanding the distinction is the only way to avoid underwriting your own stagnation.

The Baseline: What Companies Actually Spend

Across industries, global and Nordic data land in roughly the same neighborhood: average marketing spend sits around 7–8% of revenue.

Gartner’s 2024–2025 CMO Spend Survey reports:
• Average marketing spend: ~7.7% of revenue
• High-growth companies: consistently in the 10–15%+ zone
(Source: Gartner CMO Spend Survey 2024–2025)

The Nordic CMO Survey 2025 — nearly 600 CMOs across industries — shows the same pattern:
• Companies that hit their growth targets typically spend more than 10% of revenue on marketing.
(Source: Nordic CMO Survey 2025)

If your company is spending 3–6%, you’re not “efficient.” You’re underpowered.

But these averages only tell part of the story. They describe the market as it is, not what your company needs to do to change its trajectory.

The Growth Reality: Why High-Growth Companies Spend More

The companies that grow faster than their competitors treat marketing like R&D: an engine, not a cost. They invest in:

• Share-of-voice
• Brand salience
• Category reach
• Long-term demand creation
• Channels that take time to mature

This isn’t vanity. It’s math.

Les Binet and Peter Field’s effectiveness research (IPA) and Nielsen’s long-term advertising studies both show a consistent pattern:
Brands grow when their share of voice exceeds their share of market.
This is the ESOV principle — Excess Share of Voice.

In simple terms:
If you want 1% market share growth, you generally need roughly 1% surplus share of voice. And surplus share of voice isn’t free.

This is why growth-oriented companies regularly spend 10–15% or more. They are deliberately buying enough visibility to tilt the market in their favor.

The Competitive Twist: What Happens When You’re Fighting Head-to-Head

Most companies don’t operate in a vacuum. They battle competitors who are spending aggressively, saturating the category, and shaping customer expectations.

When you choose to compete directly — same product category, same audience, same digital real estate — you’re no longer budgeting for growth in a neutral environment. You’re budgeting for a fight over finite attention.

In a competitive category, one rule dominates:

To take share from a rival, you must outspend them enough to change the mental availability landscape.

If your competitors are investing 8–12% of revenue and you match them, nothing happens. You stay in the same relative position.

To gain share, you usually need:

15%+ of revenue in marketing spend
(in categories where competitors are already investing heavily)

This isn’t about a magical percentage. It’s about the real cost of stealing attention that someone else has already paid for.

In high-margin categories — SaaS, subscription services, financial services — it’s common to see 15–20% or more. In some early-stage or venture-backed B2C categories, it can stretch beyond 30%.

Why Category Context Changes Everything

How much you should spend isn’t just about ambition or competition. It’s also shaped by the economic physics of your category:

High-margin categories can sustain heavier marketing loads.
Low-margin categories cannot outspend rivals without breaking themselves.
Long purchase cycles require persistent brand investment.
Commoditized categories require distinction, not just volume.
Subscription models reward upfront spend with long-term customer value.

This is why borrowing a “benchmark percentage” from another industry is dangerous. A grocery chain adopting SaaS benchmarks will simply light money on fire.

The right number always reflects a company’s growth model, margin structure, and competitive landscape.

So How Much Should You Spend?

A simple way to frame it:

If you want to maintain your current position:
Match your category’s average. Usually 7–10%.

If you want to grow in a neutral or lightly contested category:
Aim for 10–15%.

If you want to grow in a competitive category:
Expect 15–20%+, depending on how aggressively competitors spend and how ambitious your targets are.

Again, these are not magic numbers. They’re strategic signals. They help you avoid the classic mistake: setting a budget that is logically incapable of delivering the outcome you expect.

The Real Question Isn’t “How Much?” But “What Battle Are You Fighting?”

The worst budgeting sin is asking for growth while funding maintenance.

The smartest companies choose their battlefield — category growth, competitor displacement, or defensive stability — and budget accordingly. They understand that marketing is simply the economic mechanism that buys attention, reshapes perception, and expands the future revenue line.

The right budget starts with clarity about the story you want your company to write next year.

When you're ready, we can build out a companion graphic of spend levels, add industry-specific benchmarks, or develop a sharper CTA for your audience.

‍

Sources

‍