What Should a Business Spend on Marketing in 2026?

The short answer: Established businesses should spend 7-12% of annual revenue on marketing. For a business turning over £1m, that means £70,000 to £120,000 per year. For a £5m business, it's £350,000 to £600,000. Most UK businesses spend far less, which is why most UK businesses struggle to grow beyond a certain point.

This blog isn't for everyone.

If you're a startup finding your feet or a sole trader working from a spare room, the numbers here won't apply to you. That's fine. Come back when you're ready.

This is for businesses turning over £1m to £10m. Businesses with staff, overheads, and ambitions to grow. Businesses that should be investing properly in marketing but often aren't.

If that's you, keep reading.

‍

What Do the Industry Benchmarks Actually Say?

Industry benchmarks consistently recommend that established businesses allocate between 7% and 12% of revenue to marketing.

According to Gartner's 2025 CMO Spend Survey, marketing budgets across larger companies currently sit at around 7.7% of revenue. That's actually down from the pre-pandemic average of 11%.

For a £1m business, 7-12% means £70,000 to £120,000 per year.

For a £5m business, it means £350,000 to £600,000 per year.

For a £10m business, it means £700,000 to £1.2m per year.

These aren't aspirational figures. They're what successful businesses actually spend to maintain growth.

‍

What Do Most UK Businesses Actually Spend?

The gap between what businesses should spend and what they actually spend is enormous.

The SME Marketing Challenges Report 2025 found that 58% of UK businesses spend less than £250 per month on marketing. That's £3,000 a year.

For a £1m business, £3,000 represents 0.3% of revenue.

The benchmark is 7-12%. Most businesses spend 0.3%.

That's not a rounding error. That's a 20x gap between recommendation and reality.

‍

Why Does This Gap Exist?

Most business owners think of marketing as a cost, not an investment.

Costs get cut when times are tight. Investments get protected because they generate returns.

The IPA Bellwether Report tracks UK marketing budgets quarterly. It consistently shows that when economic uncertainty rises, marketing spend is one of the first things to get slashed.

Nearly 25% of UK firms cut their marketing spend in Q1 2025.

This approach is exactly backwards. When competitors pull back, attention gets cheaper. The businesses that maintain or increase their marketing spend during downturns emerge stronger.

‍

What Happens When Businesses Underinvest in Marketing?

Underinvesting in marketing doesn't save money. It caps growth.

According to research from Warwick Business School's Enterprise Research Centre, only 7% of businesses that reach £1m turnover then step up to exceed £3m.

The majority plateau.

Why? Because they keep doing what got them to £1m, expecting it to get them further. Word of mouth hits a ceiling. Referrals dry up. The founder can't personally sell to every customer anymore.

Breaking through requires investment in systems that generate demand without the founder being personally involved in every conversation.

That means marketing.

‍

What Does a Marketing Budget Actually Include?

Marketing isn't just advertising. When we talk about 7-12% of revenue, that covers several categories.

People and expertise. Whether that's an in-house marketing hire, freelancers, or an agency. Someone needs to plan, execute, and optimise your marketing. According to the SME Marketing Challenges Report, 65% of marketing activities in small businesses are managed by the business owner themselves. That's not a strategy. That's a bottleneck.

Advertising spend. Google Ads, LinkedIn advertising, Meta campaigns, retargeting, sponsorships. The budget you put behind getting your message in front of people.

Content and creative. Photography, video production, copywriting, graphic design. The assets you need to actually say something worth hearing.

Tools and technology. Email platforms, CRM systems, analytics tools, scheduling software. The infrastructure that makes marketing scalable.

Website investment. Ongoing maintenance, updates, improvements, hosting. Your website isn't a one-off project. It's a living asset that needs continuous attention. We've written about this in detail: Is Your Website Costing You Customers?

SEO and content marketing. The long game. Building organic visibility that compounds over time rather than disappearing when you stop paying for ads. Website speed affects your rankings, but so does the quality and consistency of your content.

When you add all of that up, £70,000 to £120,000 for a £1m business starts to look less dramatic and more like the baseline for doing this properly.

‍

How Should a Marketing Budget Be Allocated?

Not all marketing channels deliver equal returns. Here's a framework for how a £1m+ B2B business might allocate their marketing budget.

Website: 10-15% of marketing budget. Your website is your shopfront. If it's slow, unclear, or unconvincing, nothing else matters.

SEO and content marketing: 20-30%. Takes time to build but delivers compounding returns. Every piece of content is an asset that can generate leads for years.

Paid advertising: 20-40%. Google Ads, LinkedIn, Meta. Gets you in front of people actively searching or highly targeted prospects. Only works if your website and offer are solid.

Agency or team: 25-35%. The people who make it happen. This is your strategic and executional horsepower.

Tools and miscellaneous: 5-10%. CRM, email platform, analytics, subscriptions. The operational infrastructure.

