How Much Should You Spend on Marketing Your Business?

Growing a business is not easy. It requires realistic investment. Furthermore, digital marketing is not easy either. In any competitive industry, $500 per month will get you nothing. $1,000 per month will get you double the nothing of $500. That’s still nothing.

ow Much Should You Spend on Marketing Your Business?

Honestly, it all depends really. It’s your business after all.

The best answer is your advertising budget should really be fluid and unlimited.If your ads are generating new business at a profitable rate then you want to be spending as many dollars as possible on them, and scaling or adjusting spend to the channels working best at any given time.

Of course, that’s not always possible. Whether it’s due to resources, lack of time, production process etc it’s not always possible to go hell for leather spending as much as possible on the ads.

As such, most companies will need that annual marketing budget.

Every business will be a smidge different based on a ton of factors, including:

What’s your monthly revenue?

What are your goals?

What are your competitors doing?

Which industry are you in?

Some big retailers spend 20% of their annual revenue on marketing. Some companies DOMINATE with only 5-7%.

It’s rare, but it happens.

Here are some ballpark figures:

The American Small Business Association recommends between 7-8% of your total revenue for marketing.

And according to a survey featured in the Wall Street Journal, the average company’s marketing budget is about 11% of its total budget. And the average company spends roughly 7.5% of their total revenue on marketing.

Again, this varies widely by industry. It also depends heavily on which phase you’re in as a company.

A large, entrenched brand might only need a small portion of its total budget because it has massive brand awareness. McDonalds rakes in upwards of 20 BILLION per year, but spent only $447 million (ONLY!) on advertising in 2019. That’s about 2%.

Compare that to Uber, who spent 3.2 billion on advertising against 11 billion or so in revenue. That’s an astounding 29%! That’s what it takes when your goal is to go from bootstrap startup to the alpha dog in your market, though.

You’ve got to spend some to make some, or so they say, and based on my decade in the advertising game “they” are right.