There is no definitive answer, but as a general rule of thumb, our experience shows companies spend 2 – 7% of their total revenue on marketing to maintain their current position. Companies looking to grow or gain greater market share often budget a higher percentage—around 10 %.
Rules of thumb aside, every business and market is unique.
- Businesses in highly competitive markets may need to spend a greater percentage of their revenue on marketing.
- A new business will typically have to spend more than an established business.
- Businesses with higher ticket items, such as automobiles, usually have a lower advertising to revenue ratio than businesses with lower price points.
You should plan advertising spending as a percentage of anticipated monthly sales. Doing so will create an advertising budget that reflects the busy or slack times inherent to individual seasons for your type of business.