Marketing spend as a percentage of revenue: the benchmark, and how to set your own

Gartner's 2025 CMO Spend Survey put average marketing budgets at 7.7% of company revenue, level with the year before. That is the best known benchmark, and it comes from large companies. For your own business the right figure is the one that your growth target, your margins and your sales cycle work out to, and the method below gets you there in four steps.

What the Gartner figure says

Gartner published the result in May 2025. It surveyed 402 CMOs and marketing leaders in North America, the UK and Europe, running the survey in February and March 2025, and most of the firms had more than USD 1 billion in annual revenue. Three details from the coverage are worth keeping (Gartner press release, 12 May 2025, as reported by Campaign and Demand Gen Report):

• The average was 7.7% of overall company revenue.
• Half of the CMOs reported budgets of 6% or less, while a group of big spenders reported more than 10.5% and a group of budget conscious CMOs reported 4% or less.
• Paid media took about 30.6% of the marketing budget, which works out to roughly 2.4% of company revenue.

Read the spread, not the average. A range from 4% to above 10.5% inside one survey tells you the percentage is a choice companies make, and that it depends on what they sell. The full release is on the Gartner newsroom.

Why a percentage is a starting point

A percentage of revenue is easy to put in a spreadsheet, and it has one built in weakness: it ties next year's marketing to last year's sales. A company that needs to grow cuts its own growth budget the moment sales dip. So treat the percentage as a ceiling and a sense check, and build the actual number from the bottom.

Four things move the right percentage up or down:

• Stage. A business entering a new market or launching a product spends a higher share than one defending a stable base.
• Gross margin. A software business keeping most of each sale can afford a higher share than a distributor keeping a thin slice.
• Sales cycle. Long cycles mean spend today lands as revenue next year, so the ratio looks heavy for a while.
• Channel mix. Paid media scales with revenue goals. Content and search work compounds more slowly and costs less per month once built.

The method: set it from the target

Step 1: write the revenue you need from marketing

Take the total revenue target and subtract what existing customers and the sales team's own network will bring in. What is left is the revenue marketing has to source.

Step 2: turn that into customers

Divide by average first year revenue per customer. This gives the new customers needed.

Step 3: set an acceptable cost per customer

Use gross margin to find the most you can pay to win one customer and still make money in your payback window. A common working rule is to recover the cost within the first year, but your own cash position decides it.

Step 4: multiply and compare

Customers needed times the cost you can afford is the budget. Divide by revenue and you have your percentage. Compare it with the 7.7% average and the range around it, and ask why you sit where you do.

A worked illustration, with invented numbers chosen only to show the arithmetic: a business targets INR 10 crore revenue and expects INR 6 crore from existing accounts, leaving INR 4 crore to source. If a new customer is worth INR 4 lakh in year one at a 50% gross margin, it needs 100 new customers. If the business will pay up to INR 1 lakh to win each, the budget is INR 1 crore, which is 10% of the INR 10 crore target. That sits above the Gartner average, and the business can say exactly why: it is growing and the margin supports it.

Where the money goes once you have the number

The split matters as much as the total. A rough order that suits most small and mid sized companies:

Bucket	What it covers	Treat it as
Committed	Tools, retainers, salaries	Fixed cost, reviewed yearly
Planned	Campaigns on the calendar	Reviewed each quarter
Flexible	Paid tests and new channels	Moved monthly to what is working

The marketing budget format guide lays out the columns and approval structure for this split, so we will not repeat it here.

Reviewing the percentage during the year

Recalculate the ratio quarterly using actual revenue. If revenue runs ahead of plan, the same rupee spend becomes a lower percentage, which is a good result, not a cue to cut. If revenue falls behind, check cost per customer before touching the budget. A channel that still wins customers at the target cost deserves more money, whatever the ratio says.

Three common mistakes when applying a benchmark

The first mistake is copying the average of a group that does not resemble you. The Gartner respondents were mostly firms with more than USD 1 billion in annual revenue, with brand budgets and media buying power to match. A company with a single product and a short sales cycle will sit differently.

The second is setting the percentage once and leaving it. Revenue moves through the year, and a fixed ratio makes the budget shrink exactly when you need to win customers. Fix the cost per customer you accept, and let the budget follow demand.

The third is mixing definitions. One company counts salaries, agency fees and events in marketing, another counts only media. Before you compare your ratio with anyone's, write down what sits in your total, and ask the same of the source you compare against.

What an assistant says when a buyer asks about your category

A growing share of buyers put the category question to ChatGPT, Gemini or Perplexity before they ever see an ad, and the business named in that answer gets a head start that no media budget buys directly. It is worth checking what those assistants say about your category and which sites they draw on. AI Knows Us runs that check, and its free scan at aiknowsus.com shows whether your name appears when buyers ask. Put the finding next to your channel costs when you set next year's percentage.

Questions about marketing spend as a share of revenue

What percentage of revenue should a small business spend on marketing?

Use the method above. Start from the customers you need and the cost you can afford to win each, then compare the result with the 7.7% survey average. Many small businesses land above it in a growth year and below it in a stable one.

Does the 7.7% figure include salaries?

Gartner's survey covers overall marketing budgets as reported by CMOs. Check how your own finance team counts salaries before comparing, and compare like with like.

Should the percentage be the same every year?

No. It follows your stage and targets. Hold the cost per customer steady and let the percentage move.

What about a new business with no revenue?

Skip the percentage. Set a test budget per channel, measure cost per lead and cost per customer, and scale the channels that pass your payback rule.

Is paid media the biggest line?

In the Gartner data it was the largest single allocation, at about 30.6% of budget. For many businesses search, content and email carry a large share too.