These percentages flex depending on your situation. A business with no organic visibility might invest more heavily in SEO upfront. A business launching a new service might lean into paid ads.

‍

What Does a Marketing Agency Actually Cost in 2026?

A credible marketing agency working with businesses in the £1m to £10m range typically charges between £1,500 and £3,000 per month on a retained basis.

Some charge more. Very few charge less and deliver anything meaningful.

Here's why that's reasonable when you do the maths.

If your total marketing budget should be £6,000 to £10,000 per month (7-12% of £1m), then an agency retainer of £1,500 to £2,500 represents just 20-30% of your total spend.

The rest goes on advertising, tools, content production, and other direct costs.

The agency provides the strategy, the expertise, and the execution. They're not your entire marketing budget. They're the team that makes your marketing budget work.

This is exactly what we do at Higher Performance Marketing. We work with established businesses on 12-month partnerships, building and executing marketing strategies that drive measurable growth.

‍

What ROI Should You Expect from Marketing Investment?

According to research cited by Whitehat SEO, a good B2B marketing ROI target is 3:1 to 5:1.

That means for every £1 spent on marketing, you should earn £3 to £5 in profit.

The average B2B marketing ROI sits around 5:1.

For a business investing £100,000 per year in marketing, a 5:1 return means £500,000 in additional profit.

SEO and content marketing typically deliver the highest returns, though they take longer to build. Paid advertising delivers faster results but stops working when you stop paying.

The key is measurement. You need to know what's working so you can do more of it.

‍

Which Businesses Get Marketing Investment Right?

The businesses we work with understand that marketing is a growth function, not a grudge purchase.

Project Management Blueprint invests consistently in building visibility in the training market. They're not looking for quick wins. They're building an asset.

Haus Developer and The Garage Conversion Specialist compete in crowded local markets. They win because they're visible when potential customers search. That visibility comes from sustained investment.

Staging Rooms built their reputation partly through showing up consistently online. In a sector where trust matters enormously, their marketing reinforces the quality of their work.

None of these businesses treat marketing as optional. They treat it as essential infrastructure for growth.

‍

How Do You Know If You're Underinvesting in Marketing?

Ask yourself these five questions.

Do you know where your leads come from? If you can't answer this, you're flying blind.

Is your pipeline predictable? Or does it swing wildly based on referrals and luck?

Are you personally involved in generating every sale? If yes, you've hit your ceiling.

When did you last update your website? If the answer is years ago, you're probably losing customers before you even know they exist.

What percentage of revenue do you actually spend on marketing? Do the maths. If it's below 5%, you're almost certainly underinvesting.

‍

Frequently Asked Questions About Marketing Budgets

"We tried marketing before and it didn't work."

Probably because it was underfunded, inconsistent, or poorly targeted. Spending £500 on a Facebook ad campaign and deciding marketing doesn't work is like going to the gym once and deciding exercise doesn't work. Marketing requires sustained investment and proper execution.

"We get all our business through referrals."

Great. Until you don't. Referrals are wonderful but unpredictable. They're also capped by how many people know about you. What happens when a key referrer retires, changes industry, or simply forgets about you? A proper marketing engine runs alongside referrals, not instead of them.

"We can't afford it right now."

Can you afford not to? Every month without proper marketing is a month of leads you didn't generate, customers you didn't win, and revenue you didn't earn. The cost of inaction is invisible but real. We've covered this in detail: How to Increase Sales Without Working Twice as Hard.

"I don't know what I'd even spend it on."

That's exactly why you work with people who do this for a living. A good agency or marketing partner will help you prioritise, allocate, and measure. You don't need to have all the answers before you start investing.

"Marketing is too expensive for a business our size."

If you're turning over £1m or more, you're not a small business anymore. You're an established operation that should be investing like one. A marketing budget of 7-12% of revenue isn't expensive. It's standard.

‍

What Happens If You Keep Underinvesting?

You can absolutely continue spending £250 a month on marketing. Or nothing at all.

But be honest about what that means.

It means growth will be slow, inconsistent, and capped by your personal capacity.

It means relying on referrals that may or may not come.

It means watching competitors who do invest pull further ahead.

For some businesses, that's fine. Not everyone wants to grow. Not everyone needs to.

But if you do want to grow, if you've built something good and you want to take it further, then marketing isn't optional. And proper marketing isn't cheap.

‍

What Should You Do Next?

If you're a business turning over £1m or more and you're serious about growth, here's where to start.

Calculate your current marketing spend. Everything. Agency fees, ad spend, tools, freelancers, your own time. Get the real number.

Compare it to the benchmark. Is it 7-12% of revenue? Or closer to 1-2%?

Identify the gaps. Where are you underinvesting? Website? Content? Advertising? People?

Get help if you need it. You don't have to figure this out alone.

Get in touch and let's talk about what proper marketing investment could look like for your business.

The businesses that grow are the ones that invest in growth. It really is that simple.

‍